BMW's Supercharger Plan -- Tesla Not Included

NEW YORK (TheStreet) -- Thursday I made the case for BMW striking a deal with Tesla (TSLA) for the purpose of getting access to the Tesla superchargers.

Near the end I wrote: "This is only one scenario. There are other scenarios. Perhaps BMW could not stand Tesla's terms and is proceeding along a different route. Perhaps BMW will partner with some other entity that will help it build their versions of superchargers. That is also a possibility."

The purpose of this article is to describe the rationale for what I think is the more likely path for BMW. Let’s start with the weakest link in the BMW-Tesla supercharger sharing argument.

In the U.S. and Europe, Tesla’s superchargers are placed mostly along the rural freeways connecting the cities. They may be spaced 100-200 miles apart. They enable you to drive from California to New York, so these are long stretches across the fruited plains.

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The fundamental problem for BMW to bother with this network right now, is that neither BMW nor any other automaker has a car that fits this network’s layout. BMW has an exotic plug-in electric car that can handle long-distance travel, the i8, but it does so by using an on-board gasoline generator. The smaller BMW i3 is available with an optional gasoline generator, but it only has a two gallon gasoline tank, making long-distance travel impractical.

Looking at the BMW i3 without the gasoline generator, however, it only has a rated average range of 81 miles. Freeway driving at normal 70-80 mph speeds would likely yield meaningfully less than that.

The point here is this: Even if BMW somehow got access to Tesla’s superchargers, the BMW i3 would be essentially useless for this purpose. Most certainly, BMW has somewhere in development one or more cars that could fit Tesla’s current supercharger requirements, from a topology standpoint -- but those are likely two to three years away from making it to market.

As such, it would simply be premature for BMW to get involved with Tesla’s supercharging network at this time. This does not exclude the possibility that it could happen in the coming years, but it seems unlikely right now.

Does that mean that BMW will do nothing in terms of some other form of superchargers right now? Absolutely not!

First of all, let’s settle on a definition of "supercharger." What we are really talking about here are DC chargers, as opposed to AC. These typically operate around 440 volt instead of AC chargers at 240 volt and 110 volt.

Then there are issues of amperage and kilowatt. Tesla’s chargers operate up to 135 kW. Most chargers from Tesla’s competitors operate in most cases only at 50 kW. This makes the charging process slower, of course.

Even at lower amperages, there is still a point in having DC charging instead of AC charging. A basic 240 volt AC charger, which is the typical electric car charger you will find in parking garages today, could easily be fed with as little as a 20 amp circuit.

Until now, DC chargers have been every expensive -- $10,000 and up just for the equipment, installation not included -- compared to AC chargers that could cost under $5,000 for commercial-grade versions and now well under $1,000 for home units that you plug into a dryer outlet in your garage.

However, there’s a way to make those DC chargers less expensive. One way is to make them work on weaker circuits, such as 20 amps. This would make them feasible to install into more public parking garages. Otherwise you might have to trench more power, install new transformers, etc., for those parking garages. That could cost well over $200,000. Simply unrealistic in most cases.

As such, I envision BMW -- and perhaps other automakers such as Nissan (NSANY) and Kia, perhaps General Motors (GM)  and Volkswagen (VLKAY) -- to join together with a suitable infrastructure partner who could install such lower-power (20 amps) DC chargers in metropolitan and suburban parking garages across the United States -- particularly in California.

This -- not Tesla -- is more likely BMW's near-term supercharging play.

What does this accomplish? First of all, it would be compatible with the BMW i3, which has been selling in the U.S. since approximately May 1. There are no hardware or software changes necessary. As long as you ordered your BMW i3 with the $700 DC charger option, it would work on this system seamlessly right now.

Second, it means that you could now “top off” your BMW i3 with up to 60 miles of range in as little as 30 minutes, although getting a 60 mile charge would likely take longer than 30 minutes given the low 20 amp circuit that I am envisioning for this initiative. Realistically, you could plug in for 10 minutes and get perhaps a 15 mile boost, ensuring you could deal with a minor unplanned detour. Or you could be plugged in for 30 minutes or more, if that’s what you needed or wanted.

As I mentioned above, BMW wouldn’t be the only company interested in this kind of new metropolitan/suburban DC charging network (“superchargers”). As the market’s electric car volume leader, Nissan would also want to be part of this. GM is selling a car in California and Oregon that would be compatible -- the Chevrolet Spark EV -- and surely GM has many more models planned for introduction in 2015 and beyond.

Starting in December this year, Volkswagen’s eGolf would also be ripe for using this kind of DC charging network. Kia launches its model -- the Soul EV -- in September in California, with additional geographies in 2015. No later than 2017, I would bet money Ford offers a compatible car as well.

Of these cars, BMW, Chevrolet, Volkswagen and in the future Ford (F), use the CCS standard (stands for combined charging standard, CCS). Nissan and Kia use the ChaDeMo standard, which originated in Japan. These DC charging stations would over time have to support both standards, which will be easy to do with two hoses being fed by the same box.

For the near term, this kind of deal avoids the laundry list of thorny issues that a deal with Tesla would entail. There is no redesigning the cars, no new software, no new business model, no getting in bed with Tesla. Basically, the cost of this infrastructure would be shared with Nissan, Kia, Volkswagen, GM, and perhaps Ford. Monetarily, it would be a rounding error even if BMW paid for the whole thing. Collectively, it’s a no-brainer.

So there you have it: While there is a rationale on both sides for a BMW-Tesla supercharging deal, I don’t think it fits the short-term needs of Tesla’s partners -- BMW or otherwise. It could happen in the longer term, but that’s years away and there are many other variables at play for what comes to market in 2018-2020 anyway.

Rather, I think the far more likely scenario is the city-suburban DC charging network deal I described above. It doesn’t solve the long-distance travel problem for pure EVs, but it fits the current cars such as the BMW i3 right now. It would make for a stronger case to go with a pure EV in metropolitan areas such as San Francisco Bay Area, Los Angeles and San Diego. That is a defensible and logical first step.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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