Right now, the stations are rolling out in California and the East Coast, where the partnership is working on developing an electric car corridor. Together, the companies hope to have 100 supercharging stations operational by 2015, in locations across all of North America.
The partnership benefits both Tesla and SolarCity in ways beyond short-term finances. SolarCity’s system of installing solar panels and selling the electricity to the building owner needs clients to continue expanding its business. With each client it gets, SolarCity gets another stream of revenue that could last for decades, thereby providing the company with additional funds for growth. On Tesla’s side, the automaker gets a powerful tool to fight range anxiety and the ability to advertise its name without buying into standard forms of advertising media.
But while 100 Supercharging stations is a great start, it’s nowhere near the number of gas stations across North America. Ultimately, it will take far longer for charging stations to grow in numbers sufficient to compete with gas stations. This owes largely to a vicious cycle: Few electric cars means little demand for charging stations, and a lack of such stations steers people away from electric cars. That cycle’s being broken now, as governments encourage the building of charging stations, and private companies such as Tesla and SolarCity build their own Superchargers.
Gaining acceptance
In 2006, Who Killed the Electric Car? debuted at the Sundance Film Festival. The documentary chronicled the death of the first major wave of electric cars in the late 1990’s and early 2000’s. But just five years later, the same group of people released another film calledRevenge of the Electric Car. In the time between the films, the Tesla Roadster, Tesla Model S, Nissan Leaf, and General Motors Company (NYSE:GM) Volt were all developed, signaling a return of the electric car. Fuel prices also climbed well above their 2006 levels, increasing the economic benefits of EVs, while better battery technology gave EVs greater range, thereby attracting more buyers.
As discussed in this series, electric cars can gain mass acceptance by either using cheaper, better batteries or improving nationwide charging infrastructure. Better batteries could help EVs travel farther between charges, while more common charging stations could greatly reduce range anxiety.
Looking forward, electric cars are taking on the factors holding them back. Battery development could drastically cut prices and increase range over the coming years, and charging infrastructure could make long-distance travel in an EV as easy as in a conventionally powered vehicle.
A growing demand for electric cars is definitely a plus for Tesla, which builds its business on EVs. But it’s less significant for major automakers like Ford. While Tesla could drastically increase sales as it expands its product line, EVs make up only a tiny part of the sales of major automakers. As a result, investors wanting to bet on improvements in EV technology should see whether Tesla Motors deserves a spot in their portfolio.
Alexander MacLennan owns shares of Tesla Motors . The Motley Fool recommends Ford and Tesla Motors . The Motley Fool owns shares of Ford and Tesla Motors .
