Surrender or not? GM and Ford will adopt Tesla’s supercharger network across US

Autor: Article based upon analysis from Reuters Breakingviews
2 min

This week, General Motors said that it would adopt U.S. automaker Tesla’s North American Charging Standard connector design in its electric vehicles, starting in 2025. The partnership follows a similar announcement from Ford Motor on May 25. Tesla said in November that it would open its charging design for use by other companies.

Surrender or not? General Motors announced Thursday it’ll adopt Tesla’s charging station design, joining rival Ford Motor in a move that will likely make the technology the U.S. standard.

The move paves the way for the two companies’ burgeoning battery-powered businesses, while ceding modest revenue to Elon Musk’s company. The risk, however, is that other, more lucrative parts of their vehicles, such as the dashboard entertainment, will also be up for grabs.

Three designs for charging plugs for electric cars have been dueling in North America. That’s a problem: Drivers need to be able to reliably charge batteries during long-distance trips. Pulling up to a gas station with the wrong plug could discourage buyers from switching gas guzzlers.

A merger around Tesla’s design will help. The company’s Supercharger network already accounts for 60% of the fast-charging stations in the U.S. and Canada where batteries can be quickly recharged.

GM and Ford’s customers will now have access to the most widespread infrastructure. The partnership is also likely to put the kibosh on competing standards – according to Experian, Tesla, Ford and GM account for three-quarters of electric cars sold in 2022.

And while GM and Ford customers will now have to pay rival Tesla for charging, analysts at Wedbush and Piper Sandler estimate the revenue opportunity for Musk’s company is only about $3 billion by 2030. That’s 4% of Tesla’s total revenue last year.

But Detroit should be wary of giving away too much. Besides charging, there are many other areas of the electric car business that others are jostling for.

Alphabet’s Apple and Google are offering software to replace the infotainment system, and Tesla wants others to adopt its self-driving technology.

GM Chief executive Mary Barra says her company will retain control of both, but Ford chief Jim Farley already says automakers have „lost” to Apple on in-car content.

Retaining control is critical: GM ‘s master plan calls for software and „new businesses” to account for more than a quarter of sales by 2030, with operating profit margins double those of car manufacturing.

Barra and Farley have given tech newcomers a small head start; Tesla and Big Tech will try to take the next mile.