Charger Congestion a Problem for Electric Cars

NEW YORK ( TheStreet) -- I never thought I would write this article. Could we already have too many electric cars?

You read that right. By at least one measure, we do.

In some places in America today, there are too many electric cars competing for too few electric chargers in public locations, primarily in city and mall parking garages. This is causing some unhappiness and grief among electric car drivers, and it's getting worse every day.

Let's start by stepping back for a minute, reviewing the relevant numbers . By the end of 2012, there were over 70,000 electric cars on the road in the U.S. In 2013, estimates mostly range between 100,000 and 125,000 electric cars sold, so we would end 2013 with at least 170,000 electric cars on the road, cumulatively. This counts both pure electric cars and plug-in hybrids.

Most electric car owners charge their cars in at least one of two places: home and work. However, sometimes it is either necessary, desirable or simply possible to charge while you are parked in a parking garage such as in a city center or at a mall. It just makes sense.

Except I'm starting to see more congestion at chargers in these locations. Granted, this is not universal. Some electric car chargers are still used very little.

However, at a rising number of locations, especially in California, I am noticing an increasingly more typical scenario: A parking garage has two chargers, each with one 240 volt and one 110 volt outlet. Four electric cars are plugged in, two of whom are charging more than twice as fast as the other two. In the same parking garage are many other electric cars, parked without charging.

In other words, you may have 15 to 20 electric cars in the parking garage, but only two are able to charge at a speedy rate, and two others at a turtle-slow rate. A year from now, you could have 30-40 electric cars in that parking garage, waiting and unable to charge. There is already today an acute need for many more electric car chargers, as the current ones are utilized nearly 100% of the time.

An even smaller, but more recent, phenomenon are the Tesla ( TSLA) "superchargers." These chargers are DC -- as opposed to AC -- and operate at 440 volt. These charge many times faster than AC at 240 volt. Tesla tends to talk about these chargers giving five miles of range per minute you are charging, so in 12 minutes of charging you would get 60 miles.

So far, the Tesla superchargers are located in a few places connecting San Francisco with Los Angeles and Las Vegas, as well as on the freeway from Washington, D.C., to Boston.

One obvious problem with the Tesla superchargers is that there are too few locations spread over too much space. Not too far to make it, but too far for an ideal safety net given the risk of a detour or delay. There are also not enough Tesla superchargers at each location.

I am hearing more and more that as Tesla owners show up at a supercharger location on a road trip, all four supercharge hoses are taken by other Tesla owners. And there are only approximately 5,000 Tesla Model S cars in the field right now. The quarterly deployment rate is 5,000, so the problem will double three months from now. Tesla is just selling too many cars!

Waiting behind another electric car while it is charging isn't like at a gas station, where you may have to wait five or ten minutes. If there is even one person in front of you at a Tesla supercharger, you might have to wait close to an hour. If it's a "regular" 240-volt AC charger, it could take many hours.

If things are this bad already with 70,000 electric cars on the road, including 5,000 Teslas, imagine a year from now, with well over 170,000 cars, including an estimated 30,000 Teslas, needing a charge.

Currently, most electric car chargers are free to use. One interesting aspect of how to price electric car chargers in the long run is how pricing power differs from selling electricity to pure electric cars such as Tesla and the Nissan ( NSANY) LEAF, vs. plug-in hybrids such as GM's ( GM) Chevrolet Volt.

In a pure electric car, "filling" your battery from a public charging station may not be optional. You may need it to get home or to work! Theoretically, you would be willing to pay many dollars per kW, per mile of range, if need be. (It's cheaper than a tow truck.) For these cars, the seller of electricity has enormous pricing power.

However, in a plug-in hybrid such as the Chevy Volt, you always have the option to simply run on gasoline, enabling you to price-arbitrage the cost of electricity vs. the cost of gasoline, and then pick whichever is cheapest.

In a Chevy Volt, a full charge from zero takes four hours on 240 volt. On this full charge, you can drive an average of 38 miles before the gasoline engine kicks in. Coincidentally, at that point the Volt can run an average of 38 miles per gallon of gasoline (the car takes 9 gallons), so it makes our math easy: In California, a gallon of premium now sells for $4.40. Therefore, one hour of charging the Volt is equal to $1.10 of gasoline-equivalent value ($4.40 divided by 4).

Let's say someone charged you $1 per hour to "fill" your Volt with electricity on a 240 volt circuit. At that rate, you might as well just not bother, simply going to the gasoline station instead, since the price is approximately similar.

As you can tell from this, it might not be easy to bother charging someone for electricity per se. Are you really going to bill someone for well under 50 cents for stopping by for 30 minutes while shopping?

What's the moral of this story? We need a very large number of electric car chargers in order to serve the 100,000 to 125,000 incremental cars that are being sold in the U.S. just this year. However, you basically can't charge people for the electricity, because it's such a small amount per charge, and because people driving plug-in hybrids can always price-arbitrage against gasoline. Someone else will have to pick up the bill, whether in terms of general parking garage fees, advertising, or some other economic incentive.

Yes, it has come to this. With "only" 70,000 electric cars on the U.S. roads, several electric car charging stations are now congested, and the situation is becoming more acute by the day. If nothing is done about this looming calamity, the U.S. electric car market risks grinding to a screeching halt.

It is really amazing how quickly the goal posts, and the pain points, are shifting in this fast-growing industry.

At the time of submitting this article, the author was long TSLA.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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