September 30, 2023

Tesla may be just beginning to unlock its true potential

Tesla Motors CEO Elon Musk speaks at the Tesla Giga Texas manufacturing

Elon Musk opens access to his charging network, which has long been considered the company’s secret weapon.SUZANNE CORDEIRO/AFP via Getty Images

  • Tesla will give Ford and GM access to its Supercharger network from 2024.

  • CEO Elon Musk said he is also open to licensing Tesla software and supplying powertrains and batteries.

  • Tesla could gain a lot by selling access to its technology and infrastructure.

Tesla is starting to show how much potential its technology and infrastructure really have.

The EV giant recently announced that it is opening up its Supercharging network to both Ford and GM in strategic partnerships. From 2024, both car manufacturers will be able to give their customers access to Tesla’s extensive charging network with adapters.

But this may just be the beginning of Tesla starting to cash in on its own technologies.

“I believe this is just the first step. It starts with Superchargers and eventually I think the next step could be battery technology,” Dan Ives, a Wedbush Securities analyst, said on CNBC Friday. “That’s the golden goose right now: they (Tesla) built the castle and are waiting for others to call.”

Elon Musk, CEO of Tesla, has spoken out in the past about new business opportunities for Tesla’s technology.

In 2020, Musk said Tesla was open to licensing its software and supplying powertrains and batteries. And on Monday, Musk reiterated this by saying in a tweet that he is “happy to license Autopilot/FSD or other Tesla technology”.

This is important because Tesla’s software and charging infrastructure have long been seen as significant advantages over the company’s rivals. But Musk clearly sees Tesla’s technology sharing as a way to catalyze EV adoption — in addition to driving new revenue streams.

“We don’t want the Supercharger network to be a walled garden, we want it to be something that supports electrification and sustainable transportation in general,” Musk said in May announcing his partnership with Ford.

Tesla could generate $3 billion by opening up its charging network

Ives, who has an outperform rating and a $300 price target on Tesla, compared Tesla’s recent move to an “AWS moment” for Amazon or an “Apple Services moment” as the company starts making more money through services. He estimated that the partnership between GM and Ford alone will generate an additional $3 billion in Tesla’s EV revenue by 2025.

In addition, Cathie Wood, CEO of Ark Invest, who has been an optimistic Tesla investor for a long time, said Friday on CNBC that the partnership between Ford and GM could also help fund the expansion of Tesla’s 12,000 Supercharging network.

“What’s interesting about this is it helps Tesla cover the cost of the charging station,” Wood said. “Because if you look at Tesla’s sales, they are highly concentrated on the coast. Now it will make much more sense for Tesla to roll out charging stations across the country much faster.”

Wood has a $2,000 price target for Tesla stock by 2027 and has not factored Tesla’s recent deals into that price, she said.

Tesla also gets a lot of free marketing from opening up its network and may be able to offer even more services at each charging location, hypothetically giving it even more ways to make money.

Tesla charges at Supercharger in Pleasanton, California.

Tesla has about 12,000 Superchargers in North America.Smith Collection/Gado/Getty Images

“I think there’s a nice direction they can take these charging stations over time. I mean, they can really stick with traditional cars and turn them into showrooms,” said Gene Munster, managing partner at Deepwater Asset Management , Friday on CNBC. “They’ve kicked that idea in the past of making Tesla-branded destinations.”

Tesla owners may experience longer queues at charging stations

But Munster said he doesn’t see opening the charging stations as a major source of revenue anytime soon.

“If you look at the context of Tesla’s overall market cap, look at their earnings. This is a fractional company and will likely remain a small company. Even with the addition of Ford, GM and other automakers,” Munster said.

“So I think of this more as a positive for GM and Ford. It’s probably a neutral positive for Tesla. As we said, because they’re going to bring in some infrastructure revenue, but ultimately they’re giving the rails to these competitors that are struggling .”

Munster also said he saw Tesla owners dislike the idea of ​​giving other EV owners access to the Supercharging Network. This is because more people can mean more lines and less convenience to fast charge your car.

If so, the move could backfire against Tesla.

However, Ives said this is just the beginning of Tesla’s larger plan to sell rivals access to its technology, and Ford and GM are just some of the first “ambassadors”.

“From batteries to superchargers to storage… the sum of the parts these are starting now, I believe in the early stages, to play out with ambassadors,” said Ives.

Read the original article on Business Insider

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