Joseph White, Akash Sriram and Nora Eckert
DETROIT (Reuters) – Elon Musk’s sudden decision to lay off employees who ran Tesla’s (NASDAQ:) electric vehicle charging business has stunned automakers as they prepare to equip new electric vehicles for customers to use Tesla’s Supercharger network, industry officials and analysts said on Tuesday.
For now, General Motors (NYSE:), Ford (NYSE:) and other automakers that struck deals last year to give customers access to the network said they are not changing their plans.
Tesla’s decision to open its network to rival electric vehicle makers was welcomed by US President Joe Biden and opened the door for Tesla to receive federal subsidies to expand its North American Charging Standard (NACS) system.
Musk’s decision to fire company chief Rebecca Tinucci and most or all of the staff who operated and maintained the system, according to two former employees and multiple LinkedIn posts, has left officials at Tesla’s automakers and suppliers uncertain about their future.
Tesla did not respond to requests for comment.
Musk subsequently stated on X that the automaker still plans to expand the Supercharger network, “just at a slower pace for new locations and with a greater focus on 100% uptime and expanding existing locations.”
Andres Pinter, co-CEO of network provider Bullet EV Charging Solutions, said: “As a contractor for the Supercharger network, my team woke up this morning to a sharp kick in the butt.”
“Tesla has already received money through the federal government’s NEVI program,” he said, referring to the National Electric Vehicle Infrastructure formula program aimed at providing funding to states to roll out electric vehicle charging networks. “Under no circumstances will Mr. Musk give up essentially free money. Perhaps Mr. Musk will recreate the EV charger team in a bigger, badder, more Musk-esque style.”
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GM and Ford said in separate statements that they are not changing plans to equip their electric vehicles with connectors that would allow drivers of Chevrolet, Cadillac or Ford electric vehicles to charge at Tesla stations.
“We have nothing new to announce regarding our plans,” GM said. “We continue to monitor the situation regarding changes to the Supercharger team and their potential implications, with no further comment or update at this time.”
“NOTHING IS DISCUSSED”
Some industry executives and analysts believe Musk could dissolve the existing Supercharger organization to create a leaner, less expensive team to run operations.
However, Musk made clear in a call with analysts earlier this month that he is focused on the capabilities of artificial intelligence, robotics and autonomous robotaxis.
“There is nothing off the table about this layoff,” Wedbush Securities analyst Dan Ives said. “Musk is trying to send a signal within the company that because of the difficulties Tesla faces, they will have to make difficult decisions. … It shows there is a serious focus on cost.”
Tesla last week reported a decline in first-quarter profit and its first quarterly revenue decline since 2021. Even after last week’s sharp rally, Tesla shares are down about 26% for the year.
In China, the company’s second-largest market, where Musk made a surprise visit over the weekend to discuss the potential introduction of an advanced driver assistance package, Tesla has more than 1,350 Supercharger stations, according to a listing on its website.
With Tesla’s electric vehicle sales falling and margins under increasing pressure, analysts say Musk may cut costs on the Supercharger network to save money for other projects with greater growth potential.
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“Tesla is looking to properly price its (capital expenditures) and operating expenses over the next few years as the company enters a slower growth phase,” said Morningstar analyst Seth Goldstein.
More traditional automakers may be able to retain a business that promises steady revenue and near-constant data flow with customers, analysts say. But Musk might take the Silicon Valley entrepreneur’s view that toll collection is an outdated business that could be streamlined or even sold.
“My guess is that now that the industry has embraced the NACS standard, it views Supercharging less as a strategic moat and more as a cost center,” said KC Boyes, vice president of analytics firm Escalent.
Analysts believe Tesla’s Supercharger network could have significant value if Musk were willing to sell it. Competing charging networks in the US have faced reliability issues and don’t have the scale or convenient locations that Tesla has locked down.
Seven major automakers, including Mercedes, GM, Stellantis (NYSE:), Honda (NYSE:), BMW (ETR:) and Hyundai-Kia last year formed a joint venture called Ionna to develop a fast charging network that could rival Tesla’s Supercharger network.