Business is booming, but profits are meager.
Electric vehicles have always been Tesla's main source of revenue, but with Tesla's Supercharger network dominating North America, a new "cash cow" may have emerged.
So far, Ford Motor, General Motors, and at least four other automakers have announced plans to adopt Tesla's proprietary plug design in exchange for the right to use the company's Supercharger network. Even Rivian, an emerging electric vehicle manufacturer seen as a strong competitor to Tesla, has joined the Tesla charging network.
Ben Kallo, an analyst at Bay Capital, predicts that the current utilization rate of Tesla's Supercharger stations is 8.75%. If it remains stable at this level until 2030, he estimates that revenue contributed by non-Tesla vehicles will increase by $5.22 billion, but earnings per share will only increase by 15 cents.
This means that although Tesla's charging network is booming, the profit margin is thin.
The most optimistic estimate is that by 2030, these transactions will contribute revenue of up to $15.7 billion and earnings per share will increase by 45 cents, with the utilization rate of Tesla's Supercharger stations increasing to 26.25%, according to Kallo.
As a long-term bull on Tesla, Kallo has maintained a buy rating on the stock since October 2020.
Kallo wrote:
We believe that the opening of Tesla's Supercharger network is a step towards NACS (North American Charging Standard) becoming the sole charging standard, and we expect additional traffic to expand Tesla's service business.
It is worth mentioning that Tesla can not only generate additional revenue from owners of other brands, but also benefit from the public electric vehicle charging subsidies provided by the bipartisan infrastructure bill passed last year.
The White House previously stated that charging stations using the NACS plug standard will be eligible for billions of dollars in federal subsidies as long as they also adopt the CCS charging standard.
In the era of artificial intelligence, Tesla's stock price has skyrocketed by 150% year-to-date, with a market capitalization of $84.54 billion.
