Tesla has been building a network of infrastructure that mainly consists of supercharger stations, mobile service vehicles and stores and services locations. They are the most important assets for Tesla. From analyzing the growth of these infrastructures, Tesla’s investors can find out whether the company is growing or shrinking.
With that in context, most investors want to see these assets growing at a meaningful rate as they provide Tesla with competitive advantage over its competitors. Any sign of slowing or stagnant growth in one of these assets may point to a poor business environment and fierce competition that is eating away Tesla’s sales.
To recap, here is a list of the assets that make up Tesla crucial infrastructure:
- Supercharger stations
- Mobile service vehicles/fleets
- New stores and service locations
Tesla Supercharger Stations
Average growth rate for Supercharger Stations from quarter to quarter => 7%
Tesla has built a network of charging stations around the world referred to as Supercharger network. These Supercharger stations are industrial grade high speed charger designed 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 Supercharger network is either free or require a small fee.
In order to remove the general perception that electric vehicles are typically having limited travel distance, the Supercharger network is built to provide fast charging to enable long-distance travel and to encourage the broad adoption of electric vehicles.
A typical Supercharger station is equipped with six to twenty electric outlets and is strategically located along well-traveled routes to allow electric vehicles owners the ability to enjoy long distance travel with convenient and minimal stops.
As seen from the chart above, Tesla supercharger station has been growing at a substantial rate. From a spreadsheet calculation which i did not show here, the average quarterly growth rate for the past 13 quarters is around 7%. By the end of 3Q19, Tesla network of Supercharging infrastructure has numbered more than 1600 stations.
Tesla Mobile Service Vehicles
Average growth rate for Mobile Service fleet from quarter to quarter => 26%
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 customers are not required to come to Tesla service centers to service their vehicles. In North America alone, Mobile Service is now completing 30% of all service jobs, allowing its customers to never have to leave their homes or offices to get their cars serviced.
According to Tesla, Mobile Service has achieved customer satisfaction that averages 98% because of its convenience and lower cost of servicing 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, Mobile Service fleet has increased tremendously from a mere 100 vehicles in 2Q17 to over 700 vehicles in 3Q19.
The average quarterly growth rate of Mobile Service fleet is more than 25%. The double digit growth rate has shown that Tesla is serious in expanding this vital infrastructure for future growth.
Tesla New Stores and Service Locations Worldwide
Average growth rate for new stores and service locations from quarter to quarter => 4%
Tesla opens its stores and service locations in highly visible, premium outlets in major metropolitan markets. All these stores are owned 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 cost 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 refer them as “Service Plus” locations.
In spike of the importance of opening new stores and service locations, the average growth rate has been only 4% for the past 13 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 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 in recent years. As such, the growth rate of new stores opening has slowed to only 4% in average as of 3Q19.
New stores and service locations growth have been slowing down as seen from the average growth rate of only 4%.
On the other hand, mobile service fleets are actually growing exponentially. The average growth rate for mobile service fleets is more than 25% in average for the past 13 quarters.
The trend discussed above is actually expected as Tesla has intended to reduce the number of stores and service locations in favor of mobile service fleet. The reason for doing this is to reduce operating cost of maintaining stores and service locations. I believe that the cost of maintaining a mobile service fleet should be considerably lower. Besides, the company has taken some of the physical store sales to online ordering as shown in this article: Tesla will close most of its stores and only sell cars online.
Moreover, according to Tesla, mobile service fleets are creating better customer experience of owning a Tesla vehicle.
Nevertheless, Tesla infrastructure expansion is crucial for the future growth of the company. The charging stations, mobile service vehicles and stores and service locations are all important assets that Tesla can’t do without.
1. Financial figures were obtained from Tesla Quarterly and Annual Reports.
2. Tesla supercharger detailed info: Tesla charging infrastructure.