In an exciting development, Tesla (TSLA) shares closed 4% higher on Friday following General Motors’ (GM) announcement of joining Ford (F) in utilizing Tesla’s electric-vehicle (EV) charging network. Analysts believe this partnership could establish Tesla Superchargers as the industry standard for EV charging in the United States.
This rare collaboration among three major U.S. automakers ensures that over 60% of the country’s EV market will have access to Tesla’s North American Charging Standard (NACS), solidifying it as the primary charging network in the nation.
In support of this move, the White House stated that electric-vehicle charging stations equipped with Tesla standard plugs would be eligible for substantial federal subsidies if they also included the U.S. charging standard connection, CCS.
Garrett Nelson, senior investment strategist at CFRA Research, explained Tesla’s strategy, saying, “Tesla is hoping that CCS adapters will help it meet that requirement to qualify for federal tax dollars.” He added that Tesla opening up its Supercharger network to competitors could negatively impact third-party charging companies.
As a result of this news, independent charging companies such as ChargePoint Holdings Inc (CHPT), EVgo Inc (EVGO), and Blink Charging Co (BLNK) experienced stock declines ranging from 11% to 13%.
According to an estimation by Wedbush Securities, the partnership between Ford, GM, and Tesla has the potential to generate an extra $3 billion in EV charging revenue for Tesla in the coming years. As a result, the brokerage raised its price target for Tesla stock to $300, representing a nearly 30% increase from its previous close.
This partnership further boosts Tesla’s market value, as the company has already added approximately $190 billion since announcing the charging tie-up with Ford on May 25. Tesla’s stock has seen eleven consecutive days of gains, marking its longest winning streak in two and a half years. It remains one of the most actively traded stocks on U.S. exchanges.
Although Tesla’s stock has a high forward 12-month price-to-earnings ratio of 60.46, compared to GM’s 5.29 and Ford’s 7.94, investors who have shorted Tesla shares have experienced substantial losses during the company’s winning streak.
GM CEO Mary Barra shared her positive outlook, emphasizing the significant opportunity to establish the North American Charging Standard (NACS) as the unified standard across the continent, which she believes will facilitate wider mass adoption of electric vehicles. As a result of this announcement, both GM and Ford stocks closed with over a 1% increase on Friday.
This partnership places pressure on other companies to upgrade their charging networks to be compatible with Tesla’s Superchargers, particularly as many companies currently lag in customer service and lack sufficient funds for such upgrades. Charging companies like Blink Charging welcome the opportunity to work with Tesla on interoperability.
While the expanded usage of Tesla Superchargers presents new challenges for the company, such as overcrowding and potential disappointment for Tesla owners, it also presents significant growth potential for Tesla’s charging business.
Michael Austin, senior research analyst at Guidehouse, highlighted the risks for Tesla, stating, “There is a potential risk for Tesla in terms of either overcrowding the charging stations and disappointing Tesla owners or losing the competitive advantage that comes with exclusive access to the top-notch network.”
The partnership between Tesla, GM, and Ford sets the stage for a new era in EV charging, with Tesla’s Superchargers moving closer to becoming the standard in the industry