To leverage the US government’s billions, Tesla must unlock electric vehicle chargers

Tesla CEO Elon Musk has often talked about opening up his Supercharger network to competitors, but he’s never actually done so in the US, where the company dominates the EV market.

Now, the cheeky CEO may have 7.5 billion reasons to speed up those plans.

The Department of Transportation is expected to finalize a requirement next week that will prompt Tesla to expand beyond its proprietary charging equipment in the United States and add the charger used by its competitors, administration officials tell Reuters.

Otherwise, the automaker will be locked out of the $7.5 billion in subsidies coming from Washington, part of President Joe Biden’s plan to blanket the nation with 500,000 electric vehicle chargers in the next few years, up from 100,000 in 2021.

The grid is a central part of Biden’s plan to tackle climate change by converting 50% of all new US vehicle sales to electric by 2030. Shortage of chargers on US roads has slowed sales growth of electric vehicles and the positive environmental impact, say advocates.

As pressure from the United States mounts, there are many signs that Tesla is on the verge of democratizing its network, even though Musk has already denounced the federal government’s involvement.

In January of last year, Tesla wrote to the Federal Highway Administration, offering the Biden administration suggestions on how to shape the charging schedule. In Ohio, the company responded to a recent request for companies to submit charging proposals, state officials told Reuters. In Arizona, the company has told the state it is willing to upgrade its chargers or build new ones to meet federal requirements, though a final decision has not been made.

Musk met with White House officials last month in Washington DC. Among the topics discussed was the electric vehicle charging program, White House infrastructure czar Mitch Landrieu told reporters.

Musk, for his part, said in a July 2021 earnings call that the purpose of Tesla’s charging network was “not to create a walled garden and use that to target our competitors,” but he has not publicly discussed plans for the charges. changes in the US market. The company has opened a few Superchargers in Europe and Australia.

An email to Tesla and Musk was not returned.

State officials are optimistic.

“We understand that Tesla is looking to change their system to make it more open. So if they reach that point and meet the eligibility requirements, they will definitely be eligible for funding,” said Iowa state transportation manager Stuart Anderson . Development Division Director.

SUPERCHARGER DOMINANCE

Tesla’s US Supercharger network is often considered the gold standard: fast, reliable and abundant, with approximately 40,000 chargers worldwide.

But for years the network was exclusive to Tesla owners, thanks to an outlet that only plugs into Tesla cars, meaning those driving a Volkswagen, Ford or Chevy vehicle would be unable to use it.

Tesla drivers can buy an adapter to connect with the standard US “combo charging system” or CCS chargers, but people who don’t own a Tesla can’t do the same with Superchargers.

Opening up its networks could grow a funding and revenue stream for Tesla, but could erode brand exclusivity and make it difficult for the automaker to manage the network, analysts said.

β€œIt’s definitely a balance for them β€” how much potential federal subsidy to expand their network versus maintaining that competitive edge on charging,” said Chris Harto, senior policy analyst at Consumer Reports.

The Department of Transportation next week will detail the final requirements all electric vehicle chargers must meet to be eligible for funding as part of the $7.5 billion effort to electrify highways and freeways across the nation. Those requirements will also cover cybersecurity and how much and which parts of the charger must be made in America.

Chargers wishing to join the National Electric Vehicle Infrastructure (NEVI) program must use a combined charging system, or CCS, the standard in the United States on nearly all charging stations except for Tesla’s popular Superchargers.

The move to finalize so-called “minimum standards” by the administration is expected to unlock the first wave of funding and spark fierce competition between companies like ChargePoint Holdings e (CHPT.N) and EVgo Inc (EVGO.O). For these small companies it represents a generational opportunity.

Any charger that wants to be eligible for federal dollars will have to meet the CCS standard once the rules are finalized next week, administration officials told Reuters.

Last year, Tesla offered another idea. In its letter to the FHA, the company proposed that its Superchargers could be eligible for discounts if they are found alongside CCS chargers that work with competitors.

An administration official told Reuters the request was not being seriously considered.

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