Investors are looking forward to a big week of earnings reports, especially in the growth and technology sector. Early-stage electric vehicle (EV) names aren't part of this week's reporting wave, but on Monday they are trading down for other reasons. Shares of luxury EV maker Lucid Group (LCID 5.58%) were down 4.4% as of 11:30 a.m. ET. The stocks of charging companies ChargePoint Holdings (CHPT 4.44%) and Blink Charging (BLNK 1.04%) were both also lower by 2.9% and 3%, respectively.
All of these names might be reacting to recent news related to sector leader Tesla (TSLA 0.49%). Investors are still digesting Tesla's surprisingly strong earnings report from last week. With Lucid poised to start building its international business, Tesla's growing lead could become a major headwind for the start-up. And over the weekend, The Wall Street Journal reported that Tesla was preparing to open some of its U.S. Supercharger network to non-Tesla owners. That could be a blow to the growth plans of charging network companies like ChargePoint and Blink.
The report said Tesla is bidding for a part of the billions in state and federal money dedicated to growing EV acceptance and ownership in the U.S. Tesla has already applied for funds in California and Texas, and there is $7.5 billion from the $1 trillion infrastructure bill that the federal government will be doling out to states to help build charging networks. ChargePoint and Blink should be well positioned to use that money, but would be a blow if Tesla also received some to open up its fast chargers to other users.
Tesla already has about 1,440 charging sites with more than 14,500 charging ports just in the U.S. ChargePoint has more than 12,000 fast charging ports of its own, but that includes all of North America as well as Europe. ChargePoint and Blink need to grow out their networks to achieve profitability through expanded subscription revenue. Opening Tesla Superchargers to all EVs could be a major headwind for these companies to achieve that goal.
Lucid has a different Tesla problem. Lucid has already announced plans to build a second manufacturing facility in Saudi Arabia. The company announced two new executive additions to its team last week focused on it global expansion goals. The new vice presidents of global logistics and process transformation will report directly to CEO and Chief Technology Officer Peter Rawlinson.
Tesla seemed to be struggling as it ramps up its two new manufacturing plants, with CEO Elon Musk saying recently the facilities were burning billions in cash. But Tesla still generated $621 million in free cash flow in the second quarter, so the plants weren't burning through as much cash as Musk seemed to imply. With Tesla's huge lead globally, including two international manufacturing plants, Lucid will have its work cut out to achieve positive free cash flow itself.