The astonishing transformation of Tesla, once the favored target for criticism within the automotive industry, into a company that now witnesses its very competitors eagerly seeking its assistance to salvage their positions, is truly remarkable. In a stunning turn of events, Tesla has emerged as the savior for its rivals, as they rush to incorporate Tesla’s groundbreaking designs into their latest vehicle offerings, hoping to save their own skins.
Amidst this industry upheaval, Elon Musk, the mastermind behind Tesla, has raked in billions of dollars in new revenue, capitalizing on a secret power move executed by the company.
Today, we unravel the captivating tale of how Tesla transformed the electric vehicle landscape, revealing how its actions led to its extraordinary triumph.
The largest automaker in North America, General Motors, made an unexpected announcement on June 8. They revealed their decision to adopt Tesla’s exclusive EV charging port for all their upcoming electric vehicle models. This significant development followed Ford’s historic move just two weeks prior, as they became the first traditional automaker to follow suit.
The simultaneous surrender and alignment of the two major U.S. automakers with Tesla’s direction is an unexpected turn of events that marks a pivotal shift in the North American EV landscape. This transition will lead to the vast majority of EVs in the region moving away from the widely adopted Combined Charging System, or CCS plug, which had been considered the global standard for electric vehicles.
Until now, non-Tesla EVs in the U.S. predominantly utilized CCS plugs, while the European Union made them mandatory for all EVs sold within its borders. This remarkable change comes merely six months after Tesla made a bold and surprising move by introducing their own connection system, the North American Charging Standard, or NACS.
In a blog post, Tesla confidently asserted that their NACS vehicles outnumbered CCS vehicles by a ratio of 2 to 1 on North American roads. They also claimed that their charging system boasts half the size and twice the power of CCS. The introduction of NACS by Tesla sparked a chain of events that has now led to the paradigm-shifting adoption of Tesla’s proprietary charging port by the major North American automakers.
This is precisely the point at which Tesla initially extended an invitation to other manufacturers interested in embracing the Tesla standard. They expressed their commitment to expediting the global shift towards sustainable energy and, in line with this mission, made a groundbreaking announcement.
“In pursuit of our mission to accelerate the world’s transition to sustainable energy, today we are opening our EV Connector design to the world. We invite charging network operators and vehicle manufacturers to put the Tesla charging connector and charging port now called the North American Charging Standard on their equipment and vehicles.”
Given the history of legacy automakers dismissing Tesla as a genuine competitor or leader in the EV industry over the past two decades, we didn’t anticipate anyone actually accepting Tesla’s offer. However, here we are, witnessing Tesla’s partnership with General Motors unfold in a manner remarkably similar to the agreement previously reached with Ford.
Through this collaboration, GM will gain immediate access to Tesla’s extensive North American Charging network, which comprises over 12,000 Supercharger locations. By utilizing Tesla’s Magic Dock adapters, GM’s existing CCS-equipped vehicles will be able to charge at these Supercharger stations.
Looking ahead to 2025, GM has set ambitious plans to make all their new vehicles default to using Tesla’s NACS. In a parallel arrangement to the Ford agreement, Tesla will provide GM with their software API, enabling GM’s vehicles and mobile app users to easily locate nearby Tesla Superchargers as well as other charging points.
Throughout the past century, automakers have largely remained detached from the concept of customer satisfaction. Their lack of concern can be attributed to the fact that companies like GM primarily sell cars to dealerships rather than directly to consumers. Once the customer drives the vehicle off the lot, the responsibility for any subsequent issues lies between the customer and the dealer. Occasionally, an automaker may encounter a severe enough problem to warrant a recall, but it is predominantly the dealership’s responsibility to address such matters.
As every car company participated in this approach, we found ourselves in a marketplace where all cars were more or less equally unsatisfactory, and consumers had to settle for the lesser of several evils. Therefore, when the established automakers finally decided to venture into electric vehicles, it came as no surprise that they simply opted for the most basic charging connector available, leaving the customers to figure out the rest.
This took the form of the J1772 plug, an AC-only charging connector capable of supplying 120 volts from a standard wall plug or 240 volts with a specially upgraded connection. In the best-case scenario, it would take approximately 8 hours to fully recharge a vehicle. However, the automakers saw this as not their problem to solve.
In contrast, Tesla took a revolutionary approach by directly selling their vehicles to customers through online ordering, eliminating dealerships and middlemen. This direct-to-customer approach aligns with Tesla’s commitment to providing a positive ownership and driving experience. Recognizing that the success of electric vehicles relied on fast, affordable, and convenient charging, Tesla simultaneously developed the Model S and designed a charging system tailored to support their product.
Elon Musk understood that competing in the existing market required offering an exceptional charging experience. Thus, the Tesla Supercharger and Connector systems were purposefully designed from the ground up to deliver an ideal customer experience. Superchargers provided DC fast charging capabilities that could fully charge a Model S battery in 75 minutes or reach a 50% charge in just 20 minutes. In contrast, when other automakers realized the demand for quick recharging, they simply added DC connectors to their existing vehicles and hoped that someone else would build the necessary charging infrastructure. Again, it’s not their problem to solve.
This is how the CCS came into existence, featuring its large and cumbersome plug. Essentially, CCS is a combination of the old design with an added fast charging capability attached at the bottom. It’s not surprising that Tesla’s sleek, efficient, high-powered, and abundant charging system emerged as the superior choice over the fragmented and haphazard CCS.
The advantages for Tesla are evident. Similar to how gas stations earn a portion of the revenue from fuel purchases, Tesla receives a share of the energy consumed by Supercharger users, translating to increased profits with more users. Even if Tesla doesn’t receive direct payment for sharing their design, their product becomes the industry standard. Opening up their charging network alone could generate over $5 billion in additional revenue, according to preliminary estimates.
However, the impact extends beyond generating revenue. It’s not just other automakers who are swiftly aligning with the new Tesla standard. EverCharge, an EV hardware and software manufacturer, announced on June 10th their adoption of the NACS across their entire network. Similarly, XCharge and Blink’s charging have also committed to implementing the Tesla standard across their networks.
For example, XCharge operates over 40,000 stations in 25 countries, while Blink provides charging services throughout the United States. These are just a few prominent names, as numerous smaller charging companies are eager to adopt Tesla’s NACS. Although they may not carry the same political influence as GM or Ford, these companies signify that global adoption of the NACS is only a matter of time. The inclusion of Tesla’s connector design by other charging networks significantly increases the number of available charging stations for current and future Tesla owners at no cost to Tesla.
However, with this wave of success, there are inevitable obstacles. Not all competitors are embracing Tesla’s superior technology. Larger companies like Electrify America pose a challenge as they have existing multi-million-dollar agreements with manufacturers using the CCS standard as well as lesser-utilized options like the Chatamo and J1772 adapter types.
Electrify America, a subsidiary of Volkswagen, has pre-existing contracts with Hyundai, Harley Davidson, and Lucid Motors, allowing their customers to use Electrify America chargers at discounted rates or for free. Electrify America strategically diversified early on by installing their charging terminals in locations like mall parking lots and securing partnerships with companies such as Target and Walmart to host their stations. All of this infrastructure is built on the CCS charging hardware, and transitioning to the NACS would be an extremely costly pursuit. While Electrify America may not operate as many charging stations as Tesla, they benefit from their alliances with influential companies. They could potentially challenge Tesla’s dominance in the charging market.
Another major hurdle is the slow adoption of new technology by the government. Despite the overwhelming support for the NACS in recent weeks, the White House issued a statement indicating that “the Government will not be changing t heir rules on requiring CCS compatibility to qualify for the new infrastructure tied to the Inflation Reduction Act.” While disappointing, the administration has a valid point, as there are already a significant number of vehicles equipped with CCS connectors on the road. Excluding over a third of current users would undermine the purpose of establishing a new nationwide electric vehicle infrastructure. Additionally, Tesla has already developed Magic Dock adapters that allow six different vehicle types to utilize their charging stations.
Therefore, this setback in changing the charging standard does not necessarily impede the industry’s adoption of the NACS. It merely delays the process of transitioning to the standard, at least for the next several years. Nonetheless, this represents a significant victory for Tesla, as they have effectively dismantled the old charging standard within a span of two weeks, establishing themselves as the dominant player in the field.