Tesla and Ford Deal a Game Changer?

If you have been following the EV race at all, it is clear that most major automakers are turning to EV technology in some fashion or another, with some electrifying their entire fleets and others electrifying portions of them.

Regardless of anyone's opinion about the entire idea from a political or practical standpoint, before you know it, and rather quickly, we're going to be seeing many more electric vehicles on our nation's roadways.

The biggest hurdle, beyond whether or not we have the power grid capacity to keep up with the massive future additional demand for electricity, is where you can charge your car? Especially if one intends to take a longer road trip, which currently requires quite a bit of forethought and planning since EV charging stations are not nearly as ubiquitous as traditional gas stations.

Tesla has been working to change this and they have good reason to do it. If there is more widespread access to charging stations for their cars, they potentially can sell more cars. And to date, Tesla currently owns the largest number of chargers in the country.

Enter Ford, a company that I have said stands a good chance to become a strong competitor in this sector of the auto industry due to the vehicles they are making and the appeal of them. The Ford F-150 Lightning and the Mach-E Mustang both have strong consumer appeal, offering utility on the truck side and performance and driving experience on the Mach-E side. One has to consider that even if you are not yet quite onboard with the idea of owning an electric vehicle, the Mach-E is pretty slick.

Part of the issue with charging stations is that all other automakers except for Tesla use a universal charging apparatus and Tesla has a proprietary one. Meaning, if you are driving a Ford Mach-E and you need a charge, you can't use a Tesla charging station to do it.

When I praised Rivian over Tesla, I considered two things. One, that Rivian's vehicle offerings look better and offer more of a driving experience. While Tesla appeals to a more environmental conscious and tech interested crowd, Rivian appeals to drivers much in the same way most traditional automakers do. Plus two, Rivian chargers are the same as all other automakers have chosen to use.

For those reasons, I have considered Rivian to be a better, more appealing stock market play over Tesla, and based on my thoughts about Ford being a strong contender in the EV race among traditional manufacturers, I prefer Ford over the others.

Granted, I have owned Ford stock for many years and Ford has always appealed to me in this sector anyway. The thinking that Ford can have a strong chance to become bigger in EV is just an added bonus.

That all said, Ford and Tesla are now talking about teaming up in the charger space. Ford says it prefers Tesla's charging technology and will work to encourage all other automakers to make the switch as well to what Tesla uses. 

Starting in 2025 Ford will outfit their electric vehicles with the NACS system, or North American Charging Standard that Tesla uses. In the meantime, current owners of Ford EV's can buy an adaptor for a couple hundred dollars to use NACS chargers as well.

Will those adaptors also be available to other EV owners? I would say it is likely that they will be.

I still hold the opinion that from a driving experience viewpoint as well as overall body style, Tesla cars are simply behind the curve. Frankly, in my opinion, they're just ugly. At least for now. And they are still more technology driven than driver driven. They are still appealing to a select group of people, in my view, limiting Tesla's growth just a little bit based on that.

But when it comes to charging technology and increasing the availability of charging access across the country, I think Tesla wins that race if it happens that NACS technology becomes the standard. And if Ford goes that way, which it will, it might encourage other automakers to follow suit, especially since Tesla would be the one doing most of the work of getting more chargers out there for people to use.

In fact, it comes to mind that at some point Tesla may not focus as much on being a carmaker as it might focus on becoming a charging behemoth similar to what oil companies became to gas cars. Can Elon Musk and Tesla become to EV charging what John D. Rockefeller and Standard Oil become to internal combustion engines?

The possibility is out there. And it changes my mind just a little bit about whether or not I see Tesla as a possible company to own. In this space overall, Tesla for me would remain a strong #3 in my portfolio, if I choose to buy shares, with Ford being #1 and Rivian being #2. But I think it is an idea worth considering. 

If Tesla at some point owns the majority of charging infrastructure, that's going to bode very well for Tesla as a whole and I think it is something to watch very closely for the foreseeable future.

This is not without some consideration that the biggest hurdle of all is going to be for Rivian. It has to ramp up production and delivery. It has to successfully launch its coming R2S line. And it has to break free somehow from their exclusive commercial vehicle deal with Amazon so they can sell their commercial vehicles to other businesses.

Still, I think Rivian has legs and I think they can make some very good inroads here.

In summary, I happen to think that Tesla may be positioning itself well not so much as an automaker, but in becoming the go-to when it comes to fueling the entire concept of EV now and in the future. If they can bag NACS and it becomes the universal standard to all EV charging, that's a game changer.

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