What Tesla charging offers with Ford and GM imply for the business

TESLA logo on a charging station on May 26, 2023 in Merklingen, Germany.

Harry Langer/ | Defodi Images | Getty Images

Within weeks, Ford Motor General Motors And Tesla seem to have changed the tide in EV charging infrastructure in North America.

Tesla owners have long enjoyed reliable on-the-go charging at the company’s Supercharger stations, by far the largest charging network in North America. But the charging industry as a whole is fragmented, and non-Tesla owners don’t have it that easy.

All of that will change soon.

Last month, Ford announced that it had struck a deal with Tesla that would allow Ford electric vehicles to use Tesla’s charging stations with an adapter — and that by 2025 Tesla’s charging technology would become the standard for its own electric vehicles. It was a surprising partnership between rivals, and on Thursday General Motors announced it had struck a nearly identical deal with Tesla.

So why would Ford and GM team up with Tesla, a company that investors have long viewed as a threat to established automakers?

And what does that mean for electric vehicles?

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Tesla’s superchargers use a proprietary connector design called the North American Charging Standard (NACS) that doesn’t work with EVs from other manufacturers. Most other electric vehicles and charging stations in the US use the Combined Charging System (CCS) public domain plug standard.

Currently, Tesla electric vehicles can use CCS chargers with an adapter, but only Teslas can use NACS chargers.

That said, while Tesla owners have access to the company’s numerous and reliable fast-charging stations, drivers of non-Tesla EVs using CCS are faced with a mess of networks and often unreliable equipment.

The shortcomings of CCS are a growing concern for Detroit automakers as they ramp up production of electric vehicles in hopes of selling their electrified models to the masses.

In a study last year, researchers from the University of California, Berkeley checked 675 CCS fast chargers in the San Francisco Bay Area and found that nearly a quarter of them were non-functional. An August 2022 study by JD Power found similar results for CCS chargers in other parts of the country. Notably, Tesla’s charging network was also found to be much more reliable.

Tesla originally built the Supercharger network to address potential buyers’ concerns about charging while driving. The scale and reliability of its fast-charging network was a key part of its early selling points to customers fearful of going electric — and it’s been an integral part of the company’s success in the US ever since.

In contrast, the inadequacy and sub-par reliability of the CCS network has been a challenge for Ford and GM (and other automakers) as they seek to increase sales of their own electric vehicles.

Potential buyers of a Ford or GM electric vehicle might like what they experience on a test drive, but without a reliable charging network, both are at a disadvantage for Tesla. These new deals should go a long way toward aligning fee terms.

Another reason to favor Tesla’s NACS standard over CCS: Tesla’s plugs are significantly smaller and lighter than CCS fast charging plugs, which can be cumbersome for elderly or disabled drivers to use.

As both Ford and GM strive to win new electric vehicle customers, improving accessibility is a high priority.

Short term savings

For automakers like Ford and GM, which are betting billions on a major EV transition, reliability issues with CCS chargers are seen as a potential obstacle to wider adoption. GM announced in 2021 that it plans to spend $750 million to improve EV charging infrastructure in the United States and Canada.

But then, last November, Tesla opened up the NACS standard, released the technical specifications, and invited charging network operators and other automakers to use its connector design.

For both Ford and GM, this change meant a shortcut—and the potential for big savings.

“We believe we can save up to $400 million out of the original three-quarters of a billion dollars that we committed to this because we were able to do it faster and more effectively,” Barra said in an interview with CNBC on Thursday. Fast Money” after the announcement of the Tesla deal.

For Ford CEO Jim Farley, these deals also signal a new era of collaboration between automakers that goes beyond individual components.

“We [worked with other automakers] on transmissions and engines without anyone in the ICE world noticing,” Farley said at a May 31 Bernstein conference. “Now it’s going to be more on the technology side.” I think that’s one of the most interesting new dynamics.”

What about Tesla?

So what does Tesla get out of the deal to allow its competitors to use its superior charging network?

The EV leader will surely appreciate the additional revenue it receives from Ford and GM EV owners every time they charge at a Supercharger station.

The company will also welcome tacit support for its technology from long-established competitors, and will likely seek a share of public subsidies for EV charging provided under last year’s bipartisan infrastructure bill.

But the deals don’t mean Tesla will win a monopoly on public charging in the US, even if all automakers eventually adopt the NACS standard.

The EV giant’s decision to release the NACS standard means that competing charging network operators also have the freedom to add chargers with NACS connectors – and they almost certainly will too.

In fact, major players are already reacting to the deals with Ford and GM. Swiss electrical appliance giant ABB, a leading manufacturer of commercial chargers for electric vehicles, announced on Friday that it will soon offer NACS plugs as an option for its products. FreeWire Technologies, a California-based startup that builds fast chargers, announced similar plans after Ford’s deal with Tesla last month.

Tesla’s main motivation — at least publicly — might be even simpler.

“Our mission is to accelerate the world’s sustainable energy transition,” said Rebecca Tinucci, Tesla’s senior director of charging infrastructure, in a statement accompanying the GM deal announcement on Thursday. “A cornerstone of this mission is to provide every EV owner with access to ubiquitous and reliable charging.”