Here's One Big Reason Tesla Still Doesn't Dominate Our Roads

We got a lot of that. By the way, Tesla owners, we can tell you love your cars. And for those of you who don't have a Tesla yet, one concern stood out. I called up one of our listeners to get a better picture. My name is Ramon Old. I am a business seannlists living in southern California. Ramon works at California State University in Long Beach. He and his girlfriend like driving out of the city into the desert near Joshua Tree. We go usually two or three times

per year, two different medeor showers. So now Ramond drives a Honda Element he brought in two thousand and seven, but he dreams of owning a Tesla. The Tesla brand is synonymous with cool for me, particularly just because I admire Elon Musk so much and SpaceX and obviously, you know, talking about the media showers earlier. Space exploration is something that is absolutely fascinating to both me and my partner.

At a starting price of thirty five thousand dollars, the Model three, the first of which just came off the assembly line this summer, is Tesla's most affordable car, and Ramont thinks he can afford it, but he has one last worry that's keeping him from pulling the trigger. I don't believe that any of the four or five weekend vacations that we've taken in the last twelve months and

I saw any charging station. Hi em Akito and I'm Pagakari, and this week Undecrypted, we're going deep into the world of electric cars and asking why, despite tremendous advances and much hype, they still haven't gone mainstream. In the US, electric vehicles still make up only one percent of new

car sales. What could finally change that is an ambitious and expensive plan that's already underway, funded by Tesla and a handful of other companies to build charging stations along America's highways, kind of like new gas stations for the electric age, so that drivers like Ramont never have to worry about running out of battery on a road trip. Tesla just announced that it's expanding its network of superchargers to not just highways and destinations, but to the center

of cities like Boston and Chicago. But will more charging points be enough to convince drivers all over the world to finally make the leap to drip cars? And what happens to companies like Tesla if after investing millions of dollars on this infrastructure, they don't sell enough cars to make up for that investment. Stay with us, all right, yea until Antony. After literally years of waiting, Elon Musk got on stage at Tesla's headquarters in Fremont, California. He

unveiled the Model three card. All right, everyone, people in the audience are the people that have designed and engineered and built the Model three. It was a big milestone for Tesla. Elon says, nearly five hundred thousand people have reserved a Tesla Model three and because it's so much cheaper than Tesla's Model s and Model X cars. It's been viewed as a potential tipping point for the entire

electric car market. Then, while he was on stage, Elon must took a moment to mention by the end of next year, there will be three times as many super charges as there are today. That should really help out a lot. Superchargers are the facilities that Tesla has built around the country so people on long drives don't run out of power in the middle. They charge your car in as little as half an hour, much more quickly than the kind of plugs you'd have at home or

at work. That's so you don't have to wait around all day at the electric equivalent of a gas station. And Elon might sound relaxed, but the need to charge up mid drive is an existential issue for the electric car industry. It's super significant and I'll tell you why it's it's um in our opinion, it's the last barrier to sales for the general consumer. That's Pat Romano. He's the CEO of a company called charge Point. Most people

don't want to worry about that. They just want to know that when they're driving along and their batteries getting low, that if they look to the left and look to the right on the highway. Over the next five or six miles, they can see something that looks like a place that they can go and get a fast charge. So if that's the general consumer sentiment, and there's nothing wrong with that sentiment, by the way, because your car should be something that is serving you and not not

the reverse. Um, what we have to do is we have to focus on planned build out of appropriate sites on highways to cover the world's corridors between metro areas before the general consumer population is going to say, look, I can make this my only vehicle. Pat's company charge Point is the world's largest network of electric charging stations. For now, most of his business comes from the long duration charging connect there's people use at home or at

work when the car has hours to charge up. Most consumers the fueling model for gas cars is so ingrained in their minds that they actually are constantly trying to frames are thinking about electric vehicles as how much range does the battery have? And it doesn't have as much range as my gas tanks, So that must be bad because I really want to go somewhere three to five days and refuel. Why do you want that shore, why

not just fuel while you're doing something else. So a lot of people who drive electric cars will tell you a version of what Pat's saying here that really, you hardly ever need to do a gas station style charge up because you completely emptied your battery. That's because there are actually dozens of charging points all around us. That's

especially true if you live in a big city. So I checked out Tesla's map of where you can charge, and I had no idea that in Manhattan, you're basically never more than a few blocks away from a parking garage that's fit it with a few Tesla connectors, so you could keep topping up your battery when you're moving around, not just when you're at home or at work, but when you go out for dinner, go shopping, go to

the cinema. I guess most people only do these long road trips a handful times a year, although I probably wouldn't fit into that category of most people. I drive hundreds of miles every weekend to get outside the city and go camping and biking and whatnot. So Pat has future customers like you in mind when he says these things. And that's why, even though his main business is in long duration charging. He's going to start building fast highway connectors.

What it does do is it enables people to buy cars um more. You know, it'll accelerate the penetration rate to vvs. And what that does for charge point is it means those cars show up at work, at home, at around town locations, and those businesses have to buy the long duration chargers, you know, the chargers that serve

the long duration parking marketer. And we're engaged with project companies right now that are looking at building out either um, significant geographic patches in the US, uh, you know, for highway transport for the entire US. So it's happening and there are going to be multi people, multiple players all vying for that. So um, that's good for consumers. By the way, it's going to give them even more options. Eventually you'll be able to go anywhere on Earth. Yeah,

so I thank you. In June, the University of Michigan published a report saying that they're about sixteen thousand public electric vehicle charging stations in the US with forty three thousand connectors. A sizeable chunk of those chargers belonged to Tesla, which just announced that it's expanding its supercharger stations to city centers so that people who don't have plugs at home or at work will still have somewhere to quickly charge their cars. The first of the urban stations launched

on Monday in Boston and Chicago. Tesla's website shows that they're about nine hundred fifty supercharger stations globally with about sixty undred connectors. The company's goal is to get that to ten thousand by the end of the year. Expanding this infrastructure is obviously a top priority for Tesla now that it's mass market car the Model three is on the market. I am Chelsea Saxton, and I am an electric vehicle consultant and advocate working in the space now

for over twenty years. Well, we do need quite a few more stations across the major highway networks, except for Tesla. I mean, Tesla does need to beef up their networks with the Model three coming in their increasing vehicle volume coming. But the main to stepancy at the moment is infrastructure for everybody else. When Chelsea talks about infrastructure for everybody else, what she means is that Tesla's network of charges is actually already pretty good, but also you can only use

it if you have a Tesla. They're actually a number of different charging connectors out there. It's sort of like how an iPhone charger doesn't really work for Android phones. The Tesla network is called Supercharger. The other connectors have names like Chattamo and J one seven seven to. A handful of third party companies are building those networks that will serve all the non Tesla electric cars. One of those players is charge Point, and we've heard from its

CEO Pat already in this episode. There's also green Lots and electrify America. Electrify America is a U S subsidiary of Volkswagen, the German car maker. It was created as part of their court settlement for cheating regulators over diesel emissions.

The big elephant home room at the moment is the Volkswagen Diesel settlement and the fact that as part of that they're spending two billion dollars through a new division College by America on agnostic infrastructure and awareness for eighties two billion dollars, that's a lot of money that could make a lot of things happen very fast. Electrify America is planning to spend its money in several phases, and it made its first round of investments this year in April.

Having the whole U S Highway system covered is probably two three years off in terms of, you know, really adequate infrastructure. Did not think about the you know, not not not have to think about you know, what are the two metro areas that I'm trying to drive between? Wow? I mean, I think if you live on the West coast, I think you're fine. And I think if you live on the East Coast, I think you'll be fine before that or northeast, I should say. But an arbitrary metro

connectivity your your a couple of years away. Once the charging network is in place, Pat thinks customers will be a lot less worried about another fear around electric cause, and that's something known as range anxiety. A lot of people, including Raman who you heard from earlier, want to know that they can travel very long distances on a single charge. You don't need four or five six miles of range in a vehicle. That's actually overkill with respect to that.

And I think that that need is going to subside when people see fast chargers at appropriate intervals on the highway above a hundred and fifty or two hundreds, they start to realize, Yeah, I'm largely carrying around a battery back. I don't use that often. Of course, it costs a lot of money in solving thousands of these charging connectors. It's one thing for a group like Electrify America, which is getting its funds from the v W settlements, But

what about Tesla. Some investors might question the wisdom of an already heavily indebted electric car maker spending big on a whole new project. One day this summer, I took a trip down to a Tesla supercharger near New York's JFK Airport. The connectors were in the back corner of a parking lot. The plugs are stationed at the end of a regular parking bay, so you'd reverse into the spot and then take out the plug. The plug hooks into the back of the car near the tail lights.

I should say I hung out at the parking lot for a couple of hours, and nobody pulled in to charge up. When the whole point of your trip is to go and talk to owners of these Tesla's. Yeah, my takeaway was that I was probably a bit too close to the city. Drivers have so many other places to top up that they probably only need a supercharger when they're in a more remote place. Yeah, going to these superchargers is not like going to a regular old

gas station. Rather than standing next to your car like you would when you're filling up gas, most Tesla owners plug in their cars and then leave them there for like twenty thirty minutes. You want to be able to go get a coffee, use the restroom, maybe run an errand um. I mean at one point I stopped and I was charging the car, and I think I went outlet shopping and an ant Taylor, which was very convenient

for me. That's our colleague Dana Hull, who covers Tesla and SpaceX for Bloomberg, and not long ago, Tesla loaned her a car and she took it out for a short vacation. You know, when I have pulled into Tesla's either supercharger or the destination charger, you know, chances are there's another Tesla there, or as you're getting ready to leave, another Tesla might be pulling up, and so you have this kind of social connection. It's almost like going to a dog park. If you're a dog owner, you quickly

get to know all of the other dog owners. You child chat about your dogs. The same thing happens at a Tesla supercharging or destination charging station. You start to chat about your vehicle and over the over the air software updates and you know what is Elon Musk doing next, and um, it's It's just it's different. Building a charging network that covers the whole country, eventually the whole world is a business imperative for Tesla. This is key to

Tesla's whole business model. Because the Model three is their mass market car. They're going to have a huge volume of cars coming onto the roads within the next couple of years, and in order to meet that demand, they absolutely need to have a charging infrastructure in place. Making a viable business out of Tesla over the long term will depend on making the Model three a success. And it's clear that Tesla is already at its charging capacity.

In some parts of the network, there really is a congestion issue, particularly in California, which is Tesla's home state, and on certain routes like the route between San Francisco and Los Angeles, for example. You know, on the weekends, road trippers, Friday night people go back and forth, and you might go into a supercharger on Interstate five where there might be eight spots for eight different cars, and there could be a line of people actually waiting. There's

no two ways about it. Expanding the super charge and network is going to be expensive, and a lot of investors are already nervous about how much money Tesla is burning through. Remember, investing in new charging stations is just one of the many big, expensive projects that Tesla is overseeing. For the last several years, Tesla has been constructing the largest factory on Earth, called the Giga Factory, where all

its batteries will eventually be made. They also merged with Solar City in November, taking on a lot of debt that the rooftop solar company had on its books. Tesla continues to go back to the capital markets in the bond market to raise money to kind of fuel the Model three and the expansion of both charging and service. So they are definitely spending, you know, millions to kind of expand this network, but I see it as really being first mover advantage and really kind of cementing their brand.

The brand and the minds of the public. Despite all the money that Tesla and others are investing, it's not clear at this stage how much revenue electric vehicle charging will generate. So while Tesla is pouring millions of dollars into building more superchargers, it's an investment that will really come back to them once they start selling more cars.

For a while, it was free for Tesla drivers to charge up, but at the beginning of this year, the company implemented a new policy where if you exceed the equivalent of about one thousand miles, you have to start

paying a nominal fee. Most of the people I spoke to think we'll end up with some kind of a pass, something similar to the data plan that comes with your cell phone, that gives drivers access to the charging network, and if you're really organized, you may never have to stop at a supercharger at all unless you're driving a long distance. Tesla has also developed something called destination charging. It's another little known but important piece of Tesla's business model.

This is where Tesla makes its charging connectors available to hotels, wineries, places where Tesla owners might like to go on vacation. I talked to a man who lives in Salt Spring Island in Canada, and he regularly drives from Canada all the way to Montana and back. Um. I mean, there are a lot of a lot of Tesla owners who road trips is a big part of their life. It's a big part of why they bought an electric car, and they will as they plan their route, they will

plan it around their charging. And this holds true in even more remote places. Dana had a chance to test this herself actually in Yosemite. The i Wanne Hotel has a destination charger. So this was fantastic because we were going to be, you know, in a fairly remote place in the mountains, far away from any highway where there would be a supercharger. And yet I could plan this Yosemite vacation with my family knowing that I could charge

the Tesla overnight. Eventually, as electric cars come to account for a bigger and bigger slice of the car market, and we should say that's still quite some ways off, utilities will have to think about how a new generation of electric cars will affect the national grid. See e V batteries are big and could add up to a lot of extra burden if hundreds of thousands of them are all plugged in and charging at the same time.

If done haphazardly with no coordination with utilities at scale, it is actually a very difficult problem for the grid. This is pat Romano from charge point again. If done with reasonably, you know, very practical, very simple things, in coordination with the grid, it actually helps the grid. Utility networks in all countries right now are a sort of peak demand oriented. They have to be engineered for peak demand.

Just explain what pat means here. The grid is set up in a way that means it can only handle a certain amount of demand at a time. If one building decides to turn its air conditioning on and that exceeds the generation capacity at that moment, it could bring the whole grid down. So for now, the ideal time to charge electric cars is at night, when skyscrapers have

their lights off and electricity demand is generally low. But there's a chance that equation could change if renewable energy like solar and winds start to play a more important part in our energy mix. Because our grid is built to deliver electricity instantly, we don't have a lot of infrastructure in place to store energy that we can use later, So we could be in a situation where there's too much electricity being generated during the day when the sun

is out. So what that means is you want cars plugged in at work all day long, and you want to potentially in the long term, plugged in at home so that opportunistically the rate of charge into the car can be managed by the utility. So when the sun is burning bright and solar is providing an abundance of energy, it's a great time to charge vehicles. In fact, in many cases they're paying people to take load right now.

So there's a lot of really interesting debates within the industry going on about vehicle to grid so that potentially the cars could act to sort of mobile storage units and send electricity back to the grid. We're not really at the at the point yet where that's become an issue or where that's happening in practice, but it's something that people are seeing as a potential synergy that could really help manage these load issues that utility operators and

grid operators are always struggling with. So of course the big question is whether having more charges around will mean that people start buying more electric cars. I tested this out with Ramon Vivero. He's the listener from southern California who we heard from at the start. In the beginning, Ramon was kind of skeptical. He told me he lives in an apartment where he couldn't install an electric charging connector. He was also worried about taking an electric vehicle on

a road trip to Palm Springs. But I actually looked online and there are places Ramon could stop to charge on the way. So I asked him if that made him feel different. I'm very impressed. I didn't think that they would be at this point for another year or two. Um, so conceivably with only a thirty minute detour, you can go four miles. I mean, that's Los Angeles to Vegas, seems we I mean obviously, once we have the hyperlips, that's entirely different. UM. Waiting on that. And that's it

for this week's episode of Decrypted. Thanks for listening. Do you have an electric car or are you thinking about getting one? We'd love to hear your story. Get in touch at Decrypted at Bloomberg dot net or I'm on Twitter at pa Gadkari and I'm at aki Eto seven. If you haven't already subscribed to our show wherever you get your podcasts, and while you're there, please leave us

a rating and a review. I read each and every single one of these, and it goes such a long way to get the show in front of more listeners. This episode was produced by Liz Smith and Magnus Hendrickson. A very special thanks to Dana Hull for all her guidance and expertise on this topic, and to Isabel Gottlieb who helped with research for today's episode. We'll see you next week.