Tesla must unlock EV chargers to tap US government billions

Now, the brash CEO may have 7.5 billion reasons to accelerate those plans.

The Transportation Department is expected next week to finalize a requirement that would force Tesla to expand its proprietary charging equipment in the United States and increase the number of chargers used by its rivals, administration officials told Reuters.

Otherwise, the automaker would be excluded from the $7.5 billion in subsidies flowing out of Washington as part of President Joe Biden’s plan to cover the country with 500,000 electric vehicle chargers in the coming years, up from 2021. 100,000 per year.

The network is a central part of Biden’s climate change plan to convert 50 percent of all new U.S. car sales to electric vehicles by 2030. Advocates say the lack of chargers on U.S. roads is slowing the growth of EV sales and their positive impact on the environment.

As pressure mounts in the U.S., there are many signs that Tesla is on the brink of democratizing its network, even though Musk has previously denounced the federal government’s involvement.

Last January, Tesla wrote to the Federal Highway Administration advising the Biden administration on how to develop a charging plan. In Ohio, the company responded to a recent request for companies to submit fee proposals, state officials told Reuters. In Arizona, the company told the state it is open to upgrading its chargers or building new ones to meet federal requirements, but has not yet made a final decision.

Musk met with White House officials in Washington last month, and White House infrastructure chief Mitch Landrieu told reporters that items discussed included an electric vehicle charging plan.

For his part, Musk said on a July 2021 earnings call that the point of Tesla’s charging network is “not to create a walled garden and use it to beat our competitors,” but he didn’t discuss the U.S. market publicly. Change of plans. The company has opened some supercharging stations in Europe and Australia.

Emails to Tesla and Musk were not returned.

State officials are optimistic.

“We do understand that Tesla is looking to tweak their systems to be more open access. So if they do get to that point and meet these eligibility requirements, they’re definitely eligible for funding,” said Stuart Anderson of the Iowa Department of Transportation Said the director of the development department.

Tor Anderson, program manager for the Arizona Department of Transportation, said he spoke briefly with Tesla representatives to discuss Biden’s EV charger plans.

“They’ve kept the door open, but they’ve made no commitments,” he said on Friday.

Supercharger advantage

Tesla’s U.S. Supercharger network is often held up as the gold standard: fast, reliable and plentiful, with about 40,000 charging stations around the world.

But for years, the network has been exclusive to Tesla owners thanks to a plug that only connects to Tesla vehicles, meaning people who drive Volkswagens, Fords or Chevrolets won’t be able to use it.

Tesla drivers can buy an adapter to connect to a US-standard “combined charging system,” or CCS charger, but those without a Tesla can’t do the same with Superchargers.

Opening up its network could boost Tesla’s funding and revenue streams, analysts said, but could dilute the brand’s exclusivity and make it difficult for the automaker to manage the network.

“It’s definitely a balancing act for them: how much potential federal subsidies to expand the network versus maintaining a competitive advantage in tariffs,” said Chris Harto, senior policy analyst at Consumer Reports.

The Transportation Department next week will detail the final requirements all electric vehicle chargers must meet to be eligible for funding from the $7.5 billion National Highway and Interstate Electrification Initiative. The requirements will also address cybersecurity, as well as the number and components of chargers that must be made in the United States.

Chargers seeking to be part of the National Electric Vehicle Infrastructure (NEVI) program must use the Combined Charging System, or CCS, which is standard at almost all charging stations in the U.S., except for Tesla’s popular Supercharger.

The government’s move to finalize so-called “floor standards” is expected to free up the first wave of funding and spark fierce competition among companies such as ChargePoint Holdings and EVgo Inc. For these small companies, this represents a generational opportunity.

Administration officials told Reuters that once the rules are finalized next week, any chargers that want to qualify for federal funding must comply with CCS standards.

Last year, Tesla floated another idea. In a letter to the FHA, the company proposed that its superchargers should be eligible for the discount if they are co-located with CCS chargers that work with competitors.

An administration official told Reuters the request had not been seriously considered.

First published date: Feb 11, 2023 at 14:31 PM CST