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The Growth Of Tesla’s Most Powerful Assets

Tesla supercharger stations at Southlake, Texas. Source: Flickr

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.

These properties represent some of Tesla’s most important assets as they help not only to generate sales for the company but also to differentiate Tesla from its competitors.

Moreover, these assets also provide the company with a competitive advantage that is hard to replicate as it takes years as well as a huge number of resources to build.

In addition, Tesla’s businesses will not function properly without these infrastructures or assets.

Therefore, an analysis of the growth of these assets will give investors an overview of the growth of Tesla’s businesses.

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

Tesla's supercharger stations growth

Tesla’s supercharger stations growth

* Supercharger station data comes from Tesla’s quarterly update letter which was released during earnings call.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Average YoY Growth Rate => 34%

To remove the general perception that electric vehicles are typically having limited travel distances, 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 6 years.

Between fiscal 2016 and 2021, Tesla has more than tripled the number of Supercharger stations worldwide, growing from only 700 stations in 3Q16 to nearly 3000 stations by 2Q21.

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 Tesla’s Supercharger stations was particularly impressive throughout fiscal 2020 and 2021.

In 2020 alone, Tesla added more than 700 Supercharger Stations and more than 400 units year-to-date, beating all prior records.

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

Tesla's mobile service fleet growth

Tesla’s mobile service fleet growth

* Mobile service fleet data comes from Tesla’s quarterly update letter which was released during earnings call.
* Starting in Q2 2020, mobile service fleet total has included mobile service vehicles dedicated to tire repair and results prior to Q2 2020 have NOT been adjusted to reflect this change.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Average YoY Growth Rate => 74%

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, Tesla’s mobile service fleet total has increased tremendously from only 100 vehicles in 2Q17 to nearly 1,100 vehicles as of 2021 2Q, representing an average growth rate of roughly 74% over the past 5 years.

Similarly, the growth of Tesla’s 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 has been relentlessly growing its mobile service fleet in the past 4 years, the growth was sort of flat in fiscal 2020, as reflected by the flat curve in the chart.

However, the growth of Tesla’s mobile service fleet made a roaring comeback in 1Q 2021 when the company increased the fleet to 923 vehicles, representing a growth of 22% year on year or 12% 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

Tesla's new stores and service locations growth

Tesla’s new stores and service locations growth

* Stores and service location data comes from Tesla’s quarterly update letter which was released during earnings call.
* Tesla’s fiscal year begins on Jan 1 and ends on Dec 31.

Average YoY Growth Rate => 19%

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.

As far as I know, 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 YoY growth rate has only been 19% for the last 6 years 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 takes resources out of the company.

Tesla has been quite conservative in expenses and costs and has switched to online booking in recent years.

As such, the growth rate of new store opening has only been 19% on average as of 2Q21 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 nearly 600 stores and services locations globally as of 2021 2Q.

Investor Takeaway

In conclusion, Tesla’s mobile service fleet has the highest average growth rate at around 74% whereas new stores and services location opening growth rate averages only 19%.

One notable explanation for the mobile Service fleet having the highest growth rate is that it probably gives a higher return on invested capital.

From a comparison perspective, Tesla’s 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 shown 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 and service locations in the future.

However, Tesla’s physical stores and service locations are not without their merits.

For one, Tesla’s physical stores and service locations definitely provide a better shopping experience compared to online stores.

More importantly, we are seeing substantial growth across all of Tesla’s infrastructures in 2021 Q2 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.

Tesla’s supercharging stations, mobile service vehicles as well as stores and service locations are all important assets that the company can’t do without.

References and Credits

1. All financial numbers in the charts in this article were obtained and referenced from Tesla’s quarterly and annual statements available in 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

Statistics For Other Companies

Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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