Tesla has just laid off nearly their entire Supercharger team, and have announced they are stopping the build out of their Supercharger network going forward.
Elon Musk make the announcement on May 29th that Rebecca Tinucci, the head of the superchargers group, Daniel Ho, who heads up the new products team, would be leaving along with their entire team of 500 employees.
So why would Tesla shutter their entire Supercharger team, and stop building out the network?
By all accounts Tesla’s Supercharger network is the largest charging networks in the world, and in terms of reliability and availability it has one of the highest consumer ratings compared to other competitors who are often broken and do not offer the fast-charging method that has made Tesla’s Supercharger network coveted by EV owners.
Tesla’s Supercharger network also makes the company a pretty penny. Bloomberg did some reporting and back of the napkin math that figures if each Tesla “charger delivered around 200 kilowatt-hours a day and that Tesla collected an average tariff of $0.4 per kWh, we estimate that the company generated around $1.74 billion of charging revenue” in 2023. They even estimated that Tesla’s Supercharger network could generate profits of $740 Million by 2030.
Today Tesla is the dominant EV charging network, with over 50,000 sites globally, and 15,000 in North America.
So I’ll ask the question again: Why is Tesla laying off the team that is building their Supercharger network, and stopping the development of new charging stations that aren’t already in progress, especially when you take into consideration that their Supercharger network has become a profit center?
The answer may be partly due to Tesla’s falling revenue and their need to cut costs, but this feels more like cutting off one’s nose to spite one’s face.
I think the answer lies more in the competition Tesla is beginning to face in the EV charging market. For a long time they were the leader, and even today still have the largest network of EV charging stations. Now that the majority of other vehicle manufacturers are adopting Tesla “North American Charging Standard” (NACS), and new EV charging providers have entered the market and are catching up to Tesla in terms of reliability and availability, it might just be a matter of Tesla exiting a business they had only been in in order to bolster the charging availability for their vehicles in order to get around that whole chicken-and-egg conundrum of building vehicles but there not being any chargers for their customers to recharge at.
Tesla has been crystal clear that they are not shutting down their Supercharger network, and will not only complete any EV charging buildouts that are in progress, but will also add some new Supercharger locations in the next year.
So could Elon Musk and Tesla change their mind in the future and restart their internal Supercharger network team? Sure, but I don’t think that’s likely to happen, and why would they? They’ve already built the predominant EV charging network throughout the world, and their “North American Charging Standard” (NACS) has been adopted by the rest of the EV industry. There are now a lot of competitors catching up to them, so the EV charging market is about to be a commodity with limited differentiation. It’s like picking between where to get gas between 2 gas stations with the same exact prices. Usually you’ll just choose the gas station on your side of the road since they offer the same products and services.
Tesla could always go the outsourced way, and hire a subcontractor to not only service existing locations but also build out new additions to the Supercharger network instead of handling that all internally managed by a big team that only adds to their headcount that affects their bottom line.
So while Tesla is dismantling their internal Supercharger team, and slowing the growth of their existing network, it will help Tesla to reduce their costs while not affecting them very much in the market. It might be seen as a no brainer in a future Harvard business case.
