Tesla is jumping as GM deal brings charging network closer to US standards

June 9 (Reuters) – Shares of Tesla (TSLA.O) closed up 4% on Friday after General Motors joined Ford (FN) in approving use of its electric vehicle charging network, a big win that analysts said could make the charger Tesla Superchargers are an industry standard in the United States.

The rare partnership between three of the largest US automakers ensures that more than 60% of the country’s electric vehicle market has access to Tesla’s North American Charging Standard (NACS), making it the nation’s primary network.

The White House said Friday that electric vehicle charging stations that use standard Tesla plugs will be eligible for billions of dollars in federal subsidies as long as they include the standard US charging connection, CCS, as well.

“Tesla hopes the CCS adapters will help it meet this requirement to qualify for federal tax dollars,” said Garrett Nelson, chief investment analyst at CFRA Research.

“Any way you slice it, we think Tesla opening its Supercharger network to competitors is a huge negative for third-party chargers.”

Shares of independent charging companies such as ChargePoint Holdings Inc (CHPT.N), EVgo Inc (EVGO.O), and Blink Charging Co (BLNK.O) closed down between 11% and 13%.

Wedbush Securities has estimated that Ford and GM together could add $3 billion in EV charging services revenue for Tesla over the next few years. The brokerage also raised its price target for the stock to $300, which is nearly 30% higher than its last close.

Elon Musk’s Tesla, already the world’s most valuable automaker, has added about $190 billion to its market value since announcing its charging partnership with Ford on May 25.

Tesla stock closed higher on Friday, posting its 11th straight session of gains, its longest winning streak in two and a half years. It was among the most traded stocks across US stock exchanges during trading hours.

The stock has a 12-month price-to-earnings ratio of 60.46, which is among the highest in the S&P 500 (.SPX), and much greater than Ford’s 5.29 and 7.94.

Traders who shorted Tesla shares have lost about $6.08 billion on a market basis during the electric car maker’s current winning streak, according to the latest data from S3 Partners.

“We have a real opportunity here to really push (NACS) to be the unified standard for North America, which I think will enable more mass adoption,” General Motors CEO Mary Barra said Thursday.

Shares of General Motors and Ford both closed up more than 1% on Friday.

Cargo Race

The tie-ups will put pressure on other companies to upgrade their networks to work with Tesla at a time when many are lagging behind in customer service and lack the funds to make such a commitment.

“We have the opportunity to work with Tesla on interoperability with cables and connections,” said a spokesperson for Blink Charging.

“Tesla was one step ahead in this game and with other operators trying to catch up they were already at a disadvantage,” said Danni Hewson of AJ Bell, adding that the shipping business could become a big driver for Tesla’s growth.

Greater use of Tesla Superchargers could, however, create its own problems for the company, said Michael Austin, senior research analyst at Guidehouse.

“There is a risk for Tesla in terms of either making the stations too busy and disappointing for Tesla owners or removing that competitive advantage of exclusive access to the best network,” Austin said.

Additional reporting by Shafi Mehta and Samrita Arunasalem in Bengaluru; Edited by Chunak Dasgupta and Magu Samuel

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