The Commercial Value of Tesla’s Supercharging Network
Tesla’s Supercharging network, which costs $250,000 USD to build an 8-stall Supercharger station with each individual stall costing $30,000 USD, was roughly 210,000 RMB in 2015 based on the current exchange rate. By the end of 2020, Tesla plans to build 650 Supercharger stations in China, which will total approximately 5,000 stalls. The majority of Tesla’s Superchargers are priced at 1.8-2.3 RMB/kWh, with most being 1.8 RMB/kWh. The cost of electricity for charging stations in China is 0.6 RMB/kWh, which is paid to the local power grid, and the remaining 1.2 RMB/kWh is used to cover the cost of building the charging stations.
In our previous post, we demonstrated that Tesla’s current number of Supercharging stations is sufficient for the existing Tesla fleet. Based on an average of 300 cars per Supercharger station (with each station averaging 8 stalls), each stall must support an average of 38 cars. Assuming an average daily driving distance of 50 kilometers per car and an energy consumption of roughly 7 kWh per day, each stall is expected to provide 266 kWh of electricity per day and generate approximately 478 RMB in revenue. This daily revenue, less the cost of electricity (160 RMB), generates a net income of 319 RMB per day per stall, which equates to an estimated monthly net income of 9,570 RMB for each Supercharger stall.
Based on current charging prices, a single Tesla Supercharger stall requires 22 months to recover its initial cost of 210,000 RMB per month. However, this period is not particularly long for an infrastructure-related industry. Despite this, Tesla continues to raise its charging prices. How much room is there for Tesla to raise its prices?
The current price of Tesla Supercharging is 1.8 RMB/kWh, and charging to 80% (56 kWh) costs 100 RMB. In contrast, filling up a gas car tank with 35 liters of 95-octane gasoline (which has a fuel consumption of 9 liters per 100 kilometers for 392 kilometers) costs 208 RMB. Therefore, the cost of recharging an electric vehicle is roughly 50% lower than that of refilling a gas tank.
If we use the highest current price of 2.3 RMB/kWh for Tesla Superchargers as a benchmark, it would cost 129 RMB to charge to 80%, and the cost of recharging an EV is still about 40% lower than that of refilling a gas tank. With a charging price of 2.3 RMB/kWh, the period required for recovering the cost of Tesla’s Supercharging stalls can be reduced to approximately 15 months. Considering the current low oil prices caused by the pandemic, there is a high probability that oil prices will rebound in the future, making the cost advantages of EV charging even more evident.# Commercial Value of Supercharging Station
In terms of Tesla’s commercial value for the supercharging station, based on the assumption that each supercharging station is used an average of 3.3 hours per day, which accounts for 13% of 24 hours and 33% of the 10 working hours, the entire Tesla supercharging network could contribute RMB 580 million in revenue to Tesla annually after deducting electricity costs at RMB 1.8/kWh by the end of 2020. If calculated at RMB 2.3/kWh, the supercharging network could contribute RMB 820 million in revenue to Tesla annually.
Tesla sold 150,000 cars in China this year, and the company’s plan is aiming to sell 450,000 cars next year, which is three times the amount of this year’s sales. Therefore, the annual revenue of the Tesla supercharging network should also triple to RMB 2.32 billion or RMB 3.28 billion. This indicates that the value of the Tesla supercharging network will be substantial as Tesla’s stock base increases.
Commercial Value of Battery Swap Station
Next, let’s discuss the battery swap station, mainly focusing on NIO’s battery swap station.
The speed of NIO’s battery swap station is approximately 10 minutes, which is much faster than the current industry advanced level of 42 minutes for a fully charged Supercharger. The cost of NIO’s battery swap is RMB 980/month for 70 kWh battery and RMB 1480/month for 100 kWh battery. The driving range of NIO’s car is 294 km/70 kWh battery (427 km/100 kWh battery). Assuming each car drives 50 kilometers per day, the monthly mileage is 1500 kilometers, which requires 6 battery swaps per month (4 battery swaps/month for 100 kWh battery). The monthly electricity cost of swapping 6 batteries of 70 kWh is RMB 252, and NIO’s net income is RMB 728 (the monthly electricity cost of swapping 4 batteries of 100 kWh is RMB 240, and NIO’s net income is RMB 1240).
Currently, NIO’s charging network mainly consists of battery swap stations. The battery swap station needs to have fully charged batteries for replacement. So, how many spare batteries are needed for the entire battery swap station network? As previously mentioned, it takes 42 minutes to fully charge a 70 kWh battery with the most advanced Supercharger currently on the market. Looking at the swap speed of 10 minutes/battery, with cars waiting in line for swapping, a battery swap station needs at least 4 spare 70 kWh batteries to maintain fast swapping (swapping 4 batteries takes 40 minutes, and the battery that is swapped first will be fully charged and ready for the fifth car to swap). In reality, the number of redundant batteries needed for each battery swap station is not as high as expected.The cost of a 70-degree battery is approximately 63,700 yuan (100 degrees is 91,000), and the cost of a battery swapping station has not been found. It is estimated to be 2,000,000 yuan for now. NIO currently has 150 swapping stations and approximately 70,000 vehicles in stock, which means that one station can support 470 cars. The rental fee for 470 cars, minus the electricity cost, is 342,160 yuan per month. Since the battery is a leased item and does not need to be purchased when buying a vehicle, the battery cost per car must also be included in the cost of the entire swapping network. This is equivalent to users “borrowing” the battery from NIO.
The total cost is the cost of one swapping station plus the cost of four redundant batteries plus the cost of the batteries inside 470 NIO vehicles, which equals 2,000,000 + 254,800 + 29,939,000 = 32,193,800 yuan. It turns out that NIO’s swapping model has a payback period of 94 months, which is close to 8 years. Based on the utilization rate of one swapping station serving 470 cars, the usage time of each swapping station per day is as long as 10 hours, which I think is the maximum situation. This means that NIO must continue to increase the number of swapping stations to increase vehicle sales.
It is not difficult to see that the biggest cost that NIO needs to bear in the swapping model is the battery cost per vehicle, which accounts for 93% of the cost of the entire swapping network.
In the swapping model, NIO’s main cost comes from the battery, which accounts for 93% of the cost of the entire swapping network. A bold guess is that this model may accelerate profitability in the following ways: (1) because users are no longer sensitive to battery attenuation under the leasing model, some second-hand battery packs that have been recycled in the market can be put into the swapping network to reduce the overall battery cost; (2) use long-lifespan batteries as much as possible. As long as the battery can serve in the swapping network for more than 8 years, NIO can start making a profit. A battery that has a lifespan of more than 8 years and has been cycled for at least 384 times, is equivalent to driving 180,000 kilometers. Nowadays, CATL’s technology promotion can reach up to 1000 cycles, equivalent to 490,000 kilometers, and there are promotions of driving one million kilometers.
Therefore, in the swapping mode, if the battery life can reach an average of 8 years, the net income will be profitable. NIO’s net income from the swapping network this year is 611,520,000 yuan, or 600 million yuan per year. However, the cost of initial investment is approximately 4.5 billion yuan. If NIO’s vehicle sales double next year, the rental income from the batteries will be about 1.5 billion yuan per year, but the cost of initial investment will be about 10.5 billion yuan to achieve this income.## Supercharging or Battery Swap?
Given the cost, is there room to raise the monthly rental fee for battery swap mode? Based on the cost of refueling with a mileage of 1500 kilometers per month, the result shows that battery swap mode is 23% more expensive than refueling.
In summary, Tesla’s Supercharging network, based on the current highest electricity price of 2.3 yuan per kilowatt-hour, can achieve a return on investment in 15 months, 40% cheaper than refueling. However, users need to spend 6 times more time to charge than refueling. The utilization rate of each Supercharging pile is only 13% for 24 hours, and 33% for 10 hours of work.
NIO’s battery swap network, based on the current price of 980 yuan per month, can achieve a return on investment in 94 months, 20% more expensive than refueling. Users only need to spend 2 times more time than refueling to swap batteries. The utilization rate of each battery swap station has reached 42% for 24 hours, and 100% for 10 hours of work.
By comparison, it is obvious to see the difference between Tesla’s Supercharging network and NIO’s battery swap network.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.