In Q4 of 2019, Tesla installed more new Supercharging stations than in any previous quarter in company history. In addition to Tesla adding more charging stations than ever, they also added more stalls per station than ever before.
Back in Q1 of 2016, the average Tesla Supercharger only had 5.85 outlets per station, while today the average station has 8.84. In fact, some charging stations have upwards of 50 stalls in a single station. This type of expansion is a strong signal that Superchargers have found product-market fit across the world.
On the surface, Tesla’s supercharger growth looks promising, and sort of obvious. Most Tesla analysts offer arguments along the lines of “with the fastest EV charging network in the world, why wouldn’t Superchargers be a massive success?” It’s a logical idea, and the formula below makes a lot of sense.
Faster chargers = more drivers Supercharging = more demand for additional superchargers
But it’s wrong.
Tesla isn’t succeeding because of their excellent charging efficiency, they’re succeeding despite having extremely poor charging efficiency. Let me explain.
The fastest EV chargers in the world are incredibly inefficient tools for transporting energy. While the 250 kW charge rate offered by Tesla’s latest V3 superchargers seems impressive compared to slower EV chargers, it’s roughly 100x slower than the charging speed offered by gas stations. And it’s the gas cars that Tesla is really competing against.
According to the EPA, the energy obtainable from burning one gallon of gasoline is 33.7kWh. Gas cars aren’t perfectly efficient at burning it, but the EPA figure is a good proxy for understanding the energy density of gas.
Since most gas stations across America can pump up to 10 gallons of gas per minute, that’s roughly 337kWh of energy that gas pumps transfer into gas cars every minute (more than the entire battery capacity of three Tesla Model S cars). In comparison, Tesla’s 250kW chargers operating at a maximum charge rate can only transport 4.16kWh of energy every minute.
So in the context of speed and efficiency, Tesla’s superchargers don’t stand a chance.
So then why is Tesla having so much success with their Superchargers when they're so much slower than the status quo? Luckily for Tesla, speed isn’t the most important variable.
And the team at Tesla knows this. That’s why they’ve designed Superchargers to improve the experience of refueling, rather than trying to compete against gas stations in a head-to-head efficiency battle.
So how did Tesla improve the experience of refueling? By treating perceptions like reality and by improving efficiency... without actually improving efficiency.
In Rory Sutherland’s masterpiece book Alchemy, he mentions the possibility that the greatest progress in the next 50 years won’t come from improvements in technology, but rather in design thinking and psychology. Rory explains this idea by saying:
One example he uses is how Uber has massively improved the perception of waiting for a cab, without actually making cabs any faster. By simply showing the real-time location of an Uber driver, giving you instant access to their phone, and giving riders an estimated pickup and dropoff time, riders perceive Ubers to be superior to cabs.
They’re still the same cars, driving in the same traffic, but riders feel more “in control” of their commute in an Uber. And all of this can be achieved without the massive costs of creating faster cars, more roads, or less city traffic.
Tesla has also incorporated a handful of these perception tricks into the process of Supercharging, helping their less-efficient refueling system compete against gas stations.
It may be a 30 minute charge, but if it only feels like 10 because you’re sitting in the warm comfort of your car watching your favorite TV show, or because you’re grabbing some food at your favorite restaurant, then in your mind it only took 10.
Gas stations on the other hand, haven’t figured this out. It almost doesn’t matter that it only takes a couple minutes to fill up a tank. When you’re staring at ticking numbers on an old LED screen, inhaling the lingering fumes of exhaust from other cars, and standing outside of your car in the cold weather, every minute feels like 10.
Learning to improve customer perceptions is a tremendously valuable skill, as the improvements are often less expensive than the cost of improving reality.
But perception can only take you so far. So how does Tesla make up the rest of the performance gap between Supercharging and gas station refueling?
By improving efficiency... without actually improving efficiency.
My favorite example of design thinking in Alchemy comes from Rory’s critique of the UK rail system. In Alchemy, he mentions the UK’s plan to spend $60 billion on a new high speed rail system.
Why? To improve speed and throughput of the rail network. Simple enough. The theory was that faster trains = faster commutes.
In response to hearing about the massive costs and long timeframe of this proposed rail system, Rory shared an idea of his own.
Instead of spending $60 billion to build faster trains, he suggested the UK could spend just $250K to improve the speed and throughput of the rail network - without actually changing the technology behind the trains.
His idea was simple:
“Don’t look at the logistics of the problem, look at it from the perspective of a passenger. To reduce journey times by 40 minutes, you don’t have to reduce the amount of time people spend on the train - which is in any case the most enjoyable part of their journey - you could simply reduce the amount of time they waste waiting for the train. Provided their end-to-end journey is 40 minutes quicker, they’ve saved 40 minutes”.
Since most people buy advance tickets, and those tickets are only good on the exact train that they were purchased for, people often arrive at the station 40 minutes early to make sure they don’t miss their train. During their wait, one or two other trains often board and depart (usually with empty seats remaining).
If a simple mobile app offered customers an option to board an earlier train if room was available, passengers could cut upwards of 40 minutes off their journey time, while also maximizing the unused passenger capacity of each train.
A genius idea, and one that slashes both the cost and time to implementation by over 90%.
Similarly, Tesla has their own special tools for creating efficiency gains without actually improving charging speed.
In contrast, the experience of using a gas station is slightly different everywhere you go. Gas pumps run by different companies have different buttons, different instructions on different screens, and sometimes even different payment options.
There are still some stations that require drivers to actually go inside the station to pay. All this inefficiency adds up to more time at the pumps.
Gas stations offer no such luxury. Gas cars have no idea how busy a particular gas station is until they arrive, prolonging the experience of filling up at busy stations on busy days.
As a Tesla battery approaches full capacity, charging speed is reduced. And since most people don’t need a full charge to get where they’re going, Tesla can speed people along by nudging them to unplug at 80%.
Anyone can override this nudge, but it helps Tesla keep cars moving through Supercharger stations as fast as possible. The only way for a gas station to do something similar is by having angry drivers honk their horn in the queue.
So despite the poor efficiency of Tesla Superchargers, Tesla has masterfully cut out all the extra time associated with refueling to increase Supercharging efficiency. All of this is possible of course, without needing to increase the flow of electricity through Superchargers.
And that’s what enables their technically inferior charging solution to compete (and win) against gas stations. I’ve been to over 100 Supercharging stations all over North America, and can attest to the pleasant atmosphere and simple process.
Gas stations (and all the other awful third-party charging networks) could learn a thing or two from Tesla here.