Tesla jumps as GM deal brings Supercharger network closer to US standard By Reuters

by The Insights

© Reuters. A driver charges the battery of his Tesla car at a Tesla Super charging station at a service station on the highway in Sailly-Flibeaucourt, France, January 12, 2019. REUTERS/Pascal Rossignol

By Aditya Soni and Hyunjoo Jin

(Reuters) – Shares of Tesla jumped 6% on Friday on expectations that its electric vehicle charging system would become an industry standard after General Motors (NYSE:) joined rival Ford in agreeing to use the Tesla Network (NASDAQ:) Supercharger.

The Elon Musk-led automaker was on course for its eleventh straight winning streak, which would mark its longest winning streak in 2½ years. Tesla was also among the most traded stocks on US exchanges.

Already the world’s most valuable automaker, Tesla was to increase its market capitalization by more than $30 billion to around $780 billion.

Shares of General Motors, which has a market capitalization well below $49.8 billion but sells millions more vehicles a year, rose nearly 5%.

The rare partnership between three of America’s largest automakers ensures that nearly 70% of the country’s electric vehicle market will have access to Tesla’s North American Charging Standard (NACS).

This will put pressure on other companies to upgrade their networks to work with Tesla at a time when many are behind 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 (NASDAQ:) fell between 3.0% and 10%.

“This is a huge boost for Tesla’s charging business,” said Chris Harto, senior policy analyst at Consumer Reports.

“They’re like asserting themselves as the number one charging network in the country. It could definitely become a big profit center for them in the future.”

Wedbush Securities estimated that Ford and GM combined could add $3 billion in EV service charging revenue for Tesla over the next few years. The brokerage also raised its price target on Tesla shares to $300, nearly 30% above their last close.

The stock has a 12-month price-to-earnings ratio of 60.46, among the highest of GM’s 5.29 and Ford’s 7.94.

Tesla’s NACS is more widespread and more reliable than CCS, or the combined pricing system, which the US government tried to support by setting aside $7.5 billion in federal funds.

Many complain that the CCS charging infrastructure is inefficient or sometimes unusable, causing potential buyers to worry that they might find themselves stranded on the road with nowhere to recharge.

Increased use of Tesla superchargers, however, could create its own problems for the Musk-led company, said Michael Austin, senior research analyst at Guidehouse.

“There’s a risk of Tesla making stations too busy and disappointing Tesla owners or taking away that competitive advantage of having exclusive access to the best network,” Austin said.

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