Tesla CEO Elon Musk took competitors, suppliers and his own employees by surprise this week by reversing course on his aggressive push to build electric vehicle chargers in the United States, a top priority of the Biden administration.
Musk's decision to lay off the 500-member team responsible for installing charging stations and sharply slow investment in new stations rattled the industry and raised questions about whether the number of public chargers would grow fast enough to keep pace. sales of battery-powered cars. He put the onus on other charging companies, raising questions about whether they can build fast enough to address a shortage that appears to be discouraging some people from buying electric cars.
As the owner of the largest charging network in the United States, Tesla has a powerful effect on people's opinions of electric cars.
“There is certainly a psychological component,” said Robert Zabors, senior partner at Roland Berger, a consulting firm. “Availability and reliability are critical to the overall adoption of electric vehicles.”
Tesla's change of direction, just days after telling shareholders in a stock exchange filing that it would “rapidly” expand its charging network, which it calls Supercharger, will likely delay the construction of fast chargers, which are concentrated at along both coasts and in parts of Texas.
Wildflower, a New York real estate developer, was about to sign a lease with Tesla to build a charging center near the intersection of Interstates 278 and 495 in Queens. Then Adam Gordon, managing partner of the company, received a text message from the Tesla executive he had been working with.
“'Hey, I got fired at 4 in the morning and my boss got fired too,'” the Tesla manager said, according to Gordon. “That was the only communication we received from Tesla,” he added.
Another charging company will likely take over the site, which has permission to obtain power, Gordon said. But Tesla's withdrawal will inevitably delay the project.
No other company has as much experience and expertise as Tesla in installing charging stations, which range from a handful of outlets in the corners of parking lots to dozens of them in dedicated locations, often along highways.
The automaker has 25,500 of the 42,000 fast chargers installed in the United States, according to federal government data. A fast charger can recharge an electric car battery in between 10 minutes and an hour, depending on the car and charger. There are around 132,000 slower public chargers that can fully recharge electric cars in about eight to 12 hours.
Tesla began building its Supercharger stations in 2012 to give Model S sedan owners a place to refuel on road trips. Buyers of its previous model, the sporty Roadster, paid mainly at home.
Other companies may not be able to make chargers as quickly or as cheaply as Tesla, said Daniel Bowermaster, senior manager of electric transportation at the Electric Power Research Institute, a nonprofit group in Palo Alto, California, where Tesla once had its headquarters. campus.
“There are significant opportunities regardless of what Tesla does,” Bowermaster said. “It will be addressed by the market. How do they do it in a timely and cost-effective manner?
But some in the industry say they won't miss Tesla as much as they did a few years ago. Government subsidies and private capital are driving a surge in building chargers that don't rely on Tesla: the Number of public fast chargers in the United States. increased by nearly 11,000, or about 36 percent, from April 2023 to April 2024.
“The public charging experience will become easier,” said Peter Slowik, an auto expert at the International Council on Clean Transportation, a research organization. “I don't think the charging market and the EV market are slowing down because of Tesla.”
Tesla makes charging hardware for Supercharger stations in a factory in Buffalo, something necessary a few years ago when there weren't many suppliers. Since then, many companies have started selling charging equipment and the technology has become standardized.
Last year, virtually all major automakers selling cars in North America agreed to use the charging plug developed by Tesla starting in 2025, which would reduce complexity. Electric cars in Europe and China are based on different standards than those used by Tesla in North America.
Tesla's withdrawal “is a normal step in the professionalization of the market,” said Jörg Heue, chief executive of EcoG, a Munich company that provides charging software.
Musk did not explain his reasons for cutting back on charger construction, but some analysts said he had probably concluded that it would be harder to make money on chargers as more companies entered the market.
Tesla does not disclose the financial performance of its charging business, but analysts say it requires capital that Musk would prefer to invest in artificial intelligence and robotics, which he believes will drive the company's future growth.
“My guess is that the electricity and infrastructure costs to operate the grid far exceed the rates provided by Tesla and other drivers so far,” Ben Rose, president of Battle Road Research, said in an email. “Now they can focus on getting the most out of what they have installed.”
Tesla did not respond to a request for comment.
Another reason Musk may have become displeased with charging is that he may regret Tesla's decision last year to open its US stations to vehicles from other manufacturers. By opening the door to Fords, Cadillacs, BMWs and other automakers, Tesla has made it easier for others to sell electric vehicles, which may help those manufacturers reduce Tesla's dominance in the U.S. market.
Musk's reasoning “may be that people will use Tesla's infrastructure and buy a car from another manufacturer,” said Raj Rajkumar, a professor of electrical and computer engineering at Carnegie Mellon University. He added that he considered Musk's decision to remove the new chargers a mistake that would make it harder for more car buyers to switch to electric vehicles.
Tesla has been one of many companies to apply for subsidies under a federal program that aims to have half a million fast and slow chargers in operation by 2030, up from nearly 200,000 currently. Combined with state and local incentives, government money can cover almost the entire cost of a charging station.
“If Tesla no longer bids on these things, the agencies that deliver them will go to other carriers,” said Badar Khan, CEO of EVgo, a charging company in Los Angeles. “There are many different participants.”
The 500 accusing employees Tesla fired will likely take their experience elsewhere, Khan said. “There is a very talented group of people entering the market,” he said. “We are having conversations with individuals right now.”
EVgo said in March that it had almost 3,000 charging stations at the end of last year, up 37 percent from the end of 2022.
Electric companies, which must upgrade their equipment to support the growth of charging options, said the fast-charging network was just one component of a broader strategy that Tesla's decision would not alter.
“It's no secret that Tesla is a major player” for electric vehicle charging, said Chanel Parson, director of clean energy and demand response for Southern California Edison, the state's second-largest investor-owned utility. . But, she added, “they're not the only player.”
The utility has 500 projects in various stages of development for 14,000 chargers focusing on light, medium and heavy vehicles. To reach California's goal of net-zero greenhouse gas emissions by 2045, Parson said, 90 percent of light and medium-duty vehicles must be electric, along with 80 percent of buses and 54 percent of heavy vehicles.
“And there are a lot of partners in this space that we are working with to make it happen,” he said.
Government officials responsible for funding and promoting electric vehicles said they were not dismayed by Tesla's decision to remove charging.
Thousands of chargers are coming online each month, the Biden administration's Joint Office of Energy and Transportation said in a statement, adding: “We do not expect individual business decisions to impact electric vehicle charging projects.”
