Ford, Tesla ‘blindside’ industry with charging agreement
Leave it to Ford and its new bedmate Tesla to shock the automotive world.
On the eve of Memorial Day weekend, Ford CEO Jim Farley announced that he would join Tesla CEO Elon Musk for a Twitter Spaces discussionwhere the two would talk about “accelerating EV adoption,” and make an announcement.
That announcement turned out to be a big one: Starting next year, Ford EVs will have access to 1[ads1]2,000 Tesla Superchargers in North America, via a Tesla-supplied adapter. Starting in 2025, all new Ford EVs will come with Tesla’s NACS (North American Charging Standard) charging connector, as opposed to the CCS standard used by most other EV manufacturers.
“Working with Elon and his team, I’m very excited for our industry and for Ford customers,” Ford CEO Jim Farley said at the Twitter Spaces event. “We believe this is a major move for our industry and all electrical customers.”
Similarly, Musk, who has been known to disparage traditional automakers but has previously shown an affinity for Ford, said, “I have tremendous respect for Ford as a company, and they make great vehicles,” adding “it’s an honour.” to work with a great company like Ford.”
Farley cited Tesla’s Supercharger network’s ease of use and reliability as key differentiators for using the service. Ford reiterated that its own BlueOval Charge Network of 10,000+ fast chargers will still be available, giving Ford owners more choice and a big leg up on the competition with Tesla’s network on tap.
Reactions in the automotive world were mixed, but one thing was certain: it was a shock.
“Ford blindsided the entire industry with this brilliant move and cemented its position as a leader in the transition to electric vehicles,” Tom Moloughney, EV charging expert and senior editor at InsideEVs told Yahoo Finance. “The Ford/Tesla deal will cause some initial disruption to the industry, but it will turn out to be good for the consumer in the long run.”
Wall Street generally supports the deal as well, with Ford owners (and putative owners) receiving a big benefit that could help sell more of the company’s electric cars.
“To the extent that it helps Ford sell more electric cars, it also reinforces the importance of achieving profitability on those car sales,” Goldman analyst Mark Delaney wrote in a note to investors. “Ford discussed having electric cars that can be charged quickly (and have a smaller battery) as part of its strategy to improve the user experience and profits at its recent investor day, and we see this step to improve the charging network as a step towards that.”
“When it comes to on-road vehicles and rapid charging ports, NACS is the leading standard in the United States,” Guidehouse Sr. said. Research Analyst Mike Austin to Yahoo Finance. “I think it’s a good move for Ford, or at least not a negative – everyone (Tesla and other automakers) will probably need an adapter one way or another anyway – so getting access to Superchargers requires moving to NACS, it’s probably worth it.”
Even Treasury Secretary Pete Buttigieg expressed support that the Ford/Tesla deal was good for consumers.
“We are very pleased to see this agreement and any agreement that means more access for more drivers to more electric chargers,” Secretary Buttigieg said in an interview with Yahoo Finance this week. “We’re on an aggressive journey to reach the president’s vision of half a million chargers by the end of the decade across America, and there’s already this remarkable charging network that Tesla has built. So for that to be available to more drivers, it’s , I think very positive news.”
Buttigieg continued that regardless of the charging plug standard – CCS vs NACS or even the CHAdeMo standard that Nissan uses, the availability of adapters for interoperability will be crucial. The most important thing for consumers is that the large number of chargers increases and these networks are opened to all users. Tesla has promised to open up more of its Supercharger network to other users by the end of next year, but the rollout is slow.
Unsurprisingly, automakers tied to the CCS standard, as well as charging companies aligned with a more agnostic approach to charging standards, are not ready to anoint Ford’s association with NACS as a game changer.
“GM believes that open charging networks and standards are the best way forward to enable EV adoption across the industry,” a GM spokesperson told Yahoo Finance in a statement. “That’s why we teamed up with a group of companies and SAE to develop and continue to refine an open connector standard in the Combined Charging System (CCS), which we believe is a truly universal solution available today for fast charging.”
“EVgo remains committed to Electric For All, and we continue to be ready to charge all electric vehicles on our network, including Fords, Teslas and dozens of other models,” EVgo told Yahoo Finance in a statement. “We look forward to learning more about how this partnership will be implemented.”
There is some concern from Tesla owners that Ford EV owners will potentially clog their Supercharger stalls in the future, but the high availability rate of Tesla’s chargers and relatively small user base of Ford EV owners should likely allay any concerns about availability.
Again, Wall Street is somewhat positive on the deal for Tesla.
“Recall in our 2022 report that we estimated the potential for Tesla to open its network wider over the next few years (ie, more than just Ford) at $1-3 billion in incremental revenue (although Tesla would not necessarily capture all of this),” Goldman analyst Mark Delaney wrote in his note. “We believe the news is a modest incremental positive for Tesla, as it is likely to bring additional profits and help Tesla maintain the most robust charging network, albeit with some risk of fewer car sales.”
“The biggest advantage for Tesla is that it helps increase Supercharger revenue (and utilization). Compared to cars, this is low capital and stable revenue, and opening it up to non-Tesla vehicles effectively makes it a standalone business entity, ” Guidehouse’s Mike Austin said.
EL charging expert Tom Moloughney was even more effusive in what this deal means for Tesla.
“Tesla is not just a car company, it’s an energy provider, and as such, the more customers, the better,” Moloughney told Yahoo Finance. “As long as Tesla continues to install Superchargers as it has been, the Supercharger experience will remain the best charging experience in the industry, even as other OEMs join in.”
Will NACS be the new standard?
The next logical question after Ford’s move: Will others follow suit and effectively make the NACS standard the main system and plug going forward?
“CCS is a good standard, but it was pretty much done by some sort of committee, and I think GM and others are going to have a big choice to make,” Ford CEO Jim Farley told CNBC. “Do they want fast charging for customers? Or do they want to stick to the standard and have less charging?”
As Buttigieg pointed out, if there are adapters for different plugs, any charger will do, but it will take a long time, and there is no guarantee that the adapters will work as seamlessly as native plugs work now.
The Tesla Supercharger experience is true “plug and play”, meaning that when the plug is connected to the car, the Supercharger system “knows” the car, has billing information already available and starts charging. With other networks, an app or charger interface needs to be handled, a specific charger selected in the interface, sometimes payment information needs to be entered, etc. before charging starts.
As the EV battleground intensifies, it’s possible that other manufacturers may jump over to the NACS side for a better user experience, but that would also mean teaming up with Tesla—a bitter pill to swallow for traditional automakers that have felt itself under attack from the Musk-led company.
For now, Tesla’s NACS appears to be in a better position for wider adoption.
“It’s possible,” Mike Austin said of whether NACS could be the new standard in the U.S., “but I think it’s too early to say — the Ford vehicles with NACS ports won’t come out until 2025, and it will take some years after that for all EVs to switch over. It’s also possible that Ford could offer both ports.”
Moloughney offered a similar sentiment, but added that the tide may be turning.
“It’s still not likely, but it opens the door,” he says. “NACS desperately needed a major OEM like Ford to back it for it to have a chance to become the mainstream standard. Now they have.”
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him further Twitter and on Instagram.
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