Tesla Motors' (NASDAQ:TSLA) growing network of fast charging stations has made it possible to take a Model S across the country and back with little more than half-hour stops to top off on electricity. But The Wall Street Journal recently reported that these charging stations are starting to see long lines as Model S owners in urban areas use them to power daily driving.
Never mind that Tesla designed the supercharger stations for long trips, not daily commutes -- they're popular, and people are using them. That's good news, but it highlights a challenge Tesla could face in keeping drivers charged up long-term.
Not all chargers are created equal
In the growing electric vehicle industry, there hasn't been a lot of agreement on what plug to use for the fast charging Tesla owners are enjoying. The CHAdeMO standard is generally preferred by Japanese and Korean manufacturers like Nissan, Kia, and Mitsubishi. BMW and Volkswagen are pushing for SAE or CCS standard. Then there's Tesla Motors with its proprietary charger.
With automakers fighting over standards, Elon Musk opened up charging patents that would allow competitors to use Tesla's technology and give an incentive for them to adopt its charging platform. If they didn't, he would be isolated against literally everyone else in the auto industry in an effort to create a standard.
If some recently announced "Express Charging Corridors" are any indication, automakers are reaching an agreement on how to proceed with different fast charging standards. The problem is, they don't include Tesla or its open-source patents.
The dual standard design is winning
ChargePoint, one of the largest charging station networks in the country, recently agreed to build dual charging stations that will include both CHAdeMO and CCS standards. It appears automakers have agreed on this compromise for now in an effort to grow electric vehicle adoption.
But it's very notable that they aren't going with Tesla Motors' charging technology, meaning Tesla's Supercharger network will still be only for Tesla owners, and the growing network of non-Tesla superchargers will leave Tesla out. This is important because building a critical mass in the charging network will help grow adoption, but if it's on a different standard, it can leave Tesla owners out of the mix, meaning Tesla can't easily leverage others to make long range possible for its drivers.
Owners can use some of the chargers because Tesla does sell a CHAdeMO adapter for $450, but losing the standards battle will put Tesla in a challenging position for the long term. Does Musk adapt to someone else's standard, or build thousands of proprietary chargers all on his own?
Standards battles are a challenge for Tesla Motors
As more and more electric vehicles are sold without Tesla Motors' charging technology, it will put Tesla Motors more and more on an island with its Superchargers. That's not a huge deal today, because fast-charging networks are fairly small, and Tesla is selling about one in every five EVs in the U.S. right now.
But competitors like BMW, VW, and GM are coming with better and more affordable EVs, and the charging networks their partners are building are growing as well. Even as abundant as electricity is, three charging standards can't survive, and in a decade, there will likely only be one.
Being on a proprietary island isn't where Tesla Motors wants to be long term, and that's a big challenge to its Supercharger network, which won't be a competitive advantage for long.