Tesla jumps as GM deal brings its charging network closer to US standards

June 9 (Reuters) – Tesla ( TSLA.O ) shares rose 4% on Friday after General Motors ( GM.N ) joined Ford ( FN ) in agreeing to use its electric-vehicle charging network, which analysts said was a big win. Make Tesla superchargers an industry standard in the United States.

The rare partnership between three major US automakers ensures that more than 60% of the country’s EV market can access Tesla’s North American Charging Standard (NACS).

Electric-vehicle charging stations that use Tesla standard plugs will be eligible for billions of dollars in federal grants as long as they include the American Charging Standard Connection, CCS, the White House said Friday.

“Tesla believes CCS adapters will help it qualify for federal tax dollars,” said Garrett Nelson, senior investment strategist at CFRA Research.

“No matter how you slice it, we think Tesla opening up its Supercharger network to competitors will be a big negative for third-party charging companies.”

Shares of independent charging companies such as Chargepoint Holdings Inc ( CHPT.N ), EVgo Inc ( EVGO.O ) and Blink Charging Co ( BLNK.O ) fell between 11% and 13%.

Wedbush Securities estimates Ford and GM combined could add $3 billion in EV charging revenue for Tesla over the next few years. The brokerage raised its price target on the stock to $300, up nearly 30% from its last close.

Already the world’s most valuable automaker, Elon Musk-led Tesla has added about $190 billion to its market value since announcing a charging tie-up with Ford on May 25.

Tesla’s stock ended higher on Friday, marking its eleventh straight winning streak in 2-1/2 years. It was one of the most traded stocks on US exchanges during trading hours.

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Among the highest-performing stocks in the S&P 500 Index (.SPX), Ford has a forward 12-month price-to-earnings ratio of 60.46, well above GM’s 5.29 and 7.94.

According to the latest data from S3 Partners, traders who shorted Tesla shares during the electric carmaker’s current run of gains lost about $6.08 billion on a market-to-market basis.

GM CEO Mary Barra said Thursday, “We have a real opportunity to really drive forward as a unified standard for North America (NACS), which I think will enable even more adoption.”

Shares of both GM and Ford rose as much as 1% on Friday.

Charging race

The tie-ups will put pressure on other companies to upgrade their networks to work with Tesla at a time when many are lagging behind in customer service and don’t have the funds to make such a commitment.

A spokesperson said Blink Charging welcomes “the opportunity to work with Tesla on interoperability with cables and connectors.”

“Tesla is one step ahead of the game and they were already at a disadvantage as other operators tried to play catch-up,” said AJ Bell’s Danny Hewson, adding that the charging business could become a major growth driver for Tesla.

More use of Tesla superchargers, however, could create its own problems for the company, said Michael Austin, senior research analyst at Kitehouse.

“Tesla has a risk of making stations too busy and disappointing Tesla owners or eliminating the competitive advantage of having exclusive access to a better network,” Austin said.

Additional reporting by Savi Mehta and Samrita Arunachalam in Bangalore; Editing by Shaunak Dasgupta and Maju Samuel

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