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Tesla (TSLA) Provides Details on Supercharger Fee Structure


Tesla Motors, Inc. TSLA disclosed the details of its plans to charge new customers for the use of its Supercharger network. While the company has traditionally offered free use of the charging network to customers, owners of Model S and Model X cars ordered after Jan 15, 2017 will have to pay a small fee if they use the network beyond a certain limit.

Tesla is implementing this strategy to facilitate faster expansion of the Supercharger network and reduce congestion at the charging locations. The company will offer 400 kWh of free Supercharging credits to new customers every year. Tesla believes that this is enough to cover the long-distance travel needs of most of its customers, based on the analysis of their current Supercharger usage. Unused credits, however, will not be rolled over at a year end but will be reset to 400kWh.

Beyond the free credits, customers will be charged for every kWh of energy used. However, in certain regions, they will be charged on the basis of the time of usage due to local regulations.

Prices will be fixed within each state or province in North America and within each country for foreign locations. To give an estimate of the pricing, Tesla revealed that the journey from San Francisco to Los Angeles will cost about $15, while that from Los Angeles to New York will cost around $120. Meanwhile, a trip from Paris to Rome will cost nearly €60 ($63.74) and that from Beijing to Shanghai will be charged at ¥400 ($3.49).

Tesla is developing a network of Superchargers in North America, Europe, Australia and Asia. These Superchargers are industrial-grade, high-speed chargers that can revive 50% of the battery of a Model S in 20 minutes and provide full charge in 75 minutes, compared to normal charging stations that take as much as 9 hours for a full charge.

At the end of the third quarter of 2016, Tesla had 715 Supercharger locations globally, with 4,461 individual chargers. While 97% and 86% of the population of the continental U.S. and Western Europe, respectively, were within 150 miles of a Supercharger by then, the company aims to reach similar coverage levels for high-population areas in China, Japan and Australia. To supplement the Superchargers, 3,222 destination chargers with 5,547 connection points were available globally at the end of the third quarter. These chargers offer easy charging at hotels, malls as well as restaurants.

Price Movement

Tesla has been underperforming the Zacks categorized Auto Manufacturers-Domestic industry over the last one-year period. Shares of Tesla increased 11.4% over this time span, while the industry witnessed a 22.5% gain.

Tesla has been facing production-related issues for a long time, as a result of which it has failed to meet delivery targets in the first two quarters of 2016. This, along with the losses incurred by the company, has had an adverse impact on its share price. Tesla’s stock was also affected by the announcement of the SolarCity acquisition due to concerns related to the latter’s losses, debts and cash outflow. However, now that the acquisition has been completed, investors are shifting their focus on Tesla’s growth plans ahead.

Zacks Rank & Key Picks

Tesla currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the auto space include Penske Automotive Group, Inc. PAG, Fox Factory Holding Corp FOXF and GKN plc GKNLY.

Penske Automotive sports a Zacks Rank #1 (Strong Buy). It has an expected long-term earnings per share growth rate of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Factory carries a Zacks Rank #2 (Buy). The company has an expected earnings growth rate of around 16.6% for the long term.

Meanwhile, GKN holds a Zacks Rank #2 as well. It has a long-term growth rate of 6.3%.

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