The last couple of weeks were pivotal for the electric vehicle (EV) industry in the United States.
Ford and General Motors, followed later by Rivian, teamed up and adopted Tesla’s Supercharger network. It’s called NACS, short for North American Charging Standard.
It’s a massive win for customers who can charge their EVs using thousands of chargers in the U.S. and Canada. No need to worry about various types of plugs, sockets, or connectors.
“…It’ll just work seamlessly,” says Elon Musk.
The four EV makers highlighted above sold 78% of all EVs in the U.S. in the first quarter of this year.
That’s a massive combined market share. And now the major players have adopted Tesla’s standards. For a good reason.
As noted by the participating companies, NACS fast chargers are superior in charging speed, ergonomics, and reliability.
As a reminder, Tesla has 1,988 fast charging stations with 21,217 connectors in the U.S. and Canada.
Its closest rival, CCS (short for Combined Charging System), has more stations but fewer connectors, at 6,620 and 12,889, respectively.
Starting in early 2024, CCS-to-NACS adapters will become available. In 2025, Ford, GM, and Rivian will make NACS a standard charging port for their EVs.
At that point, CCS chargers most likely begin fading away in North America, and Tesla will dominate the charging market.
It’s like Blu-Ray vs. high-definition DVD (or HD DVD) story again. Another battle of standards, and Tesla’s NACS has won.
A Multi-Billion-Dollar Opportunity
It may become a new source of steady revenue for the company, and we’re talking about billions of dollars. Analysts estimate that the deal with Ford and GM will add $3 billion to Tesla’s revenue per year.
The company will continue manufacturing the batteries, assembling and selling the EVs, and now it is the owner of the largest charging network in North America.
In other words, Tesla has the potential to add billions of dollars in steady revenue to its top line in the future.
The only visible downside could be the fact that the White House supports the non-proprietary CCS.
The government provides grants for EV chargers as long as they install CCS ports, even if they come along with Tesla’s NACS.
The Biden administration set aside $7.5 billion for this purpose.
With or without government support, however, it’s clear that the EV megatrend is gaining momentum. Faster charging will increase customer satisfaction and drive EV adoption rates higher.
While they will remain competitors as far as manufacturing and selling EVs go, Ford and others are ready to work together for a common purpose—expanding the EV network and making EV charging easier regardless of what brand a particular customer prefers.
Recent data from Cox Automotive says that the share of EVs in total car sales across the U.S. stands at 7.2%. The remaining 92.8%, or over 3 million cars, are still run on fossil fuels and have yet to be replaced with clean alternatives. There’s still plenty of growth for the U.S. EV market.
This megatrend is inevitable, and investing in companies working on expanding the EV market appears to be the right move in the long term.
Thank you for your loyal readership,
The Financial Star team