Tesla jumps as GM deal brings its charging network closer to US standards

June 9 (Reuters) – Tesla ( TSLA.O ) rose nearly 7% on Friday after General Motors ( GM.N ) joined Ford ( FN ) in agreeing to use its electric-vehicle charging network, a big win analysts said was a big win. Tesla superchargers are an industry standard in the US.

The rare partnership between three major US automakers ensures that more than 60% of the country’s EV market can access Tesla’s North American Charging Standard (NACS).

“Now that pressure is mounting on other carmakers to join the party, with the US government pledging billions to build the networks … we could see Tesla’s technology become the industry standard,” said Hargreaves Lansdowne analyst Matt Pritzman.

Tesla’s network is more widespread and considered more reliable than the alternative Integrated Charging System (CCS), which the government tried to support with about $7.5 billion in federal funding.

Already the world’s most valuable automaker, the Elon Musk-led company has added more than $200 billion to its market value since announcing a charging tie-up with Ford on May 25.

If the stock ends higher on Friday, it will mark its eleventh consecutive session of gains, its longest winning streak in 2-1/2 years. It is one of the most traded stocks on US exchanges.

GM CEO Mary Barra said Thursday, “We have a real opportunity to really drive forward as a unified standard for North America (NACS), which I think will enable even more adoption.”

GM shares rose 4.0% on Friday, while Ford rose 2.3%.

Charging race

The tie-ups will put pressure on other companies to upgrade 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.

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Shares of charging companies such as ChargePoint Holdings Inc ( CHPT.N ), EVgo Inc ( EVGO.O ) and Blink Charging Co ( BLNK.O ) fell between 7% and 10% in heavy trade.

“Tesla is one step ahead of the game and they were already at a disadvantage as other operators tried to play catch-up,” said AJ Bell’s Danny Hewson, adding that the charging business could become a major growth driver for Tesla.

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 the stock to $300, up nearly 30% from its last close.

Among the highest-performing stocks in the S&P 500 Index (.SPX), Ford has a forward 12-month price-to-earnings ratio of 60.46, well above GM’s 5.29 and 7.94.

More use of Tesla superchargers, however, could create its own problems for the company, said Michael Austin, senior research analyst at Kitehouse.

“Tesla risks making stations too busy and disappointing Tesla owners or eliminating the competitive advantage of having exclusive access to a better network,” Austin said.

Additional reporting by Savi Mehta in Bangalore; Editing by Shaunak Dasgupta

Our Standards: Thomson Reuters Trust Principles.

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