Published on March 11th, 2019 | by Frugal Moogal0
Revisiting My Thoughts On The Tesla Store Announcement & V3 Supercharging
March 11th, 2019 by Frugal Moogal
The goal of this series is to examine current topics being written about Tesla [TSLA] that appear to be stirring up “Fear, Uncertainty, and Doubt” (or FUD). The plan is to try to provide reasonable analysis about the validity of the claims. I generally do not link to the articles that “inspire” me to write this, as I do not wish to reward analysis I feel is poor with increased traffic. However, I will freely admit that my analysis may contain incorrect assumptions, and will do my best to acknowledge them in future articles.
Reading the comments from my recent Tesla FUD article, I felt the need to reply to some of them. Instead of trying to reply to a million different people, I thought I’d write a second article addressing various points that people made, especially because I was called out for being wrong … and I was! No need to bury that.
(Disclosure: Yes, I still have 8 shares. Not selling them. And I still wouldn’t take this as stock advice.)
Alright, let’s dive in…
On Spiking the Stock
I discussed my theory that Tesla was attempting to spike its share price the day before the company had to repay its $920 convertible senior notes. It was pointed out in the comments by a number of people that the conversion was already settled and couldn’t be in shares even if the stock did momentarily spike.
After researching this a bit more, I saw they were correct and I was wrong. Even had the stock price spiked, Tesla could not have paid off the notes using stock.
Which makes the announcement even more confusing to me. I don’t understand why all the announcements were piled up like they were. A simpler announcement of the store closings with actual reasoning behind it, followed by the announcement a week later that the $35,000 Model 3 was available to purchase, would have allowed Tesla’s PR team to spin the situation better. Store closings could have been communicated as an extra cost that was determined to be less helpful to the bottom line than Tesla had thought. Pundits could have debated if the move made sense or not.
Then, a week later, Tesla could have announced that, due to the savings that it has found, it’s able to begin delivering the $35,000 Model 3.
In my prior article’s comment section, Ken Cova noted that Tesla needs to get its PR and communications act together, and I agree. I’m not asking them to lie, or relentlessly spin, but a step back to think about how to best communicate things would sure have made this seem less like bear fodder and more like a strategy. It did — or does — appear that Tesla is flailing, and for that I do blame Tesla.
Ultimately, if the notes weren’t a factor, I feel the way this announcement was made is even worse than I spelled out in my original article. To be clear, I don’t believe that it was a panicked reaction to anything on Tesla’s part, just a poor decision to roll out the announcements in such a fashion and with so little explanation.
On Supercharger V3
A number of people pointed out that the Supercharger V3 rates that I mentioned were not really accurate because the charge doesn’t stay at 1000 mph for too long. I even had one commenter who said that I took others to task for writing FUD articles but then turned around and spread misinformation on Supercharger V3 by comparing it to refueling a gas car, noting that gas pumps do 150 miles in less than 1 minute.
Second ding on me — I admit I wasn’t very clear, but I also didn’t feel the need to go into a big gas pump exploration. Apparently I do, so let’s go!
First: gas pumps. Gas pumps pump at different rates, but it seems to generally be settled that most do about 6 gallons per minute in the US. Assuming a 25 mpg or greater average for the vehicle being refueled, that does give you an “charge rate” of 150 miles or more in one single minute! Pumping 12–15 gallons of gas should only take 2–2.5 minutes, right?
Nope. Pumping gas takes more than just the liquid flowing from one place to another. Assuming you pay at the pump, you still need to swipe your card, punch in your zip code, and wait for approval. For Tesla, the payment method is built into the Supercharger network, eliminating this step. You’ve also got to open up the gas tank itself, and then screw it shut when you’re done.
Overall, I think it’s pretty fair to estimate that an average fill-up for a normal gas car from the point that the car is shut off and ready to fuel to the point it is ready to start is around 5 minutes.
Clearly, the Supercharger V3 is significantly slower than that.
But wait — I’m going to mostly ignore the whole “you do most of your charging at home” argument, even though it is a completely fair point. My Model 3 has been driven nearly 9000 miles in less than six months. It’s been Supercharged four times. But home charging does little to help on road trips, which is the problem many ICE owners raise with charge times.
I’m not going to dismiss, however, the notion that you need to Supercharge to 100%, which seems to be a huge part of the argument over slow charge rates. In my four Supercharger trips, I have never charged more than 20 minutes, except once when my family and I went into a restaurant to eat. Even that time, I didn’t depart with a 100% charge.
Instead, I’m going to assume that I need to charge enough to get to the next place I need to get to with a little bit of buffer — whether that next place is another Supercharger or my destination.
I am also going to note that when you are on a road trip, after three or more hours of driving, you almost never just buy fuel and leave, you also stop to use the restroom. If you simply add five more minutes to your refueling for your bathroom break, you’ve now spent ten minutes for each gas station stop.
I did WAY too much math with this and will break it down in another article soon, but here’s a spoiler for the conclusion of that future article: Assuming V3 charging speeds, using Dr. Maximilian Holland’s charts, a trip from Chicago to Orlando in my long range, AWD Model 3 would take a total of 20 minutes more than a comparable gas car, assuming each time I stopped for gas in an ICE car I would also use the restroom.
This does assume that I took a break halfway (another spoiler: at the Holiday Inn Express & Suites Chattanooga-Hixson, which has destination charging … and a pool!), as I have no interest in driving 16+ hours in a day in any car.
Using the Supercharger V2 network, the difference in refueling between a Tesla and a gas car is slightly more than an hour, and that assumes I never have to split a Supercharger V2 charge rate. In the worse case scenario, a Supercharger V2 trip is an additional 3 hours.
Cutting two-thirds off the best-case scenario should be a big deal.
It’s not because of how complex it is to understand its impact, and since Tesla can’t just flip a switch and have all the Superchargers turn from V2 to V3, this completely blunts the impact of the Supercharger V3 announcement. And, unfortunately, because the rollout of Supercharger V3 will be incremental, the advancement will never stand out as much as I feel it should.
I was wrong about Tesla attempting to spike its stock price to pay off the $920 million convertible senior notes. As users pointed out, this was not the case, and I missed it.
To me, this makes Tesla’s $35,000 Model 3 announcement and subsequent store closing announcement even more bewildering. I can’t pretend that announcement, which should have been seen as a reason for celebration, was done in such a way to make it so easy for the market to question.
On the flip side, I feel that Supercharger V3 is a big deal, with implications much larger than what people realize. As I mentioned, I’ll be breaking that down in another article soon, and I contend that with reasonable assumptions for refueling a gasoline car at a gas station, V3 has the ability to make charge times roughly comparable to a gas car.
I’ll be back soon with a ton of math to prove it!