Charger Congestion a Problem for Electric Cars

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

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

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

Let's start by stepping back for a minute, reviewing the relevantnumbers. By the end of 2012, there were over 70,000 electric cars onthe road in the U.S. In 2013, estimates mostly range between 100,000and 125,000 electric cars sold, so we would end 2013 with at least170,000 electric cars on the road, cumulatively. This counts bothpure electric cars and plug-in hybrids.

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

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

However, at a rising number of locations, especially inCalifornia, I am noticing an increasingly more typical scenario: Aparking garage has two chargers, each with one 240 volt and one 110volt outlet. Four electric cars are plugged in, two of whomare charging more than twice as fast as the other two. In the sameparking garage are many other electric cars, parkedwithout charging.

In other words, you may have 15 to 20 electric cars in the parkinggarage, but only two are able to charge at a speedy rate, and twoothers at a turtle-slow rate. A year from now, you could have 30-40electric cars in that parking garage, waiting and unable to charge.There is already today an acute need for manymore electric car chargers, as the current ones are utilized nearly100% of the time.

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

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

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

I am hearing more and more that as Tesla owners show up at asupercharger location on a road trip, all four supercharge hoses are taken by other Tesla owners. And there are onlyapproximately 5,000 Tesla Model S cars in the field right now. Thequarterly deployment rate is 5,000, so the problem will double threemonths 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 youmay have to wait five or ten minutes. If thereis even one person in front of you at a Tesla supercharger, youmight have to wait close to an hour. If it's a "regular" 240-volt AC charger, it couldtake many hours.

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

Currently, most electric car chargers are free to use. One interesting aspect of how to priceelectric car chargers in the long run is how pricing power differsfrom 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 batteryfrom a public charging station may not be optional. You mayneed it to get home or to work! Theoretically, you would be willingto 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 electricityhas enormous pricing power.

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

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 thegasoline engine kicks in. Coincidentally, at that point the Volt canrun an average of 38 miles per gallon of gasoline (the car takes 9gallons), so it makes our math easy: In California, a gallon of premiumnow sells for $4.40. Therefore, one hour of charging the Volt isequal 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 withelectricity on a 240 volt circuit. At that rate, you might as welljust not bother, simply going to the gasoline station instead, sincethe price is approximately similar.

As you can tell from this, it might not be easy to bother chargingsomeone for electricity per se. Are you really going to bill someonefor 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 ofelectric car chargers in order to serve the 100,000 to 125,000incremental 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 peopledriving plug-in hybrids can always price-arbitrage against gasoline.Someone else will have to pick up the bill, whether in terms ofgeneral parking garage fees, advertising, or some other economicincentive.

Yes, it has come to this. With "only" 70,000 electriccars on the U.S. roads, several electric car charging stations are nowcongested, and the situation is becoming more acute by the day. Ifnothing is done about this looming calamity, the U.S. electric car marketrisks 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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