The Ford-Tesla electric vehicle charging contract puts pressure on GM

Ford CEO Jim Farley on the new Ford-Tesla EV partnership: It's a bet for our customers

DETROIT – A surprise deal between Ford engine And Tesla Advances in EV charging technology and infrastructure could put new pressure on other automakers’ EV strategies.

The merger of the two competitors will give Ford owners access to more than 12,000 Tesla Superchargers in the US and Canada starting early next year. More importantly, Ford’s next generation of electric vehicles — expected by mid-decade — will use Tesla’s charging connector, allowing Ford vehicle owners to charge on Tesla superchargers without an adapter.

The agreement makes Ford one of the first automakers to explicitly connect to the network.

Ford CEO Jim Farley and Tesla CEO Elon Musk announced the deal Thursday during a live audio discussion Twitter Spaces. On Friday morning, Farley acknowledged the duel would pose challenges for Ford’s rivals.

“I think GM and others are going to have a big decision to make,” he said on CNBC’s Squawk Box.

Farley’s comments related to which electric car charging plug should be standard in the US. A charger called CCS is now the industry standard. Tesla vehicles and their Supercharger network use what is known as NACS. Other vehicles can use both, but require an adapter.

“The CCS is a great standard, but it was essentially created by some kind of committee, and I think GM and others are going to have a big decision to make,” Farley told CNBC. “Do you want fast charging for your customers? Or do they want to stick to their standard and charge less?”

Ford shares are up more than 7% to over $12 a share in Friday trading. Tesla stock is up more than 5% to hit the $194 per share mark.

Watch CNBC's full interview with Ford CEO Jim Farley

The Ford-Tesla deal could be short-term negative for GM and other automakers, which don’t have access to so many fast chargers thought to be critical to expanding EV adoption, said Tom Narayan, an analyst at RBC Capital

“The news today is obviously positive for Ford shares (and potentially negative for GM/STLA in the near term), but ultimately we believe this should be viewed as a long-term play by Tesla,” Narayan said in a Friday investor note.

Tesla states that it has around 45,000 Supercharger connections at 4,947 Supercharger stations worldwide. The company does not disclose how many there are in the US US Department of Energy According to reports, the country only has about 5,300 CCS fast chargers.

General MotorsWithout specifically addressing Farley’s comments, the company said it “believes open charging networks and standards are the best way to enable EV adoption across the industry.” GM said it is working with a group of companies and the Society of Automotive Engineers to develop and further refine an open plug standard for CCS, which he says is important for “building an open fast-charging network across North America.”

The Detroit-based automaker has announced several partnerships with providers of electric vehicle charging stations and has called for more government support for this infrastructure.

Stellantis, which named Narayan as another company that could feel the impact of the Ford-Tesla deal, did not immediately respond to a request for comment.

“Fully committed”

Ford is “completely committed” to a unified US charging protocol that includes the Tesla plug connector, Farley said Thursday.

When Musk announced the deal with Farley, he hinted that other automakers could also use the Tesla Supercharger network the company’s charging ports.

“Working with Ford and maybe others can make it the North American standard. I think consumers will benefit from that,” Musk said Thursday.

An all-electric Ford Mustang Mach-E is charged at a Tesla Supercharger station.


Wall Street bullish

Rod Lache, an analyst at Wolfe Research, called the deal a “win-win” as it more than doubles Ford customers’ access to fast chargers and increases utilization of the Tesla network.

“For Ford, access to the Tesla network helps solve a major problem for its electric vehicle customers who would otherwise have to turn to third-party charging providers,” he said in a note to investors on Friday. “Meanwhile, attracting Ford customers to Tesla will help increase network utilization, a key driver of profitability.”

Jim Farley and Elon Musk

Getty Images

The deal is a big boost in access to fast chargers for Ford and its customers, Morningstar analyst David Whiston said. He added that it “puts some pressure on other long-established automakers, but if you’re someone like GM, I don’t think you need to panic.”

Whiston said he would like to know more about the deal, including costs, duration and other details that were not disclosed.

A Ford spokesman said more information about the deal will be announced once Tesla’s chargers open to Ford owners early next year.

– CNBC’s Michael Bloom, Lora Kolodny And John Rosevear contributed to this report. The Ford-Tesla electric vehicle charging contract puts pressure on GM

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