Tesla Will Have To Shell Out $8B To Match U.S. Gasoline Infrastructure: Analyst

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Tesla Will Have To Shell Out $8B To Match U.S. Gasoline Infrastructure: Analyst
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Range anxiety is perhaps the biggest problem facing makers of electric vehicles today, and it’s not a problem that’s going to be taken care of overnight. In fact, it’s going to take massive stacks of cash to fix the issue, and Tesla has been trying to convince investors and drivers that it can fight the battle all alone. But just how much would it take to make a network vast enough to convince U.S. drivers that they don’t need a gas-powered vehicle? One analyst pegs the value at about $8 billion.

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Analysis of Tesla’s Supercharger network

UBS analyst Colin Langan is one of the biggest bears when it comes to Tesla, and he offered up the results of his firm’s Supercharger network analysis in a research note dated March 2. The UBS Evidence Lab estimates that it takes about 31 minutes on average for a driver to reach the nearest Tesla Supercharger station. However, it takes only four minutes, on average, to reach a gas station.

Langan adds that just to ensure that no driver in the U.S. has to drive more than 31 minutes to reach a Supercharger, Tesla would have to add at least 7,503 more stations. For the company to build out a Supercharger network that’s on par with the gas station infrastructure in the country, it would have to add 30,160 Superchargers.

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EV charging standards are needed

The analyst estimates that the average cost per Supercharger station is about $250,000, which means that just to build out the U.S. charging infrastructure, the company would have to spend between $1.9 billion and $7.5 billion. It would be much easier if Tesla would work together with other automakers to share this cost, but that seems unlikely, given that the luxury automaker’s cars are not compatible with other EV chargers.

Langan notes that President Donald Trump’s massive infrastructure spending project might include federal subsidies to build an EV charging corridor throughout the nation, which also might cut the burden of costs. CEO Elon Musk’s position as an advisor to Trump may help ensure that subsidies are offered for this, and Musk is very well aware of how much Tesla has benefited from other federal subsidies over the years.

Tesla’s capital expenditures to soar

The UBS analyst said his firm’s analysis suggests that Tesla’s capital expenditures could reach $35 billion through 2025. He estimates that the three planned Gigafactories and associated plants will surpass $8 billion. The Model 3 ramp and launch is sure to involve heavy expenditures as well because the company wants to be delivering 500,000 cars annually by next year. Then building out the Supercharger infrastructure will add $2 billion to $8 billion just in the U.S. He believes similar investments will be needed to build out the infrastructure in Europe and Asia as well.

And the more cars Tesla sells, the bigger its servicing network will need to be so that it can support its customers. Langan estimates that building out the network to service all those Teslas on the road will add another $18 billion in capital expenditures, and the network and servicing costs will probably speed up after the Model 3 launches. He warns that investors might be disappointed because they’ll be expecting stronger cash flow after the mass-market vehicle is released.

Shares of Tesla stock closed up 0.44% at $251.57 on Friday.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@valuewalk.com.
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6 COMMENTS

  1. On the contrary, gasoline companies will have to shell out billions to match the convincence of electric vehicles. EVs can be filled in a person’s garage. The same can’t be said about gasoline cars. lol

  2. how many gas stations does Ford, GM and Chrysler own? Why would it just have to be a single electrical vehicle makers problem to build all these charging stations?

    ChargePoint already has 23,400 locations world wide.
    EVGo has 100 fast charge stations already in the US and is partnered with BMW to build another 500 over the next year.

  3. The premise that every Tesla owner will only charge on a Supercharger is ridiculous. I’ve owned my Tesla for 4 years and have used Superchargers less than 10 times. As Tesla’s sales grow, so will the Supercharger network. Everyone can exhale. It will be fine.

  4. It is just sad how little these so called “analysts” actually understand. Electric cars are NOT gasoline cars and don’t need 200K stations around for refueling. It’s so simple. People do not have gas stations at their home but they do have electricity at home. So you start every day with a full charge. That is very different and much more convenient than a gas car. You only need a charging station on the rare occasion that you are travelling long distances. If you are an average person that means you need to use a charging station just a couple times a year. Since electricity is everywhere then there are already thousands of such stations available to you. So this is just more ignorant fear mongering by someone that doesn’t know what they are talking about.

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