Finance

Tesla is killing one of its biggest benefits for new customers

Tesla Rocklin Supercharger
A Supercharger. Green Car Reports
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Tesla's extensive Supercharger network is one of the great benefits of being a Tesla owner, but after January 2017 it will no longer be free for new customers.

"For Teslas ordered after January 1, 2017, 400 kWh of free Supercharging credits (roughly 1,000 miles) will be included annually so that all owners can continue to enjoy free Supercharging during travel," Tesla said in a statement on Monday.

"Beyond that, there will be a small fee to Supercharge which will be charged incrementally and cost less than the price of filling up a comparable gas car," the automaker added. "All cars will continue to come standard with the onboard hardware required for Supercharging."

Tesla said that it would "release the details of the program later this year, and while prices may fluctuate over time and vary regionally based on the cost of electricity, our Supercharger Network will never be a profit center."

Tesla also said that the change wouldn't affect "current owners or any new Teslas ordered before January 1, 2017, as long as delivery is taken before April 1, 2017."

The critical issue for Tesla is that as it goes from being a low-volume, luxury electric-car company to providing mass-market mobility, it can't afford to effectively offer a network of free gas stations to its owners. Supercharging was a wonderful perk for Tesla owners, providing high-speed rejuicing that restored full battery power and 200-plus miles of range in less than an hour.

But with deliveries projected at 500,000 annually by 2018, there will simply be too many Teslas on the road to make free a workable business strategy.

Tesla Model 3
A Tesla Model 3.  REUTERS/Joe White/File Photo

Tesla had always planned to charge for Supercharging with its Model 3 mass-market vehicle, arriving in late 2017 with a price of around $30,000 after tax breaks.

But increasingly, the automaker has struggled with current owners of Tesla Model X SUVs and Model S sedans using the Supercharger network to "fuel" their cars, rather than charging at home.

"Just as you would charge your cellphone, we believe the best way to charge your car is either at home or at work, during the hours you're not using it," Tesla said.

"For travelers, the Supercharger Network has become a powerful, unique benefit of Tesla ownership. As we approach the launch of Model 3, this update will enable us to greatly expand our Supercharger Network, providing customers with the best possible user experience and bringing sustainable transport to even more people."

This makes clear how Tesla envisions owners using the Supercharger network going forward — as a range-extending feature for long-distance journeys, not as a means to obtain free electricity forever.

Unfortunately, the move will create two classes of Tesla owners: those who bought before the switch and will continue to get the free electrons and those who bought after, who will have to pay up.

Tesla shares opened sharply higher in trading on Monday, up to $194 from a close of $191 on Friday. But they immediately gave back that gain.

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Matthew is a Business Insider senior correspondent who covers transportation (and chess, guitars, home-audio equipment, cocktails, and sometimes classic rock). His focus is the global auto industry, including Tesla, a company he has chronicled since 2007. He also looks after Business Insider's annual Car of the Year award, announced every fall. He's written for The New York Times, Slate, The Washington Post, the Los Angeles Times, HuffPost, and CBS Interactive. He's commented on the auto industry for a variety of media outlets, including Sirius XM, MSNBC, Radio France, KPCC, and KCRW.  DeBord won the 2018 Ken Purdy Award from the International Motor Press Association. He's taught at New York University's Stern School of Business and the Marshall School of Business at the University of Southern California. His book "Return to Glory: The Story of Ford's Revival and Victory at the Toughest Race in the World" was published in 2017 by Atlantic Monthly Press and came out in paperback in June 2018. In the New York Times Book Review, Jonathan Kellerman called it a "page-turning synthesis of business book and adventure saga."