Adoption of Tesla EV Plugs is a Major Bullish Factor for Stock

Shares of Tesla (TSLA) have been on fire this year, more than doubling in price and posting a 9-month high last week.  The latest supportive factor for Tesla is opening its fast chargers to competitors, which will boost its revenue going forward.  Ford Motor (F), General Motors (GM), and at least four other automakers recently announced plans to adopt Tesla’s charging plug design in exchange for access to Tesla’s Supercharger network. 

Back in 2012, when Tesla introduced its Model S sedan, it included a proprietary plug for recharging used by no other automaker.  The company also installed its own network of high-speed chargers exclusively for Teslas. Other automakers used their own plug designs and relied on independent companies to build and operate public charging networks using those plugs.  However, this spring, other electric vehicle (EV) makers announced that their future EVs would use Tesla’s charging gear.

Tesla has a U.S. network of nearly 20,000 Superchargers, representing 62% of all high-speed chargers installed along American roads.  These charges are considered the most reliable compared with other manufacturers’ chargers and can add up to 200 miles of range to a depleted EV battery in 15 minutes.   Baird estimates that Tesla’s Superchargers are operating at an 8.75% utilization rate now, and if the utilization rate remains steady through the end of the decade, non-Tesla drivers would boost revenue for the company by $5.22 billion and add 15 cents to earnings per share.

There are two plugs used for fast-charging EVs in the U.S., i.e., (1) Tesla’s North American Standard, or NACS, and (2) Combined Charging Standard, or CCS.  With more automakers adopting Tesla’s charging standard, the company stands to boost its EV market share.  Tesla accounted for 60% of North American EV sales last year, according to BloombergNEF.  That compares with 7% for General Motors.  Ford Motor wasn’t even among the top five.  However, BloombergNEF said automakers are still bringing new EVs to market that haven’t signed on to Tesla’s standard.  The U.S. government is pouring $5 billion into subsidizing a nationwide web of public charging stations that must include CCS plugs.      

Tesla reported $5.9 billion in service sales last year, but Piper Sandler estimates that adding Ford and GM drivers to the Supercharger network could boost Tesla’s annual charging revenue by $3 billion by 2030 and $5.2 billion by 2032.  Also, those non-Tesla drivers will be exposed to Tesla’s ecosystem of chargers and apps, giving the company a chance to convert some owners to Teslas.  In addition, Tesla CEO Musk tweeted last month that he was open to licensing other Tesla technologies to automakers, potentially boosting Tesla’s revenue even more.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.