Tesla Motors Inc.'s Infrastructure Advantage

Some of the challenges Tesla faces seem borderline insurmountable, but infrastructure isn't one of them.

Jun 1, 2014 at 3:01PM

Electric-car maker Tesla Motors (NASDAQ:TSLA) has a lot going for it. So much that the market demand for Tesla stock in the past two years has run up the price by more than 600%. A wildly successful Model S launch has given investors enough confidence to value the company at $26 billion -- almost half of General Motors' $55 billion market capitalization. But can Tesla really become a mass-market player? While it won't be easy, Tesla does have one major advantage on its path to competing with the big dogs.

Tesla Model S Twtr

Model S. Source: Tesla Motors.

Tesla's hidden infrastructure
Tesla's Supercharger network is impressive. The Tesla-branded charging stations will juice a Model S to a 50% charge (132.5 miles of range) in just 20 minutes, or an 80% charge in 40 minutes. These stations, which offer Tesla owners free charging for life, are rapidly proliferating. Today, Tesla owners can travel up and down the West and East coasts and across the country. By 2015, the company plans to have charging stations within driving range of 98% of the U.S. population.

Tesla Supercharger Network

Tesla's planned corridors for Supercharging stations to be open for use by the end of 2015. Source: Tesla Motors.

This planned network puts the most optimistic scenario for potential hydrogen fuel cell fueling stations by 2015 to shame.

But Tesla's map of planned Supercharger stations drastically understates the company's infrastructure. Tesla's greatest asset, in fact, may already be in your home: your electricity.

As it turns out, charging at home is sufficient for the majority of travel. A 2012 study by two doctoral students at the School of Engineering and Applied Science at Columbia University estimated that the average daily driving for urban-based cars is 36.6 miles and the average for rural-based cars is 48.6 miles. Both figures are well below the EPA-rated range of Tesla's 60-kWh and 85-kWh versions of its Model S, with ranges of 208 and 265 miles, respectively.

Tesla Charging

A charging Model S. Source: Tesla Motors.

After installing a 240-volt outlet, Tesla owners have plenty of power to wake each morning with a full charge. On Tesla's website, it says owners can get a 265-mile charge in nine hours using a 240-volt outlet. However, if owners pair a Tesla Wall Connector with its Dual Chargers option, they can fully juice their Model S in half that time.

Tesla has some tough challenges ahead, like building the manufacturing capacity to support sales of its lower-cost vehicle after it launches in 2017 so that the company can hit the planned level of 500,000 vehicles per year by 2020. But infrastructure is among Tesla's easier obstacles to overcome. Not only is it readily possible for owners charge their vehicles at home, but advancements in solar panel technology will likely improve the costs of charging electric vehicles over time.

The ease with which Tesla can tap into existing infrastructure gives its electric vehicles an edge over fuel cell technology, and also brings it one step closer to becoming a mass-market player.

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Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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