Tesla CEO Elon Musk says that the company will spend $500m on expanding its supercharger network this year, in response to speculation that widespread layoffs at the firm's charging division spelled the end of the automaker's ambitious charging rollout plans.
After news broke of the layoffs at Tesla's charging division, Musk said that the firm "still plans to grow the supercharger network", but that it will do so "at a slower pace for new locations".
Tesla shares have now dipped to 13pc below their levels before the layoffs and Musk has sought to reassure the markets that the automaker is not abandoning plans to expand its industry-standard charging network.
"Just to reiterate: Tesla will spend well over $500mn expanding our Supercharger network to create thousands of new chargers this year," the CEO writes on social media site X, formerly Twitter.
And Musk adds that this spending is "just on new sites and expansions, not counting operations costs, which are much higher".
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However, the promise of $500mn in spending towards new charging locations still appears to signal a significant pullback on previous investments Tesla has made in its charging network.
Tesla's charging business is counted under its Services and Other division, which also includes used car trade-ins and repairs. With his prediction of $500mn in further supercharger spending excluding operating costs, Musk is presumably referring the line item that Tesla calls 'cost of revenues' in its Services and Other business, which is separate to operating costs.
The cost of revenue for the Services and Other division in the first quarter alone was $2.2bn, albeit Tesla does not split out charging cost of revenue from any other cost of revenue within the division. While not all of this $2.2bn was spent on the charging business, Musk's promise of $500mn on charging for 2024 pales in comparison to the implied annualised rate of spending for the division as a whole.
Tesla does not disclose how much its spends on installing charging locations, but Xander Johnson, former Tesla sales and operations advisor, believes that Musk's spending plan puts the company on track for a slowdown in installation growth for 2024.
"That is about 10,000 plugs by my math," Johnson says. "With roughly 50,000 plugs globally, that’s 20pc growth."
For comparison, Johnson points out that "Q1 this year saw 27pc growth y-o-y, so [it is] a slight slow down from its current pace".
However, a lot is unclear about Musk's spending announcement, and the firm's coyness about its supercharger installation costs makes predictions about the spending promise difficult. In light of these uncertainties, Johnson's projections appear to be a best-case scenario for Tesla.
Indeed, it is not clear if the $500mn will be spent across the whole of 2024, or only in the remainder of the year. It is also unclear if the spending will include costs of renting or owning land for chargers, as well as to what extent Tesla will have to invest in electricity infrastructure.
Tesla also said at its investor day last year that its supercharger installation costs vary wildly based on location, with a station in New York costing around $35,000, while a California station costs around $10,000 more.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
