The Ford-Tesla electrical car charging contract places stress on GM

DETROIT – A surprise deal between Ford engine And Tesla Advances in EV charging technology and infrastructure could put new pressure on other automakers’ EV strategies.

The merger of the two competitors will give Ford owners access to more than 12,000 Tesla Superchargers in the US and Canada starting early next year. More importantly, Ford’s next generation of electric vehicles — expected by mid-decade — will use Tesla’s charging connector, allowing Ford vehicle owners to charge on Tesla superchargers without an adapter.

related investment news

The club name Ford joins forces with Tesla and causes the shares to soar CNBC Investing Club

The agreement makes Ford one of the first automakers to explicitly connect to the network.

Ford CEO Jim Farley and Tesla CEO Elon Musk announced the deal Thursday during a live audio discussion on Twitter Spaces. On Friday morning, Farley acknowledged the duel would pose challenges for Ford’s rivals.

“I think GM and others are going to have a big decision to make,” he said on CNBC’s Squawk Box.

Farley’s comments related to which electric car charging plug should be standard in the US. A charger called CCS is now the industry standard. Tesla vehicles and their Supercharger network use what is known as NACS. Other vehicles can use both, but require an adapter.

“The CCS is a great standard, but it was essentially created by some kind of committee, and I think GM and others are going to have a big decision to make,” Farley told CNBC. “Do you want fast charging for your customers? Or do they want to stick to their standard and charge less?”

Ford shares rose 6.2% on Friday to close at $12.09 a share. Shares of Tesla were also up 4.7% on Friday to end the week at $193.17.

Watch CNBC's full interview with Ford CEO Jim Farley

The Ford-Tesla deal could be short-term negative for GM, Stellantis and other automakers that don’t have access to so many fast chargers said to be critical to expanding EV adoption, said Tom Narayan, an analyst at RBC Capital

“The news today is obviously positive for Ford shares (and potentially negative for GM/STLA in the near term), but ultimately we believe this should be viewed as a long-term play by Tesla,” Narayan said in a Friday investor note.

Tesla states that it has around 45,000 Supercharger connections at 4,947 Supercharger stations worldwide. The company does not disclose how many there are in the US. The US Department of Energy reports that the country only has about 5,300 CCS fast chargers.

General MotorsWithout specifically addressing Farley’s comments, the company said Friday that it “believes open charging networks and standards are the best way to enable EV adoption across the industry.” GM said it was working with a group of company and SAE International, formerly the Society of Automotive Engineers, to develop and further refine an open connector standard for CCS, which he says is important for “building an open network for fast charging” across North America.”

The Detroit-based automaker has announced several partnerships with providers of electric vehicle charging stations and has called for more government support for this infrastructure.

“Fully dedicated”

Ford is “completely committed” to a unified US charging protocol that includes the Tesla plug connector, Farley said Thursday.

When Musk announced the deal with Farley, he hinted that other automakers could also use the Tesla Supercharger network the company’s charging ports.

“Working with Ford and maybe others can make it the North American standard. I think consumers will benefit from that,” Musk said Thursday.

An all-electric Ford Mustang Mach-E is charged at a Tesla Supercharger station.

ford

Tesla has already talked about opening up its private network to other electric vehicles. White House officials announced in February that Tesla had committed to opening 7,500 of its charging stations to non-Tesla EV drivers by the end of 2024.

Public EV charging is a big concern for potential buyers, and no automaker other than Tesla has successfully built its own network. Instead, they’ve announced partnerships with third-party companies that have often proven unreliable and frustrating for owners.

Most US drivers log vehicle miles from home to nearby locations. But EV buyers who want to make longer car journeys or don’t have access to a garage with a charger often worry about access to reliable, public charging facilities.

The problem is getting worse: At least one in five attempted charging by drivers failed last year, according to a study on public charging published by JD Power last year.

According to a separate new study by JD Power, Tesla’s superchargers were rated top in terms of overall customer satisfaction.

Wall Street bullish

Rod Lache, an analyst at Wolfe Research, called the deal a “win-win” as it more than doubles Ford customers’ access to fast chargers and increases utilization of the Tesla network.

“For Ford, access to the Tesla network helps solve a major problem for its electric vehicle customers who would otherwise have to turn to third-party charging providers,” he said in an investor note on Friday. “Meanwhile, attracting Ford customers to Tesla will help increase network utilization, a key driver of profitability.”

Jim Farley and Elon Musk

Getty Images

The deal is a big boost in access to fast chargers for Ford and its customers, Morningstar analyst David Whiston said. He added that it “puts some pressure on other long-established automakers, but if you’re someone like GM, I don’t think you need to panic.”

Whiston said he would like to know more about the deal, including costs, duration and other details that were not disclosed.

A Ford spokesman said more information about the agreement would be announced once Tesla’s chargers open to Ford owners early next year.

– CNBC’s Michael Bloom, Lora Kolodny and John Rosevear contributed to this report.

Clarification: This story has been updated to clarify that SAE International was formerly known as the Society of Automotive Engineers.

Comments are closed.