One of the biggest questions heading into Tesla's (NASDAQ:TSLA) Model 3 event last week was whether or not the company would include supercharging capability for free or if it would be an added option.
I figured that Tesla would charge extra for it, in order to help fund supercharger infrastructure expansion while also limiting congestion. At the same time, it also wouldn't make sense to charge the same price as it previously cost to enable supercharging on older Model S vehicles. It seemed like $1,000 to $1,500 seemed reasonable.
Elon Musk had seemingly answered this question during the unveiling. But it turns out he didn't.
That's what he said
At the event, Musk said, "With respect to supercharging, all Model 3s will come with supercharging standard." But Musk didn't elaborate beyond that.
After the Model 3 site went live, Tesla almost immediately adjusted the language and added "capable" to the description, suggesting that that it may not be standard. I reached out to Tesla to clarify, and spokeswoman Alexis Georgeson responded in an emailed statement to The Motley Fool:
All Model 3 will have the capability for Supercharging. We haven't specified (and aren't right now) whether supercharging will be free.
So it seems that what Musk was referring to was that all Model 3 cars will have the necessary supercharging hardware standard, but it may or may not be enabled by default.
Why Tesla will still probably charge extra
As Tesla considers how to proceed, it's very likely that the sheer number of Model 3 reservations that the company has gathered thus far will probably push the company toward charging extra for the option.
There are a few reasons why. First off, aforementioned congestion concerns at superchargers are particularly potent when you consider how many people have already reserved (nearly 300,000) the vehicle. Tesla plans to double worldwide Superchargers to about 7,200 by the end of next year, but we're still talking about a lot of cars hitting the road. At least, if Tesla can successfully ramp production, which will be no small task in itself.
Considering the value that supercharging brings, it's also a justifiable option from the consumer perspective. Plenty of people would opt to enable supercharging. At the same time, consumers that only drive locally could save by choosing not to enable it. There are some other possible pricing structures that Tesla community members have discussed, such as pay-per-use or time-limited models, but it may not be worth the trouble to implement payment systems. The simplest route would be to charge a flat fee for lifetime supercharging.
The massive reservation tally also shows that Tesla would be leaving an awful lot of money on the table by not charging for it. Supercharging is an extremely valuable service, and while cost was built into the higher-priced Model S, the Model 3 ramp will be quite different. Frankly, Tesla itself doesn't even know quite yet how the cost curve will play out since it's still too early.
Evan Niu, CFA owns shares of Tesla Motors, and has the following options: long January 2018 $180 calls on Tesla Motors. The Motley Fool owns shares of and recommends 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.