To The Moon

Tesla (TSLA) stock charged higher Friday following an announcement by General Motors that GM’s electric vehicles would be able to charge using Tesla (TSLA)’s charging network. That news following a similar announcement from Ford just two weeks before.

The company’s stock was up about $12 a share, or 5% on the day, as of this writing.

Both Ford and GM EV drivers will, for now, need special adapters to allow their vehicles to use Tesla chargers. Later, the automakers plan to build new electric vehicles that use Tesla-style chargers with no adapter needed.

Users will presumaby pay for charging sessions, providing more revenue for Tesla. Tesla “is going to get, I don’t know, $2 billion to $3 billion of revenue just from these folks a year,” said Gary Silberg, a global automotive industry analyst at KPMG.

Ford and GM EVs are currently built to use so-called CCS fast chargers, a common industry standard which relies on differently shaped plugs and thicker cables than Tesla’s chargers.

Tesla’s charging system had been proprietary and only usable by Teslas – although Teslas could use CCS chargers with an adapter. But CEO Elon Musk announced in late 2022 that he was inviting other automakers and charging companies to use Tesla’s charging system and design standards.He named Tesla’s charging the “North American Charging Standard” or NACS. Tesla’s NACS chargers outnumber CCS chargers in the United States by a factor of two to one, according to Tesla.

Yesterday, GM CEO Mary Barra also said she wanted NACS to be “the standard.”

Having Ford and GM agree to use the NACS standard means it is a non-proprietary standard, not limited to a single company. This makes it easier for Tesla to lobby for financial assistance under federal infrastructure laws for building EV chargers, said Sam Abuelsamid, an analyst with Guidehouse Insights. Currently, those rules limit funding to chargers using the CCS standard.

Moreover, Guidehouse’s Abuelsamid and KPMG’s Silberg said they don’t expect the shift to stop with GM and Ford.

“My guess is that over the coming weeks and months, most other [automakers] will decide to make the switch and by 2026-27 there will be no new EVs sold in North America with CCS type-1 connectors,” Abuelsamid said in an email.The GM announcement is already putting downward pressure on shares of other EV charger stocks.

When Musk first made his 2022 announcement it was unclear if any automaker would take Tesla up on the offer, even though Tesla’s charging network is generally regarded as very robust, extensive, and reliable.

Tesla is, by far, the dominant seller of electric vehicles in the US with nearly two-thirds market share of EVs. GM’s Chevrolet, with its inexpensive Bolt EV, is a distant second, according to a report from Cox Automotive.

Ford sells the popular Mustang Mach-E electric SUV and the F-150 Lightning pickup, giving it a 4% market share in the first quarter of 2023. GM has aggressive plans for new EV models in the next few of years and has said it will sell only zero-emission vehicles by 2035.

Other automakers, such as KIa, Hyundai, BMW, Mercedes and Volkswagen, still use the CCS charging standard and have not announced any plans to change.

GM has said that, once it switches to building vehicles with NACS charging ports in 2025, it will make adapters available so drivers can still use CCS chargers, as well.