Mentioned in Video:

😲 #ElonMusk just announced that #Tesla (#TSLA) will open up its supercharging network to all #electricvehicles this year. This is a MASSIVE piece of Tesla news with consequences that most people don't see but @ARK Invest saw coming from miles away. Let me explain why this makes Tesla stock one of the best stocks to buy now and hold for the rest of the decade

Video Transcript:


[00:00:00.000]
Elon Musk just announced a brilliant move that I really didn't expect. So in this episode, I'd like to round out my bull thesis on Tesla by talking about the controversial decision to open Tesla's supercharging network to other vehicles and how that fits into the bigger picture for Tesla. This is a massive change that makes me think that Tesla stock is now very undervalued when I look five years out. Don't sleep on this. If you enjoy this type of commentary and analysis, consider liking this video and subscribing to the channel with all notifications turned on.

[00:00:29.940]
That way, you'll be the first to know when I come out with new research, regardless of how YouTube tunes its algorithm. Let's charge right into it. Instead of relying on third party charging networks like most other automakers, Tesla spent years developing its own network from the ground up, which was a necessity considering how early Tesla was in entering the electric vehicle market today, Tesla has over 25000 Superchargers and over 2700 stations around the world. Right now, Tesla uses its own proprietary charging connector so only Tesla vehicles can charge on the supercharger network.

[00:01:01.660]
This ends up being a massive advantage that they enjoy over other automakers, since range anxiety is one of the major factors that stops people from buying electric vehicles today. Range anxiety isn't something that Tesla owners really experienced because Elon Musk used his first mover advantage to optimize the locations of the actual charging stations.

[00:01:21.330]
I don't think people understand how big of a deal this is, and it just got way bigger. Very recently on Twitter, TesLatino tweeted, quote: Funny how many people people are now questioning why Tesla created their own proprietary charging connector and that it's not fair to other EVs. How about no support for Elon Musk? When he was advancing the technology, his team created a reliable way to charge the fleet. Deal with it.

[00:01:43.840]
End quote. Elon Musk replied: we created our own connector as there was no standard back then, and Tesla was the only maker of long range electric cars. It's one fairly slim connector for both low and high power charging. That said, We're making our supercharger network open to other EVs later this year, end quote. And then Aaron S asked if it will be open to other EVs in all countries or just specific ones, to which Elon Musk replied: Overtime, all countries. This shift will cause a lot of short term inconvenience to Tesla owners, and they're letting Elon know that they think he's giving up one of Tesla's biggest advantages.

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Here's why this is awesome for Tesla in the long term.

[00:02:22.740]
First, let's talk about the supercharger network itself. Like I mentioned earlier, the actual locations of the Superchargers are optimized to make sure that most people are always in range of one. And as most of these tweets point out, that means they're in high traffic areas. That makes them perfect gathering points for the electric vehicle community at large, not just Tesla owners. There's no better way to market Teslas to their exact target audience than to make owners of other electric vehicles go to Tesla branded Superchargers and surround the my Tesla vehicles and enthusiastic Tesla owners.

[00:02:54.580]
Here's another thing that might happen down the road. Recently, several major EV charging networks signed an agreement allowing users to roam across their combined networks of over 50000 Chargers in the US and Canada. That means electric vehicle owners would no longer need individual accounts and memberships with each provider, depending on which charger happens to be at your mall, your work, or wherever else you go. This roaming agreement will make the experience more like withdrawing cash at ATM machines. Most cards let you use any ATM even if it's not your bank, so everyone enjoys more access to cash through a shared infrastructure.

[00:03:30.850]
I can see Tesla joining this type of agreement in the future, since this type of unified charging experience will reduce the friction associated with car charging and accelerate the world's transition to electric vehicles. The current plug and charge experience, where the charger communicates directly with the vehicle to identify, authenticate, authorize, and build the customer's registered account for the charging session could become the norm, meaning more people can flow through each supercharger as charging EVs becomes simpler over time. Then if most electric vehicle owners are part of this agreement and Tesla provides the best charging experience, the Supercharger network will become a major contributor to converting electric vehicle owners in general, to Tesla owners specifically.

[00:04:15.070]
And that leads me to my second point, the Tesla app. If Tesla opens its charging network to other electric vehicles, that could mean that owners of other electric vehicles may have to download the Tesla mobile app, which is how Tesla owners get that streamlined plugin charge experience today.

[00:04:29.940]
Think about how much exposure these users will be getting to the Tesla brand not only at the physical chargers, but through various notifications on this digital app as well. Did you know that if you owned a Tesla, you would have saved $4 on this last charge? Did you know that if you owned a Tesla, you could skip the line and use one of these four dedicated Tesla-only chargers, saving you about ten minutes of wait time. What if Tesla starts incentivizing people to try full self driving for a month by giving them credits at Superchargers or rewarding people who already use full self driving for their data by giving them super charging credits for every autonomous mile driven? Or, an even simpler idea would be giving people credits to the Tesla arcade or other digital services. Whoops, you could only enjoy all of those benefits.

[00:05:12.830]
if you were a Tesla owner? The app can serve as a very powerful marketing tool.

[00:05:17.440]
Comment below with your thoughts on other ways Tesla could market to other EV owners through their Supercharger network and their app, and that brings me to point three. When it comes to opening the Superchargers, having some dedicated charging stations only for Teslas and avoiding the Tesla marketing if you're already owning one are just the tip of the iceberg. As more EVs utilize the Superchargers and their energy demand ramps up, I think auto bidder and other energy management software will play an increasingly important role in making sure this infrastructure can meet demand in a profitable way.

[00:05:49.670]
What if, through auto bidder, Tesla buys excess energy when it's cheap and stores it at the Superchargers, then it offers two different rates depending on whether you're charging a Tesla or not. What if Tesla owners pay some more consistent price based on the average cost that Tesla paid for that energy, but non Tesla owners pay the price based on the peak cost instead? Or what if Tesla offered prepaid charge cards in 1000-kilowatt/hour chunks and Tesla owners got 10% off?

[00:06:18.140]
I think the possibilities on how Tesla manages the entire charging experience for non Tesla owners are endless. I think it's important to mention that I'm not advocating for a worse charging experience if you're a non Tesla owner, I'm advocating for one that constantly makes you consider owning a Tesla. That means supercharging should be a high quality, low friction experience overall. But if you own a Tesla, it would also be a little cheaper and with a little less marketing. Sort of how Disney World has lower rates if you're a Florida resident or Androids are still great phones

[00:06:48.260]
but man, do I sometimes wish I had iMessage and FaceTime. That's the sort of difference I'm talking about Tesla building into their supercharging experience here. I also want to point out that this would be the start of a powerful virtuous cycle. As demand increases for Tesla's supercharging, Tesla is incentivized to spend money further building out their Supercharger network. As more non Tesla owners spend money with Tesla, Tesla would continue to expand its lead by reinvesting that capital into more Supercharging stations and supporting infrastructure.

[00:07:18.350]
At the end of the day, getting more non Tesla owners to spend more money with Tesla is a huge win, and that brings me to my fourth and final point. This is something that was actually pointed out to me by Tom Nash, and it's a really big deal. This move stops Tesla's direct competitors from making these types of infrastructure investments themselves. Let me give you a little context.

[00:07:38.960]
If you didn't know, governments around the world have introduced incentives for automakers to develop electric vehicles or very low carbon emitting cars. Credits are given to car makers that build and sell environmentally friendly vehicles. These car makers are required to have a certain amount of regulatory credits each year. If they can't meet the target, they can buy them from other companies that have excess credits. Because Tesla only sells electric cars, which come under the zero emission vehicle category, the company always has excess regulatory credits and can effectively sell them at 100% profit.

[00:08:11.660]
Michael Burry recently revealed that he has a short position in Tesla in excess of half a billion dollars, in large part because of Tesla's apparent reliance on these regulatory credits. What Tom Nash and others have pointed out is that Tesla actually weaponized these credits, not the other way around. Tesla sold these credits to other automakers, allowing them to keep making internal combustion engine cars while fulfilling their regulatory credit requirements in the short term. At the same time, Tesla kept extending their lead in electric vehicles. These credits aren't just a profit center for Tesla right now.

[00:08:44.730]
They're a mechanism for actively reducing the competitions' immediate need to switch to electric vehicles. And as we know, necessity is the mother of invention. Tesla opening their supercharger networks to other EVs prevents other automakers from needing to make their own investments in infrastructure to reduce the range anxiety associated with their brands. Why build their own charging stations when they can just use Tesla's? Well, in 15 or 20 years when an incredibly large chunk of vehicles on the road are electric, who's going to own the lion's share of the infrastructure?

[00:09:16.190]
Also shout out to Tasha Keeney from ARK Invest, who started talking about Tesla spinning off its supercharger network or allowing third parties to use it back in 2016.

[00:09:26.400]
If you want to know why I'm so focused on ARK Invest's research, this type of forward thinking is exactly why. And if you want to read that article, I've linked it in the description below. Things like this are why I think ARK Invest still has over $3 billion in Tesla today, making it their biggest position by a massive margin. I hope this episode helped you understand some of the major benefits of Tesla opening its Superchargers to other EVs, how Tesla's Supercharger stations could serve as major community hubs and profit centers that reach far beyond just Tesla's car owners and how this is another way that Tesla's energy business can grow beyond the size of its auto business

[00:10:03.810]
as Elon Musk has stated in the past. If it did, let me know by investing in the like button and subscribing to the channel with all notifications turned on and check out my other pieces on Tesla.

[00:10:14.510]
Those are great ways to invest in the channel that invests in you. Until next time. This is Ticker Symbol: You. My name is Alex reminding you that the best investment you can make is in you.

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Alex Divinsky

πŸ’° Investing in our future through disruptive innovation, β˜• lover of coffee, πŸ“Ί host of Ticker Symbol: YOU on YouTube

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