Musk strikes again: Tesla's win on EV charging could split the industry

Elon Musk is taking over another industry — and it’s threatening the future of one of President Joe Biden’s most-watched climate policies.

Surprise deals that Ford and General Motors have announced with Musk mean that two of the nation’s largest automakers will rely on Tesla’s charging technology for their electric vehicles, pushing the industry toward a de-facto standard in the United States. But just four months ago, the Biden administration endorsed a rival charging technology when setting the rules for companies seeking access to $7.5 billion in federal infrastructure funding.

The result: The still-burgeoning electric vehicle market is facing a split between two incompatible charging standards — a divide that could either slow the adoption of EVs or cause Washington to sink hundreds of millions of dollars into chargers that the cars and trucks of the future won’t use.

“Imagine having a fuel dispenser with a different size hole than your gas tank,” said Arcady Sosinov, founder and CEO of charging company FreeWire Technologies, which plans to start installing Tesla-compatible connectors on its chargers beginning next year. “It just seems ridiculous, but that’s essentially what’s happening in the EV charging industry.”

Feuds between rival technological camps are nothing new — as seen in the 1980s struggle between VHS and Betamax, or consumers’ frequent confusion about which USB cable to use. But in this case, Washington put its thumb, and billions of dollars, on the scale for one of the contenders.

The agreements by Ford and GM to use Tesla’s North American Charging standard adds significant heft to efforts by Musk’s company to dominate the charging business. Altogether, the three companies accounted for 75 percent of EV sales in the U.S. during the first quarter of this year, according to data released by Cox Automotive in April.

In February, the Federal Highway Administration decided to require companies seeking EV charging grants to use the other standard, the Combined Charging System. Nearly all automakers except Tesla are producing their vehicles with CCS connectors, and even GM and Ford won’t switch until 2025. Regulators in Europe have required CCS, and even Tesla uses CCS there.

The White House maintains that recipients can use the federal money to build NACS plugs alongside CCS ones. But critics say that attempt to cut both ways could stymie the United States’ EV adoption goals by delaying a convergence on a single charging standard.

“Imagine yourself showing up to a site and you have four CCS and four NACS cables, and all the CCS are taken and the NACS is available, but your car doesn’t use it,” Sosinov said. “Having one singular standard would ultimately be better for the consumer.”

For Ford and GM, the decision to back Tesla’s technology puts them on board with the chargers that the industry generally sees as technologically superior in charging speed, ergonomics and reliability.

Ford sees benefits in the NACS technology in terms of “consistent access to charging” as well as the performance of the plug itself, Chris Smith, Ford’s chief government affairs officer, said during a webinar organized by Resources for the Future on Monday.

“Availability of charging is going to be incredibly important for our business model,” Smith said, adding that the shift marks an “important step forward in order to make sure that we’ve got unified standards.”

GM, too, believes making NACS the “unified standard for North America” will enable more mass adoption of EVs, CEO Mary Barra said during a Twitter Spaces conversation with Musk on Thursday.

But until last year, NACS wasn’t even an option available to other automakers. Tesla kept its charging technology exclusive to its own vehicles, while other companies coalesced around CCS through a global standard-setting process pushed by an association called CharIN.

“For anybody to converge on something, it needs to be an open standard,” Oleg Logvinov, chair of CharIN’s board, said in an interview. “So far, CCS is the only choice that has all of the attributes of a real open standard and the ability to be a cornerstone of the ecosystem.”

As Logvinov noted, Tesla’s NACS technology relies on some of CCS’s underlying communication protocols for the interface between the vehicle and charger.

But while Tesla built out a vast network of fast-charging Superchargers using its NACS technology over the past decade, the current CCS fast charging network is just over half the size and plagued by reliability problems. Tesla operates around 19,400 fast chargers using NACS nationwide, compared with around 10,500 CCS fast chargers operated by all other companies combined, according to the Energy Department.

For companies like Ford and GM that have bet their future on electric vehicles, that lack of CCS infrastructure poses a major issue.

Barra said partnering with Tesla would nearly double access to fast chargers for GM customers.

Kevin Schwain, senior director for electric vehicles at the energy software firm EnergyHub, said Ford and GM faced a “very pragmatic decision about the fact the non-Tesla network is smaller, more error-prone.”

“The Tesla charging experience — the network that they’ve built, is unquestionably the best there is,” Schwain said.

Last fall, Tesla pounced, finally opening up its charging technology and even rechristening it the “North American Charging Standard” in a bid to make it the dominant American charger technology. It also struck a deal with the White House in February to open up some of its Superchargers to the public in exchange for federal incentives.

Tesla did not respond to a request for comment on this story. Musk, who has been at odds with the administration on a number of other issues, touted the benefits of adopting NACS as a national standard during the Twitter Spaces event.

“We can focus on one standard — it’s really going to be great for consumers,” Musk said. “They just won’t have to worry about which plug, which socket, which charging station — it’ll just work seamlessly.”

Sosinov said major automakers had “waited and waited and waited” for industry or government to deploy a ubiquitous charging network under the CCS standard.

“Public charging infrastructure has been so poor to date that Ford and GM were effectively forced to do what they did,” Sosinov said. “It is a self-preservation move, because they have now committed billions of dollars developing electrified powertrains, and if charging infrastructure doesn’t exist, who buys the car?”

Dan Ives, managing director for equity research at Wedbush Securities, said that from automakers’ perspective, Congress has “disappointed again and again” in delivering the funding to create a charging network using CCS.

“The stalwarts of the 313 area code [in Detroit] that have been supportive of every legislation now have to bet on Tesla, on the Supercharger, because they can’t rely on the government [CCS] infrastructure buildout,” Ives said, calling it “the biggest black eye” the federal government has faced in its EV initiatives.

In response to a request for comment, the White House painted Ford and GM’s decision as “a step forward” in its goal “for every car to be able to use and have a high-quality experience at every publicly funded charger.”

“More drivers having access to more high-quality charging — including Tesla Superchargers — is a step forward,” White House spokesperson Robyn Patterson said in a statement.

Patterson noted that the federal requirements make NACS eligible for charger funding “as long as drivers can count on a minimum of CCS.” That means installing connectors of both types at the same sites with the federal money.

In a statement after the publication of this story, a Federal Highway Administration spokesperson said making NACS connectors and adapters eligible for funding when provided in addition to CCS would ensure future stations “can service all EV drivers, regardless of their vehicle’s current or future connector type.”

“Our technical experts are having active conversations with automakers, charger manufacturers, and standards setting bodies to ensure federal investment continues to support a reliable, convenient, and user-friendly charging experience for all drivers,” the spokesperson said.

But with Tesla, Ford and GM — the United States’ three largest electric vehicle manufacturers — all converging on Tesla’s technology, it seems increasingly likely that future EVs will be built with a NACS inlet.

The charging industry already appears to be anticipating such a future. EVgo, which operates most fast-charging stations in the U.S. outside of Tesla’s network, is now “actively evaluating a potential retrofit for NACS,” Chief Commercial Officer Jonathan Levy told POLITICO in a statement on Friday. And Blink Charging announced Monday it is developing a fast charger with both CCS and NACS connectors.

Even CharIN, the association backing CCS, said Monday it would convene a task force to support submitting NACS to a standardization process “to unify the charging standards market in North America.”

“For any technology to become a standard it must go through a due process in a standards development organization,” CharIN said in a statement.

The question for the Biden administration is whether to stick with its decision to require CCS or pivot to Tesla’s system, if that’s where the private sector is headed.

“They were rightfully trying to nudge the industry along in the direction it was already going at the time,” Schwain said. “These announcements may change course — may have us rethinking what those minimum standards are that the federal government put in place.”

Pushing for development of both standards could drive up the cost of constructing stations and make the charging experience more difficult for drivers, even with the availability of adapters, Sosinov said.

“Whereas I would prefer that NACS have ‘won’ the standards war, this effectively ensures that there will continue to be a standards war,” Sosinov said. “For the consumers, having one standard [CCS], even if it is a sub-standard standard, ultimately would have been better.”

CharIN’s Logvinov agreed, saying there are “no winners in standard wars.”

“All parties lose because consumers are confused, they delay the adoption,” he said. “If we need to continue with multiple connectors and chargers, it’s going to cost more to develop and deploy the infrastructure.”