Tesla (TSLA) shares extended gains Friday, lifting them to their highest levels since early October, after the EV leader cut a deal enabling General Motors (GM) car owners to use its network of charging stations.
The partnership, which follows a similar deal with Ford Motor (F) last week, means all three U.S. automakers will now use the same network of 12,000 fast chargers based on the Tesla North American Charging Standard, which comprise around a third of U.S. charging stations.
GM said its cars would be made to fit the Tesla standard by 2025. Chief Executive Mary Barra said the deal was likely to save the carmaker as much as $400 million. GM cars themselves will be able to connect to ports based on that North American Tesla standard as early as 2024 with GM-made adaptors.
Tesla's deals with Ford and GM to share a single charging system represent a central plank in President Joe Biden's effort to accelerate adoption of electric vehicles under his Green Economy agenda. And they underpin the extension of billions in related federal subsidies for EV buyers.
That said, they substantially increase the number of people who can access Tesla chargers, creating more competition for spaces at charging stations. That could annoy Tesla users, who are accustomed to exclusive access to those facilities.
"For Tesla, we believe this is a large monetization opportunity for the company in its supercharger story, adding to its growing sum-of-the-parts valuation that we now peg at $300 per share with its developing energy business along with its well-established EV machine," said Wedbush analyst and longtime Tesla bull Dan Ives.
The analyst lifted his price target by $85 while maintaining an outperform rating on the stock following Thursday's charging-station pact.
"We estimate Ford and GM combined could add another $3 billion to services EV charging revenue for Tesla over the next few years in another accretive poker move by Musk & Co.," he added.
Tesla shares were marked 5.15% higher in early afternoon trading Friday to change hands at $246.90 each, the highest since early October. General Motors shares, meanwhile, jumped 4.2% to $37.37 each.
Shares in Tesla have risen more than 40% over the past month after CEO Elon Musk said he planned to carry on as CEO of the clean-energy-car maker. Musk said that he'd devote less time to Twitter under the platform's new leader, the former NBCUniversal ad executive Linda Yaccarino.
Musk: Model Y SUV to Become World's Top Seller
Musk last month told investors at Tesla's annual meeting in Austin that he saw the Model Y midsize SUV becoming the top-selling car in the world as early as this year. Musk added that Tesla would begin experimenting with advertising over the coming months, a move Ives said could be a "major positive" for the stock.
Tesla also posted solid springtime sales in China, the carmaker's biggest and most important market, even amid increased competition and an uneven economic recovery from the country's zero-covid health policies.
The China Passenger Car Association said Tesla sold 677,695 cars over the month of May, an 2.4% increase from the previous month and more than double (up 142%) the figure from the year-earlier period, when Tesla's Shanghai gigafactory was still under severe Covid restrictions
China's EV sales could accelerate further into the summer months as well, after state media reports suggested last week that the government would extend tax breaks for the purchase of so-called new-energy vehicles.
Tesla posted a record first-quarter delivery total of 422,875 new vehicles, a 36% increase from the year-earlier period, but that tally missed Wall Street forecasts as production outpaced demand. Production rose 45% to 440,808 vehicles as supply-chain disruptions and covid-related closures at its Shanghai factory faded.
The pace is firmly shy of the rate needed to meet Tesla's own target of 1.8 million deliveries over the whole of 2023, and Musk's suggestion that "if it's a smooth year ... without some big supply chain interruption or massive problem" deliveries could reach 2 million.
