One of the key selling points for Tesla Motors' (TSLA 0.44%) vehicles is the rapidly expanding Supercharger network that comes with them. Tesla CEO Elon Musk summarized why these fast-charging stations, which can charge up to 170 miles of range in as little as 30 minutes, are critical when he announced Model 3 earlier this year:
The reason Supercharging is very important ... is that it gives you freedom of travel. It means you conveniently go where you want, when you want, how you want. And a lot about having a car is about freedom. It's about going where you want to go.
But as Tesla prepares its lower-cost, higher-volume Model 3 for the first deliveries late next year, the network's continued expansion is critical.
Will Tesla have its Supercharger network ready to support a much larger fleet?
Preparing for Model 3
Unsurprisingly, Tesla's Model 3 announcement was followed with a commitment to double down on its expansion efforts for its Supercharger network. "By the end of next year, we will double the number of Superchargers and quadruple the number of Destination Chargers," Musk said at the Model 3 unveiling event on March 31. "You will be able to go virtually anywhere.
Doubling its 3,608 Supercharger stations (each individual charging stall -- not to be confused with Supercharger locations), and quadrupling its 3,689 Destination Chargers (slower Tesla charging units installed by businesses at locations where travelers might stay for longer periods of time, such as restaurants and hotels), as of the end of March would bring them to 7,200 and 15,000, respectively. Musk said Tesla will do this by 2017.
Tesla's ambitious Supercharger expansion target ahead of Model 3 is necessary. The company anticipates the lower-cost vehicle will help it increase total vehicle production from an estimated 80,000 units this year to 500,000 vehicles in 2018 -- the first full year of Model 3 deliveries. And management seems to indicate it anticipates Model 3 will account for around 400,000 of these units. If sales really do grow this fast, Tesla is going to need a much bigger Supercharger network.
So how's Tesla holding up on this expansion, so far? Today, Tesla has 4,311 Superchargers, located at 698 locations. While this isn't a bad start, it could be argued that the company is running behind. The most striking evidence that this is the case is that Tesla said in its 2015 10-K that it planned to "energize about 300 new Supercharger locations" in 2016. Tesla ended 2015 with 584 Supercharger locations; this would mean Tesla intended to end 2016 with nearly 884 locations.
But it's nearly the middle of September, and Tesla's Supercharger location count is at 698. With just over 100 locations energized year to date, and less than 200 to go to hit its 2016 target, the company would need to expand its network at an unprecedented rate to achieve this goal.
Still, Tesla is moving fast enough for its 2017 target for 7,200 stations to appear achievable. In just four-and-a-half months, Tesla has added over 700 Supercharger stations, increasing its total count by 19%. And the company has about 15 months to hit its Supercharger-station target.
Given that Tesla CEO Elon Musk has said the company will require Model 3 customers to pay for access to its Supercharger network -- a departure from the way Supercharging comes free with every Tesla vehicle purchase today -- it's important that Tesla delivers a robust and convenient network for customers. While a monetized network could open up a new revenue stream for the company, it also means customer expectations will probably be higher.