June 9 (Reuters) – Tesla ( TSLA.O ) shares rose 6% on Friday on expectations that its electric-vehicle charging system will become an industry standard after General Motors ( GM.N ) merged with cross-town rival Ford ( FN ). I agree to use the Tesla Supercharger network.
The Elon Musk-led automaker was on course for its eleventh straight year of gains, marking its longest winning streak at 2-1/2 years. Tesla is one of the most traded stocks on the US stock market.
Already the world’s most valuable automaker, Tesla plans to increase its market capitalization by more than $30 billion to around $780 billion.
Shares of General Motors, which has a much smaller market cap of $49.8 billion but sells millions of vehicles annually, rose nearly 5%.
The rare partnership among three major US automakers ensures that nearly 70% of the country’s EV market has access to Tesla’s North American Charging Standard (NACS).
This will put pressure on other companies to improve 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.
Shares of charging companies such as ChargePoint Holdings Inc ( CHPT.N ), EVgo Inc ( EVGO.O ) and Blink Charging Co ( BLNK.O ) fell between 3.0% and 10%.
“This is a big boost for Tesla’s charging business,” said Chris Hartow, senior policy analyst at Consumer Reports.
“They want to establish themselves as the number one charging network in the country. This will definitely become a huge profit center for them.”
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 Tesla shares to $300, up nearly 30% from their last close.
The stock has a forward 12-month price-earnings ratio of 60.46, above the S&P 500 Index (.SPX) and Ford’s GM at 5.29 and 7.94.
Tesla’s NACS is more widespread and reliable than CCS or the integrated charging system, which the US government has attempted to support with $7.5 billion in federal funding.
Many complain that the CCS charging infrastructure is inefficient or sometimes non-functional, leaving prospective buyers to fear they will be stranded on the road with nowhere to charge.
The increased use of Tesla Superchargers could create its own problems for the Musk-led 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.
Report by Aditya Soni; Editing by Shaunak Dasgupta
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