Elon clears the field.

The alternative to Tesla's supercharging network, the government-backed CS charging port, will not be Android to Tesla’s Apple. It will be Betamax to Tesla’s VHS.

Something extraordinary happened over the last few weeks as the media obsessed over the latest palace intrigue around U.S. Presidents past and present: Elon Musk drove a combine through the EV charging industry.  First, he inked a deal to open Tesla’s supercharging network to Ford.  Yesterday, he opened that network to GM.  In two deft moves, Musk made his largest EV competitors in the lucrative U.S. market dependent on his network.  Other car companies will likely follow suit.  Vito Corleone could not have done it better.

With these two Tesla tie-ups, the share price of a slew of EV charging companies––from Blink to ChargePoint to EVgo––plunged by double digits, with more pain in store.  Months ago, niche charger Volta crashed to penny stock status before Shell Global gobbled it up for a paltry $169 million in cash (86 cents a share).  One remaining charging straggler, Electrify America, remains an albatross around Volkswagen of America’s neck, a mandated expense that came with their diesel emission scam settlement with California and U.S. regulators.  Unless the terms of their settlement preclude it, VW would be wise to partner with Tesla too by adding a Tesla plug or adapter at their Electrify America stations.

Everywhere you see “winning, winning, winning” in the EV space, you see the hand of Elon Musk.  Everywhere you see failure, you see Joe Biden’s misguided Inflation Reduction Act (IRA), which I long prophesied would enable a series of Solyndra-like fiascoes.  Right on cue, it has.

Biden’s Folly was set in motion the day the President glibly snubbed the world’s most successful EV maker by pointedly not inviting Musk to early discussions of the IRA––by its more honest name, The Green New Deal––while including CEOs from far less successful firms.  That move was like Charlotte’s BJ Armstrong taunting the Bulls’ Michael Jordan after a rare playoff win over the GOAT.  Such undeserved bravado does not sit well with the ultra-competitive alpha males that still dominate the world, even with the Left’s global war on “toxic masculinity.”  Jordan subsequently dismantled Armstrong and the Hornets.  And Musk has made a mockery of Biden’s signature “achievement,” the IRA, even as he benefited from its tax credits. “I drink your milkshake,” says the Tesla CEO in so many words, as pressure grows on Uncle Sam to accept Tesla’s widespread and reliable charging model, the North American Charging Standard (NACS), which more than 60% of America’s EV market can now access. 

Recognizing the failure of its own IRA incentives, yesterday the White House announced that charging stations using NACS would still be eligible for billions of dollars in subsidies if they also offered the inferior government CCS charging standard.  The profit model of the zombie charging companies now rests primarily on payola from Uncle Sam.  No surprise, Elon has an answer to the latest desperate White House gambit: use a CCS adapter on the existing Tesla plug.  No need to switch from the Tesla charging network. 

Full disclosure: I dumbly bought the IRA hype, losing big on publicly traded EVgo and Volta.  In a tight, pricey lending market, driven by the high-interest rates needed to tame the inflationary effects of Biden’s gross overspending on boondoggles like the Inflation Reduction Act, only companies with strong balance sheets and free cash flow can afford to grow their networks at pace.  That’s Tesla.

But Elon’s triumph is wider than EV charging.  When you look at Shell’s purchase of Volta, you already see the growing desperation among traditional energy companies. It’s like Verizon buying Yahoo in 2017––way too late to the digital content party.  Ford and GM essentially told Shell that they don’t want to be in the “gas” station business. Despite Biden’s financial sweeteners, their decision came down to the prudent application of capital.  GM CEO Mary Barra said that partnering with Tesla’s charging network––at essentially no cost––would save the company $400 million dollars from a planned $750 million investment in its own charging network.  From Mercedes to Kia to Hyundai, similar savings will accrue to any automaker that partners with Tesla’s easier, more powerful network.  The alternative, the government-backed CS charging port, will not be Android to Tesla’s Apple.  It will be Betamax to Tesla’s VHS.  This is now a zero-sum game.  And Musk is clearing the field.