The CEOs of Tesla (TSLA 1.70%) and Ford (F 1.61%) announced a new arrangement between the two companies last night, and both stocks are popping today because of it. Tesla shares closed higher by 4.7% and Ford by 6.3% on the day.
Starting next year, Ford electric vehicle (EV) owners will be able to utilize Tesla's extensive network of Superchargers in the U.S. and Canada. Elon Musk and Ford CEO Jim Farley announced the deal on Twitter last night. The arrangement could be a boon for both companies.
Tesla's network of fast chargers is the largest in North America, and access for Ford owners could help Ford ramp up its EV business more quickly. For Tesla, it's a way to expand what is already becoming a meaningful part of its business.
Tesla includes revenue from its Supercharger network in its "services and other revenue" segment. That revenue jumped 44% year over year in the first quarter and represented about 8% of total revenue for the quarterly period. Starting next year, that growth could accelerate as Ford owners begin using Tesla's fast chargers.
Ford customers will initially use an adaptor to access the network, but future Ford EVs will also include the Tesla plug. Ford customers currently use the company's BlueOval Charge network, which provides access to chargers run by partners. But this deal could mean Tesla's technology will eventually become the standard in North America.
Ford sold more than 60,000 EVs last year, making it the second-largest EV maker in North America behind Tesla. But Tesla has a large lead and will likely win over even Ford owners if they are impressed with the Supercharger hardware and software.
One of Tesla's goals has always been to support electrification in mobility. This agreement does that while potentially driving growth in its business. That has investors bidding up shares today.