Challenging Tesla, seven companies team up to form new company

Seven automakers announced on Wednesday they will form a new company to provide electric vehicle charging services in the United States, in a bid to challenge Tesla and take advantage of subsidies from the Biden administration.

The group includes General Motors, Stellantis, Hyundai Motor and its affiliate Kia, Honda, BMW and Mercedes Benz. These brands are behind about half of the cars sold in the US but account for only a small portion of the electric vehicle market dominated by Tesla.

The consortium of competitors — which some lawyers say will raise antitrust concerns — said it would aim to deploy 30,000 electric vehicle charging stations across North America, starting at locations along major highways and in cities.

The automakers did not specify how much they would invest in each company or overall, but said they were open to additional investment or participation requests from other companies, including those outside the auto industry. The joint venture does not yet have an official name.

“The investment each company will have to make through this partnership will be much smaller than if they were to build their own charging network,” said Akshay Singh, a partner at consultancy PwC Strategy&. “They will also have control over the user experience and data collection.”

There are currently more than 30,000 fast-charging stations across the United States. Each of these stations can cost anywhere from less than $100,000 to more than $200,000 to deploy, depending on the features.

Industry executives with extensive experience in charging stations say the cost of the venture could run into the billions of dollars.

The White House administration has praised the deal.

“We believe this is an important step forward,” said White House press secretary Karine Jean-Pierre. “This partnership will create jobs through the installation and maintenance of charging stations.”

The Biden administration has set a goal of installing 500,000 charging stations by 2030, a four-fold increase from when President Biden took office.

Tesla will account for more than 60% of all electric vehicles sold in the US in 2022, holding the largest electric vehicle charging station network with more than 18,000 Supercharger stations.

Earlier this year, Tesla said it would offer service at part of its charging network to electric vehicles from rival companies in order to qualify for part of a $7.5 billion federal subsidy package.

Tesla takes the lead

Tesla's advantage in the race to roll out electric vehicle charging networks allows the company to set standards, a factor that rivals have viewed with concern.

World - Challenge Tesla, seven companies cooperate, establish new company — Stellantis CEO Carlos Tavares speaks at CES 2023, an annual consumer electronics trade show in Las Vegas, Nevada, U.S., January 5, 2023. (Photo: REUTERS/Steve Marcus/File Photo)

GM, Mercedes and other companies have signed deals to use charging technology developed by Tesla starting in 2025.

GM has said it could save $400 million by using Tesla’s network. The company said Wednesday that the joint venture is part of its cost-cutting efforts and “will not change GM’s existing commitments and partnerships.”

Other automakers — Stellantis, Hyundai, Honda, and BMW — have yet to incorporate Tesla's technology, called the North American Charging Standard (NACS), and produce many products using a rival technology called the Combined Charging Standard (CCS).

The new charging service company will support both charging standards but will compete with Tesla's network.

The CEOs of the seven companies said a network of charging stations built similar to gas stations with full amenities such as restrooms, food services and retail operations would help support the rollout of electric vehicle sales.

However, according to Andres Pinter, co-CEO of installation and maintenance company Bullet EV Charging Solutions, car manufacturers do not have the necessary number of electrical engineers or experience working with retailers.

“It will be very difficult for car companies to catch up. But they have huge amounts of money to throw at these problems and can outsource them to outside companies.”

The new venture will also compete with existing charging service companies like Volkswagen's Electrify America or EVGo.

Industry officials said the venture could be structured similarly to Ionity, a joint venture formed in 2017 in Europe by VW, Daimler, BMW, Ford and Hyundai.

Asked about the possibility that the joint venture would raise antitrust concerns, a spokesman for the group cited a joint statement that the companies would have to get regulatory approval.

The US Department of Justice has not commented.

The Justice Department is likely to review the deal despite White House backing, said Andre Barlow, an antitrust attorney at the law firm Doyle Barlow and Mazard.

One concern that often arises around joint ventures is that a legal partnership can lead to illegal coordinated activities such as price gouging and market sharing.

“There are a lot of antitrust risks. We are seeing seven automakers partnering in this joint venture.”

Nguyen Quang Minh (according to Reuters)

Source