Tesla's deals with GM, Ford is going to upset Tesla owners, says analyst

General Motors is following Ford's lead and partnering with Tesla to give its EV owners access to 12,000 of Tesla's charging ports. GM CEO Mary Barra stated that the new deal will save the company up to $400 million in EV infrastructure. Craig Irwin, ROTH Capital Partners Senior Research Analyst, joins Yahoo Finance Live to discuss what these deals will mean for the EV market and charging infrastructure.

Video transcript

JULIE HYMAN: Well, on Thursday, General Motors announced that they'll be partnering with Tesla to gain access to the 12,000 EV charging ports across North America. GM CEO Mary Barra stated that the new deal will save the company up to $400 in EV infrastructure. $400?

BRAD SMITH: Million.

JULIE HYMAN: Million. Thank you. And like Ford, General Motors will start installing Teslas charging ports in their vehicles starting in 2025. Joining us is Roth Capital Partners senior research analyst Craig Irwin. Craig, it's good to see you.

We've been sort of trying to figure out what exactly this means. Among other things, sort of is there financial implications for Tesla? Like, this is obviously being seen as a win for Tesla. I'm just trying to figure out why.

CRAIG IRWIN: So it's-- Ford and General Motors, obviously it's good for both of them because their customers are not going to deal with the issue of range anxiety. Range anxiety is actually very real. I imagine having to drive half an hour, 45 minutes to go to a fast charger. It's a pretty frustrating thing. And I've lived through that.

For Tesla, there's a few different things in place. So one is, yes, you know, I can't imagine him not wanting to make money on this. So are they going to charge Ford and General Motors the same price for their customers to access the supercharger network? Or are we going to see them paying a premium?

I would not be surprised if there were paying a typical premium versus the Tesla customers. And then you have to look at the impact on the Tesla brand. So nothing is going to irritate a Tesla owner more than lining up behind a bunch of vehicles from Ford and General Motors.

I mean, imagine a big Hummer it's going to take a charger for an hour in front of you while you've got to go and do your errands and get your groceries. It's not going to be something where people are going to say, oh great, that car has General Motors badge on it. But the charger says Tesla. I paid for that. What's up with that?

It's not going to be a good for Tesla's brand. But it will be good for their access to subsidies under the infrastructure bill. So lots of things in play here. You know, people are speculating about what it means for earnings. But it's blatant speculation because we really don't know what the pricing is going to be at this point.

RACHELLE AKUFFO: So I was going to ask you about biggest winners and losers here. Obviously, the losers might be some of these other Tesla drivers, as you mentioned, stuck behind a line of Ford and GM drivers. But what about some of these other car brands? Does this perhaps force Honda and other brands to try and come to the table as well?

CRAIG IRWIN: You know, I think actually some of the biggest winners are going to be the other network operators because it's going to give pricing visibility on the sale of electrons. So Electrify America is owned by Volkswagen. They have a fantastic fast charging network across North America, you know?

And then obviously EVgo has a really solid fast charging network as well. Of the roughly 26,000 DC fast chargers, half of them, more or less, just under half are operated and owned by Tesla. So those other owners of the infrastructure I think get a little bit more price visibility and quite possibly more demand.

Across the board, this is going to be good for EVs. It's going to make it more competitive. And it's going to make it more realistic for drivers to be able to actually get out there and go from A to B, long distances and not have to worry about charging. And you know, I think this is a great move for Tesla. It's a great move for both General Motors and Ford.

JULIE HYMAN: Craig, I want to dig a little bit more into what you mentioned about some of the other charging networks because if you look at EVgo today, if you look at ChargePoint today, if you look at Blink today, they're all down. So if you're right, it seems the market is sort of fundamentally misunderstanding what this means for overall for charging networks. Should people be buying those stocks today, as we're seeing that dip?

CRAIG IRWIN: So investors don't discern too terribly well between these companies. Actually Tesla is very much a misunderstood company in my opinion too. So Blink I think this is a positive because Blink does operate its own network. And Blink is OEM charge equipment with credible suppliers.

ChargePoint, you know, I absolutely hated their stuff when. I had to fast charge on a ChargePoint DC fast charger, it was horrible experience. I did not like that. They do very, very well in level two. That's where they make all their money. This puts more pressure on them to get it right.

The network operators I think are going to get price visibility. And price visibility is a very important thing. Can you make money selling electrons? Tesla's obviously going to want to make money selling electrons. If you think about Elon Musk's political posturing in public, you know, I can't see that really helping him getting a proportionate share of the funding from the infrastructure bill. You know, reality is he's probably going to get a minor share and the other network operators are going to get a major share, or else he wouldn't even be playing to open up the network to these other OEMs.

To come back to Tesla, there's credible reasons to believe that there was forced labor, UFLPA, CBP impoundment in the last few weeks in North America. So Richard Mojica who was intimately involved with this on the seller side kind of rung the alarm. And law of large numbers as with probably Tesla, when I look at the fact that they changed the reimbursement rate, the federal reimbursement rate from the rear wheel drive model 3-- now this is their highest volume vehicle in North America-- it went from 3,750 to 7,500. That means the Chinese content in the battery, which was coming from China ATL has changed or will change.

It's hard to see them switching to a North American supplier being accretive to earnings. And that does speak to risk in their supply chain and risk around deliveries. This is a developing story right now. It's obviously a very sensitive subject. And Richard Mexico has actually just decided to hide after ringing the alarm bells.

But you know, Tesla I think is misunderstood. So that's the job of an analyst. That's why I'm able to add value for my clients, is being able to put the pieces of the puzzle together and show people the real sources of information to understand the ebbs and flows in the sector.

BRAD SMITH: So Craig, just going back out to about a 30,000 foot view for Ford and GM, them now partnering with Tesla, does that make their automobiles that much more attractive to potential car buyers?

CRAIG IRWIN: Absolutely. It makes it easier for their car buyers to get out there and charge them. So they're going to get an adapter for the next few years until this is onboard technology that they're going to be able to roll up to one of these Tesla superchargers, put the adapter on the end of the charging cable and plug it into their car. It just made everything easier for their customers. It's a much more interesting compelling charging experience.

The Tesla owners speak very highly of the superchargers. Tesla's executed impeccably there. You know, it makes sense for both Ford and General Motors. I commend both companies on this action. You know, I often think Elon Musk uses things that are I would call misnomers for what he calls different things. But NACS, the North American Charging Standard, this is looking more inevitable now that we have two icons of American automotive production joining Tesla here. Very positive for the customers of those two companies.

JULIE HYMAN: Craig, thanks for being here this morning. Have a great weekend. Craig Irwin is Roth Capital Partners senior research analyst.

CRAIG IRWIN: Thank you.