Tesla TSLA-Q jumped nearly 7 per cent on Friday after General Motors GM-N joined Ford F-N in agreeing to use its electric-vehicle charging network, a big win that analysts said could make Tesla Superchargers an industry standard in the United States.
The rare partnership among three of the biggest U.S. automakers ensures that more than 60 per cent of the country’s EV market can access Tesla’s North American Charging Standard (NACS), which should make it the primary network in the country.
“Pressure is now mounting on other car makers to join the party and the U.S. government who have pledged billions to build out networks … we could see Tesla’s tech become the industry standard,” Hargreaves Lansdown analyst Matt Britzman said.
Tesla’s network is more widespread and considered more reliable than the alternative combined charging system (CCS), which the government has tried to support with about $7.5-billion in federal funds.
Already the world’s most valuable automaker, the Elon Musk-led company has added more than $200-billion to its market value since announcing the charging tie-up with Ford on May 25.
Should the stock finish higher Friday, it would mark the eleventh straight session of gains, its longest winning streak in 2-1/2 years. It was among the most traded stocks across U.S. exchanges.
GM CEO Mary Barra said on Thursday that “we have a real opportunity here to really drive (the NACS) to be the unified standard for North America, which I think will enable even more mass adoption.”
GM shares rose 4.0 per cent on Friday, while Ford was 2.3 per cent higher.
The tie-ups will put pressure on other companies to upgrade their networks to work with Tesla’s at a time when many lag in customer service and lack the funds to make such a commitment.
Shares of charging companies such as ChargePoint Holdings Inc, EVgo Inc and Blink Charging Co fell between 7 per cent and 10 per cent in heavy trading.
“Tesla’s been one step ahead in this game and with other operators trying to play catch up they were already at a disadvantage,” said Danni Hewson of AJ Bell, adding that charging business could become a big growth driver for Tesla.
Wedbush Securities estimated Ford and GM combined could add $3-billion to services EV charging revenue for Tesla over the next few years. The brokerage also raised its price target on the stock to $300, which is nearly 30 per cent above its last close.
The stock has a forward 12-month price-to-earnings ratio of 60.46, among the highest in the S&P 500 index, and far greater than GM’s 5.29 and 7.94 for Ford.
Greater usage of Tesla Superchargers could, however, create its own problems for the company, said Michael Austin, senior research 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.