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Tesla’s Superchargers Matter Only Because It Already Sells a Car People Want

Better Place got it wrong: First make a car that people want, then build infrastructure to let them drive it cross-country.

Tesla Motors, whose stock price has soared in recent weeks after a series of positive announcements, once again made news today with details of its plan to extend and upgrade the performance of its fast-charger network. Within a year, the network will allow drivers to travel cross-country in the company’s electric Model S, stopping every few hours for a 30-minute charge that adds 200 miles of range to the vehicle. Tesla has doubled the rate at which it’s building its fast-charger stations and, by upgrading the charging technology, cut charging times in half. Within a year, well-travelled corridors will have fast charge stations every 80 miles or so, close enough to avoid the sort of problems that arose during a recent test-drive of Tesla’s current charging system, in which a New York Times reviewer ran of battery power during a poorly planned trip. If the network proceeds as planned, it will go a long way to addressing one of the key issues with electric cars—their limited range.

The announcement comes less than the week after Better Place, another startup trying to commercialize electric cars, announced that it had filed for liquidation, admitting that its plan to bring electric cars to the masses—which involved battery swap stations and a subscription service rather that fast-charging stations–had failed.

There’s been a debate recently about which approach—fast chargers or battery swap stations—is the best way to deal with the inability to drive electric cars very long distances, given the hours it takes to recharge them with standard chargers. DC fast chargers are cheaper, but they’re slower—they take at least half an hour. Automated battery swap stations can replace a depleted battery with a fully charged one in five minutes. Both approaches have pros and cons.

But the more interesting point of comparison between the companies isn’t here. The key difference between the companies is that Tesla saw, rightly, that the ability to drive long distances isn’t really that important, at least at first. Indeed, neither is the high upfront cost of electric vehicles, something Better Place’s subscription model—something like a leasing plan for the battery—was meant to solve.

Tesla recognized that, while cost and range-per-charge are important issues, one of the main problems at this early stage with electric vehicles is that people are either unfamiliar with them or view them negatively, as weak, underpowered vehicles—like golf carts. The first problem with electric vehicles, then, is a public relations problem. Once that’s solved, there’s actually a significant market for them even at current costs and ranges.

Tesla, to solve the PR problem, has focused on designing electric cars that people would want more than gasoline ones. Its first car, the Roadster, was able to out-accelerate just about any other car in the world. And Consumer Reports called the more recent Model S the best car it had ever tested, saying it combined the best parts of a luxury car and a sports car. Only now that it’s selling a lot of cars—it’s on track to sell 20,000 this year—is it spending much money on allowing long-distance driving.

Today Musk said that fast chargers aren’t needed to sell 20,000 cars. But fast-charging will become important as Tesla aims to expand its market. “To be able to drive your car anywhere you want to go is really important to most people,” Musk said. “I think it’s really important for accessing a broader audience.”

Better Place’s problem wasn’t that it focused on battery swap stations, instead of fast-charging stations. Better Place’s problem is that it built the swap stations too soon, burdening itself with a heavy capital investment before it had established that people would want enough electric cars to justify it.

Beyond that, it failed to solve the electric car PR problem. Its unusual subscription service added another source of unfamiliarity. And for Better Place, the car itself was an afterthought. The car designed for its swap stations, the Renault Fluence ZE, is an underwhelming car, far less desirable than the Model S by nearly every measure. It’s far slower, for example, has less interior space, and travels less than half as far per charge. Demand for it wasn’t that bad, considering the small size of the market in Israel. But it wasn’t nearly good enough to keep the company going.

Better Place’s failure, it should be said, doesn’t necessarily mean the end of swap stations. Musk thinks swap stations might be a good idea. Today he reiterated his previously expressed support for them, and suggested that there may be news from Tesla about them in the future (see page 38 of this SEC document, where Tesla says it plans to build them).

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