Jun 9 (Portal) – Shares of Tesla (TSLA.O) rose 5% on Friday on expectations that the electric vehicle charging system would become the industry standard after General Motors (GM.N) joined city-wide rival Ford (FN) had consent to use the Tesla Supercharger network.
The Elon Musk-led automaker was on course for its 11th straight uptrend, which would mark its longest winning streak in two-and-a-half years if premarket gains hold up. Tesla was also the third most traded stock on U.S. stock exchanges.
Tesla, already the world’s most valuable automaker, should increase its market cap by more than $30 billion to about $780 billion.
Shares of General Motors, which has a significantly smaller market cap of $49.8 billion but sells millions more vehicles annually, rose 3.5%.
The rare partnership between three of the largest US automakers ensures that nearly 70% of the country’s electric vehicle market will have access to Tesla’s North American Charging Standard (NACS).
That will pressure other companies to modernize their networks to work with Tesla’s, at a time when many are lagging behind in customer service and don’t have the resources to make such a commitment.
Shares of charging companies including ChargePoint Holdings Inc (CHPT.N), EVgo Inc (EVGO.O) and Blink Charging Co (BLNK.O) fell between 2.0% and 7.7%.
“It’s a huge boost for Tesla’s charging business,” said Chris Harto, senior policy analyst at Consumer Reports.
“They are in the process of establishing themselves as the leading charging network in the country. It could definitely become a big profit center for them in the future.”
Wedbush Securities estimates that Ford and GM together could contribute $3 billion to Tesla’s EV charging revenue over the next few years. The broker also raised its price target on Tesla stock to $300, which is nearly 30% up from the last close.
The stock’s 12-month price-to-earnings ratio is 60.46, among the highest in the S&P 500 index (.SPX) and ahead of GM’s 5.29 and Ford’s 7.94.
Tesla’s NACS is more widespread and reliable than CCS, or the combined charging system that the US government has tried to support by providing $7.5 billion in federal funding.
Many complain that the CCS charging infrastructure is inefficient or sometimes non-functional, leading potential buyers to fear being stuck on the road with nowhere to charge.
However, increased use of Tesla superchargers could bring problems of its own for the Musk-led company, said Michael Austin, senior research analyst at Guidehouse.
“Tesla faces a risk that either stations will become overcrowded and disappoint Tesla owners, or they will lose the competitive advantage of exclusive access to the best network,” Austin said.
Reporting by Aditya Soni; Edited by Shounak Dasgupta
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