Is Data the Real Driver of Tesla’s Charging Standard Expansion?
Tesla has long enjoyed a competitive advantage in the EV space by providing charging via its Supercharging stations, the largest and most reliable charging network in North America by a wide margin. This superior fast-charging network was a key aspect of Tesla’s early sales pitch to reticent electrification converts—and it has remained a key component of the company’s tremendous success since.
Tesla historically walled of its charging network by using a proprietary plug design known as the North American Charging Standard (NACS), which until very recently was not compatible with other automakers’ EVs that typically charge using the Combined Charging System (CCS) plug standard. Through the use of NACS, Tesla has been able to tightly integrate its entire charging ecosystem, while other competing charging networks have remained fragmented and unreliable. In a study last year, researchers at the University of California at Berkeley found that almost a quarter of the 675 CCS fast chargers in the San Francisco Bay Area were inoperable, while a more comprehensive August 2022 study by JD Power concluded that Tesla’s Supercharger network was far more reliable than CCS chargers in other parts of the country.
Given the superiority of Tesla’s Supercharger network and the concomitant economic advantage Tesla has maintained over its competitors as a result, many were shocked by announcements over the past few months that Tesla had reached agreements with Ford, GM, Mercedes-Benz, Polestar, Volvo, Nissan, Fisker, and Rivian to make the Tesla Supercharger network available to their drivers through an adapted NACS port. Initial reactions saw these deals as a curious concession by Tesla that could finally level the charging playing field and allow other automakers to ramp up sales of their own EVs.
So why did Tesla let its competitors inside the gates of its charging network? At first glance, it appears that Tesla will certainly add additional revenue to its coffers from increased use of its charging ports. Indeed, analyst Piper Sandler estimates that, by 2030, Tesla will earn $3 billion in charging fees from non-Tesla drivers. Tesla also may reap the benefits of the implicit endorsement of its technology as the superior standard, which could further result in a share of the public EV-charging subsidies available under the Bipartisan Infrastructure Law.
From a public relations standpoint, Tesla has consistently maintained that the primary reason for opening up its Supercharger network is to assist the acceleration of EV adoption and the world’s transition to sustainable energy by removing infrastructure barriers. Upon closer examination, however, Tesla’s motives may be far less altruistic. In fact, the real impetus for Tesla’s sudden change of heart may simply be what is quickly becoming the equivalent of gold in the connected car market: data, and lots of it.
It is no secret that Tesla uses cellular and WiFi data ports to collect what one investigation called a “hoard” of data about any car that plugs into its Supercharger network, tracking a plethora of data points from vehicle performance to driver preferences. By letting it competitors freely access its chargers, Tesla may also be covertly positioning itself to siphon critical and highly valuable vehicle data from its competitors under the guise of charging collaboration. In addition to affording invaluable insight into its competitors’ EV specifications and performance, this move may also provide Tesla with yet another lucrative revenue stream in the form of vehicle data sales, which some predict could be worth more than $800 billion by the end of the decade.
Tesla’s bid to get the entire EV industry to adopt its NACS plug could be a harbinger of Tesla’s future designs on supplying or licensing its arguably superior technology to other automakers who either don’t want to or can’t invest sufficient capital to develop EV components or technology organically. In fact, Tesla CEO Elon Musk recently confirmed during an earnings call that Tesla is in advanced discussions with major OEMs regarding the licensing of its Autopilot and FSD technology, which not so coincidentally would require other automakers to onboard both Tesla’s software and hardware suites, thus creating yet another trove of accessible vehicle data.
By continuing to leverage its competitive advantages through the utilization of unparalleled access to a broad range of vehicle data, Tesla may actually be implementing an ingenious plan to corner the EV market on key components such as technology, batteries, plugs, chargers, and even drivetrains. Yes, we are talking about a future EV landscape, backed by public subsides at every level, that could be completely dominated by Tesla.
Regardless of Tesla’s actual intentions, it is becoming more and more apparent that access to vehicle data is the gateway to innovation and market dominance. In this regard, Tesla certainly appears to have a substantial leg up on all other automakers, who seem to always be a little late to the EV game, which whether you like him or hate him, is currently being dominated by Elon Musk.
Copyright Nelson Niehaus LLC
The opinions expressed in this blog are those of the author(s) and do not necessarily reflect the views of the Firm, its clients, or any of its or their respective affiliates. This blog post is for general information purposes and is not intended to be and should not be taken as legal advice.