June 9 (Reuters) – Shares of Tesla Inc (TSLA.O) jumped 5% on Friday on expectations its electric vehicle charging system will become an industry standard after General Motors (GM.N) joins rival Ford (FN) in town. Consent to Use the Tesla Supercharger Network.
The Elon Musk-led automaker was on track for its 11th straight session of gains, which would mark its longest winning streak in 2-1/2 years, if pre-market gains hold. Tesla was also the third most traded stock across US stock exchanges.
Already Tesla, the world’s most valuable automaker, is poised to increase its market capitalization by more than $30 billion to about $780 billion.
Shares of General Motors, which had a much lower market value of $49.8 billion but sells millions more vehicles annually, rose 3.5%.
The rare partnership between three of the largest automakers in the US ensures that roughly 70% of the country’s electric vehicle market will have access to Tesla’s North American Charging Standard (NACS).
This will put pressure on other companies to update their networks to work with Tesla at a time when many are lagging behind in customer service and lack the funds to make such a commitment.
ChargePoint Holdings Inc (CHPT.N), EVgo Inc (EVGO.O) and Blink Charging Co (BLNK.O) fell between 2.0% and 7.7%.
“It’s a huge boost to Tesla’s charging business,” said Chris Harto, senior policy analyst at Consumer Reports.
“They want to establish themselves as the number one shipping network in the country. It can definitely become a big profit center for them in the future.”
Wedbush Securities has estimated that Ford and GM together could add $3 billion in EV charging services revenue for Tesla over the next few years. The brokerage also raised its price target for Tesla shares to $300, which is nearly 30% higher than its last close.
The 12-month price-earnings ratio per share is 60.46, among the highest in the S&P 500 (.SPX) and higher than GM’s 5.29 and Ford’s 7.94.
Tesla’s NACS system is much more widespread and reliable than CCS, or Combined Charging System, which the US government has tried to support with $7.5 billion in federal funds.
Many complain that the CCS charging infrastructure is inefficient or inoperable at times, leading potential buyers to fear being stranded on the road without a place to charge.
Even greater use of Tesla Superchargers could, however, create its own problems for the Musk-led company, said Michael Austin, senior research analyst at Guidehouse.
“There is a risk for Tesla in terms of either making the stations too busy and disappointing for Tesla owners or removing that competitive advantage of exclusive access to the best network,” Austin said.
Reporting by Aditya Soni; Edited by Shounak Dasgupta
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