Tesla jumps as GM deal brings charging network closer to US standard

June (Reuters) – Tesla ( TSLA.O ) shares rose 5% on Friday after General Motors ( GM.N ) joined Ford ( FN ) in agreeing to use its electric vehicle charging network, a major win that analysts said could make Tesla Superchargers an industry standard in the United States.

The rare partnership between three of the largest US automakers ensures that more than 60% of the country̵[ads1]7;s EV market has access to Tesla’s North American Charging Standard (NACS), which should make it the primary network in the country.

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

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

“No matter how you slice it, we think Tesla opening up its Supercharger network to competitors is a huge negative for third-party charging companies.”

Shares of independent charging companies such as ChargePoint Holdings Inc ( CHPT.N ), EVgo Inc ( EVGO.O ) and Blink Charging Co ( BLNK.O ) fell between 10% and 13.6%.

Already the world’s most valuable automaker, Elon Musk-led Tesla has added more than $200 billion to its market capitalization since announcing the charging tie-up with Ford on May 25.

Should the stock finish higher Friday, it would mark its 11th consecutive session of gains, its longest winning streak of 2-1/2 years. It was among the most traded stocks across US exchanges.

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

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

Shares of GM and Ford rose about 2% on Friday.

CHARGING CRY

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

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

“Tesla has been 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 charging business could be a major growth driver for Tesla.

Wedbush Securities estimates that Ford and GM combined could add $3 billion in electric vehicle service revenue for Tesla over the next few years. The brokerage also raised its price target on the stock to $300, which is almost 30% above the last close.

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

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

Additional reporting by Chavi Mehta in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel

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