Over the past 15 years, Tesla (TSLA -5.55%) has gone from enigmatic start-up to household name. The company single-handedly popularized electric vehicles (EVs) for the masses, starting a movement that soon attracted a flood of competition. A host of new rivals brought with it numerous different charging connectors, with each automaker vying to make theirs the industry standard.
The tide has turned decidedly in Tesla's favor over the past month. Ford was the first to announce that it would join Tesla's Supercharger network and adopt the company's North American Charging Standard (NACS) connector. A similar statement by General Motors soon followed. Just yesterday, news broke that rival Rivian would also adopt the NACS standard and join Tesla's Supercharger network.
Given the undeniable trend taking place before our very eyes, has it become virtually inevitable that other automakers will follow suit? Several recent reports provide a clue.
Image source: Tesla.
High-profile additions
Tesla's charging system is the largest such network in the world, totaling more than 45,000 Superchargers, with roughly 17,000 charging ports in the U.S. Tesla's charging stations can deliver, on average, a faster charge, adding more than 200 miles of driving range in just 15 minutes, according to the company's website. Its chargers are also more reliable, a factor that Ford, GM, and Rivian each noted in their respective press releases as having influenced their decision to join.
Furthermore, Tesla's network accounts for roughly 60% of the fast chargers in the country, according to Reuters, which would significantly increase the availability of -- and access to -- chargers for non-Tesla EVs.
Having the No. 2 (GM) and the No. 3 (Ford) EV sellers in the country -- as well as a high-profile competitor -- join its network is a coup for Tesla, and recent reports suggest there could be more to come.
Another potential suitor
On Tuesday, Hyundai Motor revealed it's also considering making the jump. At the company's investor day, president and CEO Jaehoon Chang said Hyundai is assessing the possibility for joining Tesla's network, though he pointed out one stumbling block. Chang noted that Hyundai vehicles can currently achieve a charge more quickly on its own chargers than on Tesla's. "That's what we will look into from a customer's perspective," Chang said.
Hyundai's newest EVs are equipped with 800-volt electrical systems that permit faster charging, while Tesla's system uses a lower voltage, resulting in a slower charging time for Hyundai's vehicles.
A sizable win in Texas
Tesla scored another big win this week, this time in Texas, the location of its headquarters and the home of its Gigafactory auto manufacturing facility. The Texas Department of Transportation announced that it was backing Tesla's standard. The state regulator said it would require all charging companies to include Tesla's NACS -- along with the existing Combined Charging System (CCS) standard connectors -- in order to qualify for a Texas program to bring chargers to the state's highways using federal funds, according to a Reuters report.
"The decision by Ford, GM, and now Rivian to adopt NACS changed requirements for Phase 1. Each Direct Current (DC) Fast Charge port will be required to have 1 CCS connector and 1 NACS connector," the Texas Department of Transportation said in an email.
This development could ramp up the pressure on other states -- and automakers -- to adopt Tesla's NACS standard.
Billions of dollars at stake
Tesla has a vested interest in opening its Supercharger network to other automakers.
Aside from quickly becoming the industry standard, the company is vying for its part in billions of dollars in federal subsidies. Tesla could receive as much as $7.5 billion courtesy of the Biden administration if it makes its network accessible to EVs produced by other carmakers.
There's also the potential to add billions of dollars from additional EV charging revenue in the coming years, though estimates vary.
Wedbush analyst Dan Ives is calling this Tesla's "AWS moment," referring to the decision by Amazon to open its cloud infrastructure service to paying customers back in 2006, after initially developing its cloud tools for internal use.
"For Tesla, we believe this is a large monetization opportunity for the company in its supercharger story," Ives wrote. He estimates that the deals with GM and Ford could result in an additional $3 billion in EV charging revenue "over the next few years." That figure could grow as the number of deals mounts.
Piper Sandler analyst Alex Potter came to a similar conclusion, estimating that the charging revenue from new network users could add $3 billion annually to Tesla's coffers by 2030, with that amount increasing to $5.4 billion by 2032.
Given the ongoing trend, it seems almost inevitable that other automakers will join Tesla's network, helping supercharge its future growth.
