By Joseph White, Akash Sriram and Nora Eckert
DETROIT (Reuters) – Elon Musk’s abrupt decision to lay off employees who ran Tesla’s electric vehicle charging business has blindsided automakers preparing to equip new electric vehicles to use Tesla’s Supercharger network, industry officials and analysts said Tuesday.
General Motors, Ford and other automakers that reached agreements last year to give customers access to the network said they would not change their plans for now.
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 grants to expand the reach of its North American Charging Standard (NACS) system.
According to two former employees and several posts on LinkedIn, Musk’s decision to fire the company’s head, Rebecca Tinucci, and most or all of the employees who operated and maintained the system led to executives at automakers and Tesla suppliers are uncertain about the future.
Tesla did not respond to requests for comment.
Musk then said goodbye
Andres Pinter, co-CEO of Bullet EV Charging Solutions, a supplier to the network, said: “As a contractor for the Supercharger network, my team woke up this morning with a major kick in the pants.”
“Tesla has already received funds under the federal government’s NEVI program,” he said, referring to the National Electric Vehicle Infrastructure formula program that aims to provide funding to states to build electric vehicle charging networks. “There is no way Mr. Musk would give up what is essentially free money. It could be possible that Mr. Musk is reshuffling the EV charging team in a bigger, badder, more Musk-like way.”
GM and Ford said in separate statements that they would not change their 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 the potential impact and have no further comment or updates at this time.”
“NOTHING IS OFF THE TABLE”
Some industry executives and analysts said Musk could have dismantled the existing Supercharger organization to build a leaner, more cost-effective team to run operations.
However, in a call with analysts earlier this month, Musk made it clear that he is focused on opportunities in artificial intelligence, robotics and autonomous robotaxis.
“Nothing is off the table with this layoff,” said Dan Ives, an analyst at Wedbush Securities. “Musk is trying to send a signal internally that Tesla needs to make difficult decisions given the difficulties it is facing. … This shows there is a serious focus on costs.”
Tesla last week reported lower first-quarter profits and its first quarterly sales decline since 2021. Even after a rise last week, Tesla shares are down about 26% for the year.
In China, the company’s second-largest market, which Musk made a surprise visit to over the weekend to discuss the possible launch of its advanced driver assistance package, Tesla has more than 1,350 Supercharger stations, according to a list on its website.
As Tesla electric vehicle sales fall and profit margins come under increasing pressure, Musk could cut spending on the Supercharger network to save money for other projects with greater growth potential, analysts said.
“Tesla is trying to right-size its (capital) and operating costs over the next few years as the company is in a slower growth phase,” said Morningstar analyst Seth Goldstein.
More traditional automakers could hold on to a deal that promised stable revenue and near-continuous data sharing with customers, analysts said. But Musk may be taking a Silicon Valley entrepreneur’s view that the store is a legacy business that could be streamlined or even divested.
“I suspect that now that the industry has adopted the NACS standard, he views Supercharger less as a strategic moat and more as a cost center,” said KC Boyce, vice president of data analytics firm Escalent.
The Tesla Supercharger network could have significant value if Musk wanted to sell it, analysts said. Competing U.S. charging networks struggle with reliability issues and have neither the size nor the prime locations that Tesla has secured.
Seven major automakers, including Mercedes, GM, Stellantis, Honda, BMW and Hyundai-Kia, formed a joint venture called Ionna last year to develop a fast-charging network to compete with the Tesla Supercharger network.
(Reporting by Joe White and Nora Eckert in Detroit and Akash Sriram in Bengaluru; additional reporting by Abhirup Roy in San Francisco, Chris Kirkham in Los Angeles and Daniel Leussink in Beijing; Editing by Ben Klayman and Richard Chang)