Elon Musk's sudden layoff of employees managing Tesla's EV charging business surprised automakers who were preparing to integrate their new EVs with the Tesla Supercharger network, according to industry officials and analysts on Tuesday.
US President Joe Biden praised Tesla's move to allow rival EV manufacturers access to its network, which also enabled Tesla to qualify for federal subsidies to extend the reach of its North American Charging Standard (NACS) system.
Supercharger Team Getting Disbanded
Elon Musk's choice to remove Rebecca Tinucci, the head of the business, along with most or possibly all of the staff responsible for operating and maintaining the system, as reported by two former employees and various LinkedIn posts, has left officials at automakers and Tesla suppliers unsure about what lies ahead.
Tesla did not provide any comments in response to requests.
A Slower Pace for Expansion
Musk subsequently shared the carmaker's expansion plans for the Supercharger network on X, emphasizing a slower pace for new locations with an increased focus on achieving 100% uptime and expanding existing locations.
As per Andres Pinter, the co-CEO of Bullet EV Charging Solutions and a supplier to the network, his team, as contractors, woke up to a sharp kick in their pants that morning.
He noted that Tesla has already received funding under the federal government's NEVI program, which stands for the National Electric Vehicle Infrastructure Formula program, to provide funding to states for deploying EV charging networks. Pinter noted that Musk would not pass up effectively free money, and it is conceivable he might rebuild the EV charger team in a bigger, badder, more Muskian way.
Rivals Retaining Stance on Supercharger Collaboration
GM and Ford, in separate statements, affirmed that they are maintaining their plans to equip their EVs with connectors enabling drivers of Chevrolet, Cadillac, or Ford brand EVs to recharge at Tesla stations, highlighting that they are closely monitoring the situation regarding changes to the Supercharger team, with no additional comments or updates at present.
Some executives and analysts in the industry speculated that Musk's disbandment of the existing Supercharger organization aims to create a leaner and more cost-effective team for managing operations. However, in a call with analysts earlier this month, Musk stated his focus is on opportunities in artificial intelligence, robotics, and autonomous robotaxis.
Wedbush Securities analyst Dan Ives observed that no options are being overlooked in this layoff. Musk seems to be signaling the need for tough decisions internally due to the challenges Tesla faces, indicating a serious focus on cost.
Tesla shares are down 22% for the year despite reporting its lower first-quarter profits last week and its first quarterly revenue decline since 2021. With sales of Tesla's EVs declining and profit margins facing more significant pressure, analysts suggested that Musk might reduce Supercharger network spending to preserve cash for other projects with higher growth potential.
Tesla's Supercharger Network Value
According to analysts, more traditional automakers might choose to retain a business offering steady revenue and constant data exchanges with customers. However, adopting a Silicon Valley entrepreneur's perspective, Musk might view EV charging as a legacy business that could be streamlined or divested. KC Boyce, a vice president at data analytics firm Escalent, proposed that Musk might now perceive Supercharging less as a strategic advantage and more as a cost center, especially with the industry's adoption of the NACS standard.
Analysts highlighted that the Tesla Supercharger network could hold substantial value if Musk considered selling it. They pointed out that rival US charging networks have grappled with reliability issues and lack the scale or prime locations that Tesla has already secured. Last year, seven major automakers, including Mercedes, GM, Stellantis, Honda, BMW, and Hyundai-Kia, formed a joint venture named Ionna to develop a fast-charging network to rival the Tesla Supercharger network.
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