This week, electric vehicle drivers received some excellent news that isn’t helping EV stocks so far. President Joe Biden’s administration is doubling down on EV charging infrastructure, with the goal of “creating a convenient, reliable and Made-in-America” charging network for drivers.
This announcement is not surprising, as prioritizing clean energy has been a cornerstone of Biden’s policy agenda. But less expected is the fact that Tesla (NASDAQ:TSLA) has confirmed it will be cooperating with this government decision. In fact, the EV leader has agreed to open its Supercharger network to vehicles made by rival companies. As TechCrunch reported:
“Tesla will open up a portion of its Supercharger and destination charger network to non-Tesla EVs. The company will make at least 7,500 chargers available for all EVs by the end of 2024, according to the White House. At least 3,500 of those will be 250 kW chargers located along highway corridors. All EV drivers will be able to access these stations using the Tesla app or website.”
At first glance, this sounds like an all-around win. Biden has praised Elon Musk for this decision, touting the importance of Tesla getting on board with the policy. But while this will ultimately be a win for EV stocks, Tesla’s opening of its network is unlikely to be a major catalyst for the entire sector.
What This News Means for EV Stocks
It’s no secret that EV adoption is growing, spurring the need for reliable charging options. Tesla maintains one of the largest electric charging networks in the country but it has long held out on opening it to rival automakers. However, the question of just how much of an impact this decision will have on both Tesla and the EV charging market warrants a closer look.
Karl Brauer, executive analyst of iSeeCars, recently conducted a study of exactly that, posing the following question: “Can Tesla’s Supercharger Network Fix the National EV Charging Grid?”
Analyzing data from the Alternative Fuels Data Center of the U.S. Department of Energy, he determined that Tesla’s contribution to the new EV charging network would provide little benefit to EV drivers as it is ultimately minimal. In his words:
“Tesla has only committed to 3,500 Level 3 chargers becoming available by the end of 2024, or about 20 percent of its fast-charging network. Of course every little bit counts when trying to solve the EV infrastructure problem… but it’s disappointing to see this little bit coming from the nation’s largest fast charger network.”
Another important fact that Brauer highlights is that Tesla could be doing much more to help. “Tesla’s network could more than double the Level 3 charger count for all EV drivers, but it’s only offering a small percent of its network, minimizing the benefit for non-Tesla EVs.” This suggests that Musk may not be as concerned with helping the world transition to sustainable energy as has previously claimed.
If Brauer’s hypothesis proves correct, Musk’s decision will yield little benefit for either TSLA or other EV stocks. But Biden’s move itself is likely to provide significant benefits for other companies in the space. The influx of federal funds will go to companies in the EV charging space willing to build in the U.S.
Likely candidates include industry leader ChargePoint Holdings (NYSE:CHPT) as well as Blink Charging (NASDAQ:BLNK) and EVgo (NASDAQ:EVGO). This is the time to double down on EV charging stocks but to keep avoiding Tesla.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.