In just over two weeks, electric-car maker Tesla Motors (NASDAQ:TSLA) will unveil its $35,000 Model 3. While still at a premium price point, $35,000 is a serious haircut from the $70,000 and $80,000 starting prices of its Model S and X. While some Model 3 cost savings will come from the vehicle's smaller size, and possibly a steel body construction versus the aluminum body of Tesla's S and X, it's also expected that the company could try to save money in other areas. Could one of the ways Tesla cuts costs for Model 3 be choosing to make buyers pay for Supercharging?
What is Tesla's Supercharger network?
For those unfamiliar with Tesla's charging network, here's a quick overview.
Superchargers are fast charging connections, delivering up to 120 kilowatts of direct current power to Tesla vehicles. Each location includes a handful of Supercharger connections. Locations are strategically placed on major routes for long-distance travel in the U.S., Western Europe, Australia, and -- increasingly -- China.
Tesla's Supercharger network is currently made up of 604 locations and 3,542 Superchargers.
Tesla owners can stop for about 30 minutes to charge at Supercharger locations when driving long distances, or charge at home every night when driving locally.
A look at the way Tesla has historically approached offering Supercharging to customers suggests there's definitely a possibility the company may require payment from Model 3 buyers to get access to the robust network.
If Tesla does decide to require Model 3 buyers to pay a fee to Supercharge, it wouldn't be the first time Tesla has done this. Indeed, just last year, Tesla required an upfront payment from some customers to get access to its Supercharger network. Initially, buyers of Tesla's entry-level Model S, which had a 60 kWh battery, were required to pay $2,000 to get access to the company's Supercharger network. Supercharging was only included standard with a purchase of its larger 85 kWh model.
However, this changed when Tesla introduced its 70 kWh version of Model S in the first half of 2015 and simultaneously discontinued the 60 kWh model. The beefed-up, entry-level model included access to Tesla's Supercharger network.
Paying for Supercharging
Tesla definitely has good reason to charge for use of its network -- at least until competitors catch up with fast-charging networks. Currently, Tesla's network of 120 kW chargers is unmatched. Not only is it the only charging network that can charge an electric vehicle about 170 miles in just 30 minutes, but the network is also the only one that makes long-distance travel nearly as convenient as traveling in a gas-powered vehicle.
There's still a chance, of course, that Tesla could continue to offer free charging even for Model 3. After all, Tesla includes the cost of operating its Superchargers under its cost of goods sold and asserts the cost is "immaterial." But given how fast the company is anticipating to grow, collecting payment could help fund further expansion of the network, which would benefit both initial Model 3 buyers and future Tesla owners further into the future.
Of course, Tesla's decision to require payment from Model 3 buyers to get access to the company's Supercharger network may ultimately come down to whether or not it is economical or not for the company to sell the vehicle at a $35,000 price point while offering free charging.
Tesla may not say whether Supercharging for Model 3 will be free or not at the company's event on March 31. With the vehicle scheduled to begin production in late 2017, the unveiling this month may only focus on the design of the vehicle. Indeed, Tesla waited until just months before the launch of its Model X to finally say whether charging would be included standard for the vehicle. The automaker may opt to do the same for its Model 3.