Market leader Tesla is set to establish a monopoly over US public fast charging, an automotive industry insider says. But with Tesla opening up its supercharging network to its rivals – a move some commentators feel helps Tesla’s competitors more than its own interests – others are turning the microscope on the OEM’s motivations.
Dan Ives, an equity analyst at US investment bank Wedbush Securities, predicts that Tesla’s network will become a one-stop shop for public charging across all EV brands. “They are going to be the only game in town. That is why you have GM, Ford, and others going towards Tesla,” he says.
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The others that Ives mentions include US EV pure plays Rivian and Fisker, Sweden’s Volvo and Polestar, Japan’s Nissan and Germany’s Mercedes-Benz, which have all announced that they will adopt Tesla’s charging system, known as the North American Charging Standard (NACS). Most of the companies have given 2025 as the start point for new BEVs being built NACS compatible.
In the meantime, Tesla is unrolling so-called ‘magic docks’, adapters which allow users to charge non-Tesla vehicles at Tesla charge points. The company has begun installation of the magic docks in New York state and California, and this week rolled out its first in Canada.
Revenue
Wedbush also projects a substantial hike in Tesla revenue coming from its charging network. “We think, conservatively, $10-20bn/yr by the end of the decade. This is the next stage of monetisation of the Tesla ecosystem,” says Ives.
Tesla does not currently split out its revenue generated from its global supercharging network, which contains over 48,000 connectors in 5,000 locations. However, out of a total Q2 revenue of $24.9bn, $2.2bn came from “services and other revenue”. This number, a share of 8.8pc of total revenue, includes after-sales vehicle services, paid supercharging, used vehicle sales, retail merchandise, and vehicle insurance, according to publisher Business Insider.
Wedbush projections therefore forecast Tesla’s charging revenue increasing steeply. It was only in the second quarter this year that Tesla’s charging services “started to become a meaningful contributor to overall profitability,” CEO Elon Musk said on the company’s results call.
Tesla motivation
But while revenue from charging is projected to grow sharply, compared to forecasts for Tesla’s overall revenue by 2030, $10-20bn from charging is still largely a drop in the ocean. Consensus estimates for Tesla’s total 2030 revenue is $332bn. This would mean that Wedbush's forecast of $10-20bn from supercharging would amount to between 3pc and 6pc.
And infrastructure businesses such as charging come with a lot of associated baggage, and potential reputational risk if things go south. Charging stations require frequent maintenance and expanding the network necessitates widespread construction and installation work.
It is also not yet known what unforeseen challenges will come with trying to replicate NACS’ reliability record for Tesla cars on vehicles from other makers. In short, the charging game takes time and money for a payoff which is relatively small compared to Tesla’s automotive revenue.
Musk has made splashes with predictions of 20mn/yr Tesla vehicles sold by 2030. Even if Tesla fall short of this target, at the current price of the cheapest Tesla cars of over $40,000, projections for charging revenue do not compare.
It made sense for Tesla to develop a charging network to support the development of an EV ecosystem when it was nascent — i.e. it would have been challenging to sell large numbers of Teslas while relying on third-party charging infrastructure rollout not to lag these sales — and when there was brand advantage to operating an exclusive network. But it makes a lot less sense for an automaker to tie up significant amounts of capex and opex, as well as corporate bandwidth, running a charging network for all in a maturing market.
This begs the question of whether Musk might spin off the charging business. And, in the absence of such appetite, whether Tesla might be reaping some benefits from the charging network that belie its claims of a level playing field and a desire to benefit EV adoption more widely.
Big data
Some commentators have speculated on whether Tesla may look to capitalise on opening its charging network in its collection of data from EVs made by other manufacturers. As Tesla installs its magic docks to allow EVs with CCS ports to charge, users of non-Tesla vehicles will still need the Tesla app to complete the charging process. In Tesla’s defence, earlier this month it rolled out its first ‘tap-and-go’ charger in the UK where non-Tesla drivers can use it without having the app.
But US chargers that still require these downloads could present opportunities for Tesla to monetise user data. Data about the cars themselves — which could include monitoring “efficiency of the braking system to how often drivers use the AC”, according to Business Insider’s Adam Rogers — could be even more valuable to Tesla.
This potential for data siphoning has alarmed analysts since the various NACS deals were announced. Rivian, which signed on to use NACS in June, faced questions from Adam Jonas, head of global auto and shared mobility research at bank Morgan Stanley, about data exchange at its Q2 results.
“In terms of specifically what occurs in terms of data transfer, there is not any data transfer built into the relationship,” said Rivian CEO RJ Scaringe. But he then seemed to concede that, inherently there would be some data going to the larger firm, as Rivian drivers will “ultimately pay for the charging, and that will flow from us through to Tesla”.
Concerns about data exchange have lingered, although at least one analyst feels they are overdone. “Tesla itself tells its users that some data points are collected from chargers. Some things are going to be necessary for settlement of payment and operations,” says Mike Ramsey, an automotive analyst at consultancy Gartner.
But Ramsey stresses that Tesla is unlikely to collect any data from rivals’ BEVs which is not usually collected by any point charge operator. “The charger will likely be able to identify the vehicle identification number or some other ID, and the battery state of charge, battery temperature, charging rate and possibly the odometer reading,” he says.
“Beyond that, it is unlikely that much else would be available. Most connected chargers would gather that sort of information. I do not think there is real danger of the charger being used to plumb for data deeper in the system,” Ramsey concludes.
But he does caution that “it is unclear how much data Tesla can or will collect from the vehicles”.
Tesla is adamant that ungating its charging network is a tool to boost the industry at large and strive towards higher volumes of BEVs on the road. “We strongly believe in helping other car companies to accelerate the EV revolution and just trying to do the right thing in general,” Musk told investors in July.
The firm will likely continue diversifying its revenue streams —not least in the form of carbon credits, which generated $1.78bn in revenue in 2022, according to carbon offsetting agency DBG. But scrutiny of its charging business will also continue, and even intensify if and when NACS comes to dominate the market.
“It is Tesla’s world, and everybody else is paying rent,” Wedbush’s Ives says. While other US automakers might have to accept that price for getting into bed with the country’s most reliable network, they may not be so sanguine if ‘costs’ to their ability to compete with Tesla also start to emerge.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
