Tesla Starts Battery Swap Pilot Program to Gauge Demand

Tesla Motors, Inc. TSLA is starting a pilot program this week to test its battery swap technology. The company has invited some Model S owners to test the technology, which allows vehicle owners to exchange their used battery for a fully charged one. At present, the battery swap is available by appointment only at a custom-built facility across the street from the Superchargers, at Harris Ranch, CA.

The battery swap process takes about three minutes, per Tesla. This is because the titanium and hardened aluminum ballistic plates added to the vehicles last year have increased the time required for removal of the battery pack. However, the company is trying to reduce this time to less than one minute through modifications of the vehicle structure.

Nevertheless, three minutes are still quite less compared to the 75 minutes required to fully charge a battery using a Supercharger. Charging at normal charging stations takes even longer.

Thus, the battery swap technology helps Model S owners save time. However, unlike the Superchargers, the battery swap facility will not be available for free. Vehicle owners will have to pay a fee for the service, although the cost will be less than that of a full tank of gasoline, initially.

However, Tesla is not sure if people will be willing to pay for a battery swap when they can charge their car battery for free, using Superchargers. Thus, it is conducting this pilot program to gauge the demand as well as test the technology before investing further in it. This is a prudent step taken by the company, which already has high research and development costs.

Tesla currently carries a Zacks Rank #5 (Strong Sell). Investors interested in the auto industry could consider better-ranked stocks like Gentex Corp. GNTX, Douglas Dynamics, Inc. PLOW and STRATTEC Security Corporation STRT, all sporting a Zacks Rank #1 (Strong Buy).