Elon Musk, Tesla’s chief executive, caught competitors, suppliers and his own employees off-guard this week by reversing course on his aggressive push to build electric vehicle chargers in the United States, a top priority of the company. Biden administration.
Mr. Musk’s decision to lay off the 500-member team responsible for installing the charging stations and significantly slow investment in new stations has confounded the industry and raised doubts about whether the number of charging stations Public charging would increase quickly enough to keep pace with battery car sales. That places the onus on other charging companies, raising questions about whether they can build quickly enough to address a shortage that appears to be discouraging some people from buying electric cars.
As the owner of the largest charging network in the United States, Tesla has a powerful impact on people’s opinions of electric cars.
“There is definitely a psychological component,” said Robert Zabors, senior partner at Roland Berger, a consulting firm. “Availability and reliability are critical to the global adoption of electric vehicles. »
Tesla’s change in leadership, just days after telling shareholders in a securities filing that it would “rapidly” expand its charging network, which it calls Supercharger, is likely to delay the construction of fast charging stations , concentrated along both coasts and in parts of Texas.
Wildflower, a New York real estate developer, was close to signing a lease with Tesla to build a charging station near the intersection of Interstates 278 and 495 in Queens. Then Adam Gordon, the company’s managing partner, received a text message from the Tesla executive he worked with.
“Hey, I got fired at 4 a.m. and my boss was fired too,” the Tesla executive said, according to Gordon. “This is the only communication we have received from Tesla,” he added.
Another charging company is likely to take over the site, which has a permit to obtain electricity, Mr Gordon said. But Tesla’s withdrawal will inevitably delay the project.
No other company has as much experience and expertise as Tesla in installing charging stations, which range from a handful of outlets on the corner of parking lots to dozens of them on dedicated sites, often along the highways.
The automaker accounts for 25,500 of the 42,000 fast chargers installed in the United States, according to federal government data. A fast charger can recharge an electric car’s battery in 10 minutes to an hour, depending on the car and the charger. There are around 132,000 slower public charging stations, capable of fully recharging electric cars in around eight to 12 hours.
Tesla began building its Supercharger stations in 2012 to give owners of the Model S sedan a place to refuel during road trips. Buyers of its previous model, the Roadster sports car, mainly charged at home.
Other companies may not be able to build chargers as quickly or cheaply as Tesla, said Daniel Bowermaster, senior director of electric transportation at the Electric Power Research Institute, a nonprofit group of Palo Alto, California, where Tesla was once headquartered.
“There are significant opportunities regardless of what Tesla does,” Mr. Bowermaster said. “It will be the market that will take care of it. How can they do this in a timely and cost-effective manner? »
But some in the industry say Tesla won’t be missed as much as it would have been a few years ago. Government subsidies and private capital are fueling a surge in building chargers that don’t rely on Tesla: number of public fast charging stations in the United States increased by almost 11,000, or about 36%, between April 2023 and April 2024.
“The public charging experience is going to get easier,” said Peter Slowik, an automotive expert at the International Council on Clean Transportation, a research organization. “I don’t think the charging market and the electric vehicle market are slowing down because of Tesla.”
Tesla makes charging hardware for Supercharger stations at a factory in Buffalo, which was necessary a few years ago when there weren’t many suppliers. Since then, many companies have started selling charging equipment and the technology has become standardized.
Last year, virtually every major automaker selling cars in North America agreed to use the Tesla-developed charging socket starting in 2025, reducing complexity. Electric cars in Europe and China rely on different standards than those used by Tesla in North America.
Tesla’s withdrawal “is a normal step in the professionalization of the market,” said Jörg Heue, chief executive of EcoG, a Munich company that provides charging software.
Mr. Musk did not explain why he cut back on building chargers, but some analysts said he likely concluded that it would become harder to make money from charging as more companies would enter the market.
Tesla doesn’t disclose the financial performance of its charging business, but analysts say it requires capital that Mr. Musk would prefer to invest in artificial intelligence and robotics, which he says will fuel the company’s future growth .
“My guess is that the electricity and infrastructure costs of operating the network far exceed the fees provided by Tesla and other drivers to date,” said Ben Rose, president of Battle Road Research, in an email. “They can now focus on getting the most out of what they have installed.”
Tesla did not respond to a request for comment.
Another reason Mr. Musk may have soured on charging is that he may regret Tesla’s decision last year to open its U.S. stations to vehicles from other manufacturers. By opening the door to Ford, Cadillac, BMW and other automakers, Tesla has made it easier for others to sell electric vehicles, which could help those automakers reduce Tesla’s dominance in the U.S. market.
Mr. Musk’s reasoning “may be that people will use Tesla’s infrastructure and buy another manufacturer’s car,” said Raj Rajkumar, a professor of electrical and computer engineering at Carnegie Mellon University. He added that he viewed Mr. Musk’s decision to remove the new chargers as a mistake that would make it harder for more car buyers to transition to electric vehicles.
Tesla is one of several companies applying for grants under a federal program aimed at operating half a million fast and slow chargers by 2030, up from nearly 200,000 today. Combined with state and local incentives, government money can cover almost the entire cost of a charging station.
“If Tesla no longer bids on these products, the agencies that distribute them will go to other operators,” said Badar Khan, chief executive of EVgo, a charging company in Los Angeles. “There are a lot of different participants.”
The 500 charging employees laid off by Tesla will likely take their expertise elsewhere, Mr. Khan said. “There is a pool of very talented people entering the market,” he said. “We are currently speaking with individuals. »
EVgo said in March that it had nearly 3,000 charging stations at the end of last year, up 37% from the end of 2022.
Electric utilities, which need to upgrade equipment to support the growth of charging options, said the fast-charging network is just one part of a broader strategy that Tesla’s decision won’t change .
“It’s no secret that Tesla is a big player” in electric vehicle charging, said Chanel Parson, director of clean energy and demand response at Southern California Edison, the second largest investor-owned utility in the state. But, she added, “they are not the only actors.”
The utility has 500 projects in various stages of development for 14,000 chargers focused on light, medium and heavy vehicles. To reach California’s goal of net zero greenhouse gas emissions by 2045, Parson said, 90% of light and medium-duty vehicles must go electric, along with 80% of buses and 54% of heavy vehicles.
“And there are many partners in this area that we are working with to make this a reality,” she said.
Government officials responsible for financing and promoting electric vehicles said they were not dismayed by Tesla’s decision to forgo charging.
Thousands of chargers come online every month, the Biden administration’s Joint Office of Energy and Transportation said in a statement, adding: “We do not expect individual business decisions to have an impact on electric vehicle charging projects”.
