Following a lacklustre Q1 for EV sales and subsequent narrowing of focus towards AI and the Robotaxi, Tesla announced it had let go of its 500-person strong Supercharger team. The news came as a surprise to the market, given the success in expanding the network in past years, as well as the pledge to double the network’s size in the US in 2024. While this may on the surface look like a harsh way to treat a team that has been crucial in helping to secure Tesla’s high market share, there is some logic in the decision.

After the round of fresh layoffs, Tesla CEO, Elon Musk, posted on X “Tesla still plans to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations.”

Growth of the Supercharger network

The expansion of the Supercharger network between 2021 and 2023 set the bar for what is possible in deploying charging infrastructure, with the number of global Supercharger points more than doubling in that period. In 2024, the company boasted over 25,000 points in the US alone, with 60% of these being 250kW+ in speed. Though other CPOs have tried to follow suit in deploying points across the country, Tesla’s early and rapid rollout has afforded them a market share of 59% for DC charging.

What are the knock on impacts for the rest of the EV market

With Tesla having such a dominant presence in the charging market, a scaling down in its expansion is bound to effect overall growth in the sector. Consequently, over the next few years the charging sector, especially in the US where Tesla is most dominant, may experience slower growth.

That considered, Tesla has not mentioned that it will stop selling its charging hardware. In October 2023, Tesla signed a deal worth USD100 million with BP Pulse to supply its Supercharger hardware, highlighting the potential for growth in the side of the business.

Rho’s Evaluation, why has Tesla done this?

Given the success of the Supercharger rollout, the decision to let the charging team go has left many scratching their heads. To understand why Tesla has taken this route, it is important to acknowledge why the growth of the Supercharger network was so crucial in the first place.

Rho Motion’s Charging & Energy Research Lead, Shan Tomouk commented “Firstly, given Tesla was an early mover in the space, particularly in the US, the fast rollout of a public charging network was crucial in helping to support EV adoption. Furthermore, the Supercharger network was a key marketing pull for people buying into the Tesla ecosystem due to its exclusivity. However, we saw a shift in strategy for Tesla in 2022 with the announcement of the NACS and opening of the Supercharger market.”

He continued “With a desire to reduce costs at the company, it is likely that Tesla has questioned the material benefits of continuing to expand a charging network that:

1) no longer has the marketing pull of exclusivity

2) already has strong coverage across most perceived high-traffic areas.”

Tomouk concluded “Though this is something that would have had to happen eventually, it is clear that the slowdown in EV sales in recent months has placed pressure on the company to accelerate this plan in an abrupt way.”

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Image credit: Adobe Stock

Sources: X, Linked-in