Tesla's (TSLA) latest job cuts this week move the EV pioneer closer to the bones of its big competitive advantage: its ubiquitous Supercharger network.
As first reported by EV blog Electrek, Tesla has laid off nearly the entire Supercharger organization responsible for building a best-in-class charging network. A major automaker recently signed on to use the company's NACS (North American Charging Standard) plug.
Nearly 500 employees were let go from the group, including senior director Rebecca Tinucci. CEO Elon Musk made the move last week, after Musk led layoffs totaling more than 10% earlier this month, according to Bloomberg and other sources. That was it.Former head of Tesla's strategic charging program confirmed the dismissal Even X.
Growth of Tesla's Supercharger network, which totals 6,249 Supercharger stations and more than 57,000 connectors, will reportedly slow down going forward and construction in certain locations will be halted.
Mr. Musk gave a speech about superchargers X newssaid the network would grow at a “slower pace” at the new location.
Tesla plans to continue expanding its Supercharger network, but at a slower pace with new locations and a focus on 100% occupancy and expansion of existing locations.
— Elon Musk (@elonmusk) April 30, 2024
What this means for the future of Tesla's Supercharger network and large-scale EV construction across the United States is unclear, casting doubt on many plans.
President Joe Biden has invested significant political capital into converting America's fleet to electric vehicles, including spending $7.5 billion to build a domestic EV charging infrastructure. The White House aims to install 500,000 new chargers by the end of 2010 through the National Electric Vehicle Infrastructure (NEVI) program, using public and private funding.
Tesla is one of the White House's larger partners in the NEVI initiative.
“Tesla has already been awarded funding under the federal government's NEVI program,” Andres Pinter, CEO of Bullet EV Charging, one of Tesla's Supercharger contractors, told Reuters. There's no way Mr. Musk would back down from providing substantial grant funding.” The decision to pause supercharger production was a “disaster” for his business, leaving the current Tesla project in limbo.
Pinter believes the administration's “free money” probably means Musk will rebuild the charging business rather than abandon it. And Tesla's automaker's charging partners hope that happens.
Automakers such as GM, Ford, Kia, Polestar, Stellantis, and Honda have signed up for access to the Supercharger network, and with the promise that the Supercharger network will continue to grow rapidly, Tesla We plan to incorporate the NACS plug inlet. constant pace.
“We have nothing new to announce regarding our plans to transition to NACS.” [also known as the SAE J3400 standard]'' GM said in a statement to Yahoo Finance regarding Tesla's recent moves. “We continue to monitor the situation regarding changes and potential impact to our Supercharger team.”
Ford gained access to Superchargers through Tesla adapters earlier this year, but said there are “no changes to our plans for customers” at this time. Rivian also gained access to the Supercharger network this year, but told Yahoo Finance, “The owner continues to have access to the Tesla Supercharger network and we have begun shipping his NACS DC adapters to customers.” he said.
Most of the automakers that responded to Yahoo Finance agreed with each other, including Kia Motors, which said its plans remain unchanged and will continue to build toward NACS compatibility.
The news clearly blindsided Tesla's automaker partners, with officials at the major automaker telling Yahoo Finance that Tesla's move is “insane.”
“If you lay off the supercharger team, access to the network will slow down. [original equipment manufacturers] …and the pace of infrastructure development will slow,” said KC Boyce, vice president of the mobility and energy practice at market research firm Escalent. “[Supercharger layoffs] This will put a damper on EV sales growth for Tesla and non-Tesla manufacturers. ”
Escalent's data shows that charging infrastructure availability and awareness influence buyers' EV adoption decisions, and Tesla was the first car company to realize and do just that.
Additionally, Boyce said Musk's efforts in AI and robotaxis, which have been a major focus for investors since he unveiled robotaxis earlier this month, came at the expense of the company's successful charging network. I think there is a possibility of doing so.
Is the Supercharger network worth the cost?
Some analysts believe Tesla's Supercharger business could be worth billions of dollars, but others disagree.
Peter Ramsay, a former energy analyst at Argus and BP and now editor-in-chief of the EV inFocus newsletter, thinks Musk's move to limit charging spending was actually a smart move. .
In a post published Wednesday, Ramsey said Tesla's first-quarter earnings report showed “services and other” gross profit fell 40% to $81 million, with the division's “biggest key driver” being He pointed out that it has nothing to do with billing and revolves around the center. Used car sales profits and parts sales.
Additionally, Ramsey cited BNEF estimates that Tesla earned just $1.74 billion in charging revenue last year, or 1.5% of its total revenue. While the charging business was expected to grow over the next few years, the business remains a “fairly insignificant” part of Tesla's small services division and generates little profit, relatively speaking.
“Musk's decision to cut costs in non-core areas, where there are persistently high capital investment requirements and few attractive margins in sight, is understandable, even if it was not communicated in the best way. should be taken seriously,” Ramsey wrote.
BNEF estimated that Tesla (prior to its move to eliminate the Supercharger team) would have generated $7.4 billion in global revenue from its charging business by 2030. Tesla brought in nearly $100 billion in revenue in 2023 alone.
Ramsay believes the charging business should be able to stand on its own, and that it may eventually have some value.
“However, in our view, charging [a] The tools to support Tesla's growth will be judged more heavily on its prospects as a business opportunity and may move further into decisions regarding the potential sale of the division to more natural owners, but overall positive There is a possibility that it will become. ”
Tesla's move to curb the growth of its Supercharger network also opens the door for other companies to join.
“EVgo is actively working on the development of the J3400 standard as a voting member, and as we add NACS to fast charging networks across the country, we will We look forward to welcoming Tesla drivers to our network.” Yahoo Finance for development and public policy.
While EVgo is one of the biggest players in the industry, some believe a new player could emerge and take over what Tesla started.
“This unexpected move by Tesla is not indicative of a broader trend or fundamental problem with the EV charging business model. Rather, this shows that there is an opportunity open to the industry.” said Patrick Sullivan, CEO of charging company EV Realty.
Sullivan believes now is the time for other companies to step up and lead “Version 2.0” of the charging industry as it moves towards open standards and interoperability. The roughly 500 people laid off from Tesla have valuable expertise, he said.
“Tesla alumni are already present everywhere, including on our own teams, helping us build low-cost, high-utilization EV charging solutions for our fleet customers,” Sullivan said. he said. “I have no doubt that we will see this group of talented professionals multiplying even further as they find new roles with companies in this sector.”
Pras Subramanian is a reporter for Yahoo Finance.you can follow him twitter And even more Instagram.
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