A Leader Amongst Followers

When we hear the name Tesla, right or wrong, we immediately think about the brand that began the Electric Vehicle (EV) revolution. Since its first production EV, the Tesla Roadster in 2008, Tesla has led the way in passenger EVs, establishing somewhat of a unicorn status in the EV world. While others were still talking, or even just thinking, about EV production, Tesla was well on its way to reaching global dominance in the EV market – the Model 3 became the first EV to reach 1 million units sold globally in June 2021, and the company temporarily reached a market cap of $1 trillion in October 2021.

Hot on the heels of the first mass production EV, the Model S, Tesla solidified its status by introducing the Supercharger network in September 2012 with six sites in California, Nevada, and Arizona. Tesla now operates a network of almost 2,300 Supercharger stations in the US, with just over 25,000 connectors. Globally this number stands at just shy of 6,000 Superchargers, with close to 50,000 connectors.

This is in addition to the slower Tesla branded ‘Destination Chargers’, aimed at locations where drivers may be parked for several hours, e.g., restaurants, hotels, shopping centers, and are owned and operated by the property owners.

But even with this current position of dominance in the EV charging world, will Tesla be able to maintain their lead as more and more charging networks are coming online, and charging station hosts have more choices available to them?

The most recent news around the termination of the entire Tesla Supercharger team has everyone talking about whether this implies a slowdown in the rollout of Superchargers, or a change in strategy to introduce something even better than the existing network, or just Musk being Musk. The true thought process behind this decision, and its consequences, remain to be seen, but rest assured, Superchargers are not going away anytime soon.

 

Charger Deployment Models – Who Makes the Investment, Who Takes the Risk?

Deployment of chargers can be categorized into three models:

1. Host Owned and Operated – High investment, high risk for the host. They are 100% responsible for costs related to charger installation and operation, but also reap all the rewards from setting prices, managing the customer journey, and promoting loyalty.
2. EV Supply Equipment (EVSE) Provider Owned and Operated – Low investment, low risk for the host. The EVSE provider bears all the costs and manages the chargers, and also owns all the customer data. The host benefits from cross shop but doesn’t always have visibility of its extent.
3. Hybrid of the Two Models – This could be any combination of the above two options where risk and reward are shared.

Each model has its benefits and drawbacks, and the model that is used for deployment will depend on several factors including revenue strategy, risk profile, branding and loyalty requirements, and incentives available.

 

Increased Choice Brings Increased Competition

Over the last several years we have seen a whole host of EV Charger (EVC) networks materialize. These charger networks are no longer just being developed and branded by the traditional EVC network providers, such as ChargePoint, Electrify America, Blink, EVgo, Flo, and of course Tesla, among others. Many are being white-labeled and host-branded, e.g., 7Charge, BP Pulse, Circle K Charge.

However, the biggest disruptors are networks being developed by major automakers, such as Mercedes or IONNA – a collaboration between seven Original Equipment Manufacturers (OEMs), modeled on the successful IONITY network in Europe.

Historically, having Tesla chargers on location was one of the only ways to guarantee higher rates of utilization (because of Tesla’s EV market share), and hence was the most attractive prospect for hosts. But with Tesla’s North American Charging Standard (NACS) connectors now rapidly becoming available on pretty much all new DC Fast Charger networks, as well as Tesla Superchargers being made available to other EVs, the lines of who charges where are now blurring. Sharing the network and charging ability could mean that Tesla’s days of being the unicorn in EV charging may be coming to an end.

So, what does this mean for EVC hosts?

 

EV’s Future Borrows from Oil’s Past

Just as with fuel, where dealers and jobbers have a choice of which major oil brands’ “flag” to fly with many moving from one major brand to another as their contracts come up for renewal, could we start to see the same activity with EVC brands?

Oil Majors have always sold themselves on the service that they offer to the dealers, above and beyond the brand, including marketing support, product supply (outside and inside the store), business expertise, savings on additional services, etc. This “blend” of services enables them to compete with other Oil Majors vying for the same dealers’ business, with a goal to increase their footprint and the distribution of their products.

Tesla is just one of several brands of EVC networks from which retail hosts can select. Not just Tesla, but all the major EVC brands are to retailers what Oil Majors are to dealers, with one key difference – their branding generally stops at the charger without extending into the retail site itself nor into any of the associated marketing, business expertise, and savings on services.

Tesla’s model has always involved building their own locations and/or partnering with both short- and long-stay Points of Interest (POI) to lease the land on which chargers are deployed, allowing them to always maintain control. Where leased, the terms have varied, assumingly based on the value that each host location brings to Tesla vs. the value Tesla believes it brings to the host. However, all of the information on the driver, visits to the location, and transition into the store has typically remained closely guarded by Tesla.

While we are starting to notice a shift in the sharing of information, there is more to be done. In order to remain an attractive and competitive proposition for the host, and ensure success, just as with the Oil Majors, any EVC provider needs to make sure they are offering the best terms to hosts compared to what is being provided by other EVC networks, including more to support the cross shop.

 

Will the Unicorn Live On?

While Tesla’s last quarters’ result fell short of the market expectations, and with Tesla beginning to face more competition in the evolving EV and EVC market, Musk doesn’t seem too worried about where Tesla’s future is headed. The most recent cuts of the 500-person strong Supercharger team may have created concern within the market, but the message remains that “Tesla still plans to grow the Supercharger network, just at a slower pace.”

Will the unicorn maintain its position for a little longer? Only time will tell!

But one thing is certain…those building an EV charger deployment strategy must keep their eye on the changing EV charger marketplace. While knowing which 3rd-party brand to leverage in building a consumer offer can be challenging, recent developments may prove it worthwhile to re-think the approach. EVC competition is high, stay ahead of the game!