To support the goal of transitioning the world from fossil fuel to clean energy, Tesla (NASDAQ:TSLA) has been building a network of infrastructure that spans all over the world.
This network of infrastructure is made up of buildings and vehicles, including the supercharger stations, mobile service vehicles as well as stores and services locations that work tirelessly for the company.
Moreover, these properties also provide the company with a competitive advantage that is hard to replicate as it takes years as well as immersed resources to build.
In addition, Tesla’s businesses will not function properly without these infrastructures. Therefore, the analysis of the growth of these assets will give investors and analysts a glimpse of the health of Tesla’s business operations.
In this article, we will look at the numbers of these infrastructures and track the growth of these assets that primarily consist of supercharger stations, mobile service vehicles and stores and services locations.
Let’s take a look!
Tesla’s Supercharger Stations
Average quarterly growth rate => 7.9%
To remove the general perception that electric vehicles are typically having limited travel distance, Tesla has built a network of charging infrastructure referred to as Supercharger stations.
These Supercharger stations are built to provide fast charging to enable long-distance travel and to encourage the broad adoption of electric vehicles.
According to Tesla, they are built with an industrial-grade high-speed charger designed specifically to recharge a Tesla electric vehicle at a significant speed faster than other charging options.
For instance, Tesla Superchargers can replenish half the battery in as little as 20 minutes. Besides, Tesla has a growing network of Destination Charging partners – including hotels, restaurants, resorts, and Airbnb locations. The use of the Supercharger network is either free or requires a small fee.
A typical Supercharger station is equipped with six to twenty electric outlets and is strategically located along well-traveled routes to allow electric vehicle owners the ability to enjoy long-distance travel with convenience and minimal stops.
When we look at the chart above, the number of Tesla’s Supercharger stations has grown dramatically in the last 5 years.
Between 2016 and 2020, Tesla has more than tripled the number of Supercharger stations worldwide, growing from only 700 stations in 3Q16 to nearly 2600 stations by 4Q20.
Tesla has been adding this important asset from quarter to quarter, suggesting that the expansion of a network of Supercharging infrastructure is crucial for the broad adoption of electric vehicles.
This unique asset is hard to replicate and require huge upfront capital outlay.
Over the chart, we can see that the growth of the Supercharger stations was especially significant in 2020 Q4, hitting a record high at 2564 units.
In short, the continuous growth of the supercharging infrastructure all these years suggests that Tesla’s business operation has also been growing healthily and may even be accelerating at a much faster pace in the foreseeable future.
Tesla’s Mobile Service Fleet
Average quarterly growth rate => 17.4%
Tesla launched the Mobile Service fleet to create the best car ownership experience for its customers.
The biggest advantage of the Mobile Service fleet is that Tesla’s customers are not required to come to Tesla service centers to service their vehicles.
In North America alone, Mobile Service is now completing a substantial number of all service jobs, allowing its customers to never have to leave their homes or offices to get their cars serviced.
According to Tesla, the Mobile Service fleet has achieved a great deal of customer satisfaction because of its convenience and lower cost of service compared to its service centers.
Tesla will continue to increase its service capacity especially during the period of Model 3 and Model Y ramp up.
As the chart above shows, the Mobile Service fleet has increased tremendously from only 100 vehicles in 2Q17 to more than 800 vehicles as of 2020 4Q, representing a growth rate of more than 800% over the past 3 years.
Similarly, the growth of the Mobile Service fleet has been unstoppable year over year and quarter over quarter, suggesting that this infrastructure is crucial for Tesla’s domination in the all-electric vehicle race.
While Tesla may have been relentlessly growing its Mobile Service fleet in the past 4 years, the growth has sort of slowed down in 2020, as seen from the flattening curve in the chart.
However, the growth of Tesla’s Mobile Service fleet made a roaring comeback in 4Q 2020 when the company managed to increase the vehicles to 823 in the same quarter, representing a growth of 11% year on year or 6% sequentially.
Again, the incredible growth of this valuable asset will provide Tesla with a competitive edge over its competitors as these are hard to replicate properties that require a huge upfront investment.
Tesla’s Stores and Service Locations Worldwide
Average quarterly growth rate => 4.5%
Tesla opens its stores and service locations in highly visible, premium outlets in major metropolitan markets.
All these stores are owned and operated by Tesla. There are no third-party vendors involved in Tesla sales and marketing.
The reason is that the company wants to have better control of inventory, manage warranty services and pricing, maintain and strengthen the Tesla brand and more importantly, having faster customer feedback.
According to Tesla, opening a new store and service center in a new geographic area boost demand for its products.
Tesla is rapidly increasing its retail footprint by having more stores and service outlets.
In addition, Tesla combines these facilities with sales and personnel in service centers and refers to them as “Service Plus” locations.
Despite the importance of opening new stores and service locations, the average quarterly growth rate has only been 4.5% for the past 18 quarters as shown in the chart above.
Tesla may have slowed down in recent years in opening new stores and service locations as the services provided by these stores can possibly overlap with the one provided by the Mobile Service fleet.
Besides, maintaining new stores and services locations requires huge working capital and take resources out of the company.
Tesla has been quite conservative in preserving capital and has switched to online booking in recent years.
As such, the growth rate of new store opening has only been 4.5% on average as of 4Q20 due to the huge capital as well as massive operating cost requirement for such a venture.
Despite the slow down in new stores and service location openings, Tesla still operates 523 stores and services locations globally as of 2020 4Q.
In conclusion, the Mobile Service fleet has the highest average growth rate at around 17% whereas the new stores and services location openings have averaged the lowest at only 4.5%.
One notable explanation for the Mobile Service fleet having the highest growth rate is that it probably gives a higher return on invested capital.
For perspective, the Mobile Service fleet is easier to maintain and requires less capital to operate but covers a greater area compared to a store and services center which is usually fixed to a certain location.
More importantly, according to Tesla, the Mobile Service fleet gives better customer satisfaction in terms of flexibility and cost.
For this reason, Tesla has taken some of the physical store sales to online ordering as discussed in this article: Tesla will close most of its stores and only sell cars online, which means that Tesla will most likely further slow down the opening of physical stores in the future.
Besides, we are seeing positive growth rates across all infrastructures in 2020 Q4 and the result shows that Tesla’s growth train is still chugging along healthily.
In short, Tesla’s infrastructure expansion is crucial for the future growth of the company.
The Supercharging stations, Mobile Service vehicles as well as stores and service locations are all important assets that Tesla can’t do without.
References and Credits
1. All numbers in the charts in this article were obtained and referenced from Tesla Quarterly and Annual Reports.
2. Tesla supercharger detailed info: Tesla charging infrastructure.
3. Featured images in this article are used under creative commons license and sourced from the following websites: Ed Uthman
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