PALO ALTO, Calif. -- When it unveiled the Model S, Tesla Motors Inc. crowed about its fast-swapping technology, demonstrating in 2013 that a depleted battery could be swapped for a fresh one in minutes. Later, it built a swap station in Harris Ranch, Calif., halfway between Los Angeles and San Francisco, to test the technology.
But there’s a problem, Tesla CEO Elon Musk says: Customers aren’t interested.
“People don’t care about pack swap,” Musk said Tuesday at the company’s annual shareholder meeting. Tesla’s proprietary Superchargers, which can top off the battery in the Model S with 200 miles of range in about 20 minutes, are “fast enough” for most customers, he said, and unlike battery swaps, they’re free.
“We thought people would prefer Supercharging, but we weren’t sure,” Musk said. “So that’s why we built the pack swap capability in. And based on what we’re seeing here, it’s unlikely to be something that’s worth expanding in the future unless something changes.”
With this public reversal by Musk, battery swapping, once a promising alternative to fast charging, now seems destined to become a quirky footnote in the history of Tesla, and perhaps the entire electric-car movement.
Battery swapping was in vogue when Tesla was designing and engineering the Model S. Better Place, an Israeli startup, raised $750 million in venture capital to prove the concept, and had 200 employees at a headquarters right near Tesla’s offices in Palo Alto. But in 2013, the company left the U.S., and then went bankrupt.
That same year, Tesla signaled it was committed to battery-swapping. In June 2013, the company held an event at its design studio in Hawthorne, Calif., where it demonstrated a pack being swapped in 90 seconds.
Ricardo Reyes, vice president of communications at Tesla, said the company subsequently invited Model S owners in California to use Tesla’s Harris Ranch swap center during road trips. Few accepted the offer, and even fewer were repeat customers, he said in an interview Tuesday in Palo Alto.
“There’s been limited use by the people we’ve invited,” Reyes said. “They say: ‘that was a cool experience, but I’m going to go back to Supercharging.”
In the heyday of excitement about battery charging, Tesla also had a strong financial incentive to make the technology work.
Tesla makes tens of millions of dollars per quarter by selling zero-emission vehicle credits awarded by the California Air Resources Board, which requires a share of cars automakers sell in the state to be electric vehicles. It’s a small and shrinking share of Tesla’s revenue -- about 5 percent nowadays -- but money is money.
In 2013 and 2014, Tesla was able to claim about 75 percent more credits -- up to 7 credits per Model S instead of 4 credits per Model S -- under a fast-refueling provision that regulators had written in an attempt to give extra credit to hydrogen cars. That translated into tens of millions of dollars in extra profits.
The board changed its rules, effective Jan. 1, so the mere ability to swap batteries was no longer enough. Tesla suddenly had to prove that actual swaps were happening if it wanted the Model S to get the same treatment as hydrogen cars like the Hyundai Tucson FCEV and Toyota Mirai.
And, as Musk acknowledged Tuesday, those swaps were few and far between. So another reason to hammer away at fast-swapping was basically gone.
Some cynics argue Tesla was gaming the system. I don’t see it that way.
With companies like Better Place presenting another way to refuel EVs, Tesla decided to engineer the Model S with a swappable battery to hedge its bets and to show off a nifty technology. It made a logical choice: to squeeze every cent out of that technology by making sure that it qualified for California’s credits.
It is ultimately customers, not regulators in Sacramento, who decide which cars are desirable. And people simply haven’t found battery swapping desirable. C’est la vie.