Imagine taking any road trip in the U.S. without spending a dime on gas.
Thanks to Tesla Motors (NASDAQ:TSLA), this reality is just around the corner. And this is the primary reason I think that bears are underestimating Tesla.
If you build it, they will come
Superchargers put other charging stations to shame. They are the difference between a convenient electric vehicle, or EV, experience and an inconvenient EV experience. These Tesla-owned charging stations juice the Model S roughly 16 times faster than most public charging stations -- and they're free.
A 50% charge in 20 minutes or an 80% charge in 40 minutes (at Tesla's new 120 kW Superchargers), and Model S owners can be on their way. Even more, by the end of this year, Tesla will be taking some stations one step further, giving Model S owners the option to pay about $50-$80 for a 90-second battery swap without even having to get out of the car.
"Faster or free?" Tesla likes to ask.
The value proposition is very real. Especially when you take into consideration the extent of Tesla's Supercharger rollout. Earlier this year, Tesla had just 17 Supercharger stations. By 2014, the company plans to have 80% of the U.S. population and parts of Canada covered. By 2015, Tesla plans to have 98% of the U.S. population covered.
Currently, Supercharger stations are only accessible to Tesla Model S owners. Even more, the company hasn't publicly announced any plans or partnerships to share Supercharger stations with other EVs.
In other words, Tesla's fast-growing Supercharger network currently serves as a meaningful competitive advantage for the company.
When Apple (NASDAQ:AAPL) introduced the iPhone, the company had already built the world's largest digital store. The digital store gave the new iPhone meaning. It gave it context.
Then, with millions of credit cards already on file, Apple was able to introduce the App Store to customers already buying digital products from Apple, further strengthening its ecosystem. Once just a music store, iTunes has now expanded to become the world's largest digital movie and app store too. The digital store reported a whopping $4 billion in revenue last quarter.
There's little doubt that Apple customers' intense loyalty stems at least partly from this powerful ecosystem.
Tesla is doing something similar. It's building an ecosystem of Superchargers and service centers. It's building the infrastructure needed to make EVs mainstream -- just on time, in fact, for Tesla's planned Model X launch.
Sure, competition will continue to force the company to step up its game. But investors should realize that Tesla's ambitious goals aren't just fluff. They're backed by aggressive infrastructure expansion.
And Superchargers will not just be a U.S. phenomenon. Already, Tesla has plans to cover 80% of Norway's population with Superchargers. Of course this is just the beginning of Tesla's international Supercharger rollout.
A catalyst for EVs
Sure, Tesla Motors may one day decide that the best move for the company will be to open up its Superchargers to other EVs. After all, their mission is to catalyze the entire EV market.
Though industry-wide access to Tesla's Superchargers would certainly encourage competition, it would also boost further outside investment in EV infrastructure. This, in turn, would strengthen the EV value proposition in general.
To confirm, I asked Tesla Motors about their plans to make Superchargers accessible and they assured me that they remain "open to the idea of making Superchargers accessible to others [at some point in the future]...".
In a way, Tesla is hedging its own success in four steps:
- Pioneer the EV revolution by building out infrastructure and top-notch EVs.
- Achieve scale with the help of an exclusive, superior Supercharger network.
- Open up the ecosystem to spur outside investment.
- Ride the wave of mass EV adoption.
Valuing Tesla's Superchargers
Analysts have had a blast playing with the numbers on Tesla's potential vehicle sales, but very few give the company credit for its fast-growing network of Superchargers.
What happens when Tesla Motors launches a $35,000, 200-mile-range, stylish EV in three to four years (as Tesla CEO Elon Musk has expressed to Bloomberg) with a massive network of Superchargers already in place? Likely the beginning of mainstream EV adoption.
Tesla's investment in Superchargers is what makes America's most closely followed growth stock an enduring business and not a high-flying fad.