Tesla jumps as GM deal takes Supercharger network closer to US standard

By Aditya Soni and Hyunjoo Jin

(Reuters) -Tesla shares jumped 5% on Friday on expectations that its electric-vehicle charging system would become an industry standard after General Motors (NYSE:) joined cross-town rival Ford in agreeing to use the Tesla (NASDAQ:) Supercharger network.

The Elon Musk-led automaker was on course for its eleventh straight session of gains, which would mark its longest winning streak in 2-1/2 years, if premarket gains hold. Tesla was also the third-most traded stock across U.S. exchanges.

Already the world’s most valuable automaker, Tesla was set to increase its market capitalization by more than $30 billion to about $780 billion.

Shares of General Motors, whose market capitalization is much lower at $49.8 billion but sells millions more vehicles annually, rose 3.5%.

The rare partnership among three of the biggest U.S. automakers ensures that nearly 70% of the country’s EV market will have access to Tesla’s North American Charging Standard (NACS).

That will put pressure on other companies to upgrade their networks to work with Tesla’s at a time when many lag in customer service and lack the funds to make such a commitment.

Shares of charging companies such as ChargePoint Holdings Inc, EVgo Inc and Blink Charging Co (NASDAQ:) were down between 2.0% and 7.7%.

“It’s a huge boost for Tesla’s charging business,” said Consumer Reports senior policy analyst Chris Harto.

“They are like to cement themselves as the number one charging network in the country. It definitely could become a big profit center for them going forward.”

Wedbush Securities estimated Ford and GM combined could add $3 billion to services EV charging revenue for Tesla over the next few years. The brokerage also raised its price target on Tesla shares to $300, which is nearly 30% above their last close.

The stock has a forward 12-month price-to-earnings ratio of 60.46, among the highest in the and above GM’s 5.29 and 7.94 for Ford.

Tesla’s NACS is more widespread and reliable than CCS, or the combined charging system, which the U.S. government has tried to support by setting aside $7.5 billion in federal funds.

Many complain that the CCS charging infrastructure is inefficient or sometimes inoperable, leading prospective buyers to fear becoming stranded on the road with nowhere to charge.

Greater usage 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 Tesla owners or removing that competitive advantage of having exclusive access to the best network,” Austin said.