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Tesla is Giving Up a Large Competitive Advantage

  • July 18, 2023

A few years ago, after buying a Tesla (TSLA), we headed down from San Francisco to LA for a family summer road trip. Even though the car did not have enough range to get us to LA, the process of charging the car was seamless. We stopped in a tiny town called Kettleman City that had a Tesla Supercharger center with dozens of rapid chargers and a neat little waiting area with food and coffee that could be accessed with a Tesla card and a code the car provided.

By the time we were done eating lunch, the car was topped off and we were off to the races. This charging experience and others I had with Tesla over the last four years are a far cry from what I experienced a few days ago in a Ford Mach-E. We were in the market for a new car and were trying to decide between a regular ICE car, a hybrid like the new Toyota Crown that replaces the Avalon, a plug-in hybrid like the Lexus NX and an electric car like the Tesla Model Y, the Hyundai Ioniq 6, the Genesis GV60 and the Mustang Mach-E.

Genesis GV60
Genesis GV60

Among the vehicles we test drove, the performance edition of the Genesis GV60 with its little yellow boost button turned out to be the most fun. The Mustang Mach-E came a close second. With auto dealer markups a thing of the past and manufacturer rebates offered during the July 4th weekend, we decided to buy the Mach-E and headed down once again to the land of sunshine and palm trees.

Over a nearly 1,500 mile trip, the car turned out to be just as good as we hoped for but the charging experience was an absolute disaster. When attempting to charge a vehicle like the Mach-E, the three primary charging options are Electrify America, EVgo (EVGO) and ChargePoint (CHPT).  Two out of these three are public companies and the third one, Electrify America, is still private.

Electrify America appears to have struck a deal with multiple car manufacturers that gives new EV drivers a certain amount of free charging. Ours worked out to 250 kWh of free charging or about 800 miles (more on that later). Both Electrify America and EVgo had rapid chargers while ChargePoint mostly had very slow chargers located in universities or office buildings where students or employees expect to leave their cars charging for the better part of the day.

Given the ample time I had on my hands sitting in front of chargers, I decided to look into the two public charging companies to understand them better. The business models of these companies are very different with Electrify America and EVgo charging customers for the amount of energy consumed. Pricing is tiered based on the time of the day you charge the vehicle and charging speeds can vary quite a bit from 50 kWh to 350 kWh. The best I was able to get was a starting speed of 110 kWh on a 350 kWh charger that then dropped rapidly to the low 80s and eventually even lower once you reach the recommended 80% charge level.

ChargePoint on the other hand, works with the organization that wants the chargers installed and makes its money by installing and maintaining charging infrastructure. Both EVgo and ChargePoint have seen their stocks decline sharply during the last year, both are growing their revenue rapidly and both remain fabulously unprofitable.

EVgo and ChargePoint Revenue Growth
EVgo and ChargePoint Peer Comparison (source: Seeking Alpha)

EVgo and ChargePoint Profitability


Considering Electrify America has been offering free charging through car manufacturers or retailers, those chargers were the most popular and by far the most frustrating. Most locations only had about three or four chargers and more often than not, one or more of those chargers were not working. At a Ralph’s in the Sherman Oaks neighborhood of Los Angeles, we had to wait anywhere from 30 minutes to an hour just to get a charger and then wait even longer for the car to charge. We came across owners of a VW ID.4, a Hyundai Ioniq 5, a Porsche Taycan and a Mercedes EQS, all of whom had to wait their turn to get a shot at the charger.

The owner of the VW ID.4 was enterprising and got on a call with Electrify America to get them to fix the one broken charger. When I showed up the next day to charge again, an additional charger was also broken, leaving us with just two working chargers out of the four. One EV driver was so fed up that he said that he was going to return his Ioniq 5 after his two years were up because charging was turning into such a nightmare.

Our suboptimal charging experience where I had to juggle between four different charging apps, all with their own unique interfaces and problems, made me wonder if we should have opted for the Tesla Model Y instead. I normally charge at home and don’t do a lot of long distance trips by car. If that were not the case, opting for a car other than Tesla would have been a terrible decision. To drive the point home, there were numerous open Tesla chargers right next to the Electrify America chargers I was trying to use in Pismo Beach.

The problems weren’t just limited to the charging infrastructure. Sometimes the communication between the chargers and the vehicle would break down. I especially experienced this every time I attempted to charge after 10 PM. It was almost as though Ford’s servers on the East Coast were in maintenance mode at that time and not accessible.

Anticipating these issues with charging, General Motors (GM) and later Ford (F) struck a deal with Tesla to use Tesla’s supercharger network in the near future. This will make the life of some non-Tesla EV owners significantly easier and will allow Tesla to generate additional revenue from its charging infrastructure. However Tesla’s build out of its charging infrastructure is a huge competitive advantage and by opening it up to other companies, Tesla will lose that advantage in a highly competitive market.

It will be interesting to see how this massive transition to EVs plays out in the coming years. We will likely see a large number of winners and losers in various segments of this transition including car manufacturers, charging infrastructure companies and battery technology companies.

Electric car sales in the first quarter of this year were up 63% compared to a year ago and were up 48% in the second quarter of 2023. While this enthusiasm for electric cars is good to see and the driving experience is amazing, without proper charging infrastructure, some of these new EV adopters might go back to regular ICE or hybrid cars. I observed this with a friend who returned his Tesla at the end of his lease and switched to a Toyota Highlander instead.