Tesla Stock: The Impact of Opening the Supercharger Network

Susan Dziubinski: Hi, I’m Susan Dziubinski with Morningstar. Earlier this month, Tesla TSLA announced a charging partnership with General Motors GM. GM plans to integrate Tesla’s North American Charging Standard connector into its electric vehicles, thereby allowing GM’s EV drivers to charge up at one of 12,000 Tesla Superchargers. Tesla announced a similar partnership with Ford F last month. Morningstar expects that other automakers will follow suit.

Morningstar views this development as a positive for electric vehicle adoption in the U.S. With EV charging unified, drivers would be able to charge their vehicles at any Supercharger, much like how drivers of gas-powered cars can fill up at any gas station.

What Is a Fair Price for Tesla Stock?

But what does this development mean for Tesla’s stock and for EV charging stocks?

Morningstar views this development as neutral for Tesla. Access to the company’s fast-charging network could be considered an advantage that would cause a consumer to choose a Tesla over other EVs. However, we don’t see the news as negative, because we think Tesla’s technological and cost advantages still remain, and we still expect deliveries to grow to 5.0 million vehicles by 2030, up from 1.3 million in 2022. So after the news broke, we didn’t change our $215 fair value estimate nor our narrow economic moat rating on Tesla stock.

EV Charging Stocks

What about the impact on the two EV charging stocks that Morningstar covers, EVgo EVGO and ChargePoint CHPT?

Well, we think the GM-Tesla collaboration is a long-term negative for EVgo, which operates fast-charging direct-current stations in the United States. Now, we don’t expect any material changes to EVgo’s existing contract with GM, which involves EVgo adding 3,250 DC fast chargers by March 2026, with GM funding about 25% of the cost. However, in the long term, we see the opening of Tesla’s Supercharger network to GM owners as increasing competition for DC fast charging. We have therefore lowered our EVgo fair value estimate to $3 per share from $4.

As a provider of networked EV charging hardware and software, ChargePoint doesn’t own DC fast-charging stations, and because of that, we don’t view the opening of Tesla’s Supercharger network as a threat for now. As a result, we left our $11 fair value estimate for ChargePoint stock unchanged. However, given Tesla’s increased willingness to work with third parties on EV charging, ChargePoint could be at risk if Tesla began supplying DC fast-charging equipment to outside parties.

For more stock insights, be sure to subscribe to Morningstar’s channel and visit Morningstar.com.

Morningstar strategist Seth Goldstein and analyst Brett Castelli provided the research behind this segment.

Watch “4 Growth Stocks Trading at Reasonable Prices for Long-Term Investors” for more from Susan Dziubinski.