Back to top

Analyst Blog

Shares of Tesla Motors, Inc. (TSLA - Analyst Report) popped 8.8% to $224.61 on Jun 16 after reports that the automakers is expected to collaborate with two of its biggest rivals, Nissan Motor Co. Ltd. (NSANY) and BMW for developing its charging technology. If such an agreement is inked, the automakers will jointly build and maintain charging networks which can be accessed by their users.

Tesla, BMW and Nissan collectively represent a significant 80% of the electric vehicle market. However, there are few charging stations for BMW i3 compared with the number of Superchargers and charging stations for Nissan Leaf. Moreover, Nissan’s charging station is not highly reliable.

Expansion of the Supercharger coverage should interest more buyers in electric vehicles. At present, Tesla has about 97 Superchargers spread across the U.S., 20 in Europe and 3 in Asia. The company has recently opened a Supercharger network in China and plans to open more than 200 all over the world including Japan.

This collaboration is expected to drive electric car sales. Tesla will also stand to gain if this move boosts the development of electric cars as an increase in popularity of such cars will automatically lead to development of charging infrastructure, which in turn should increase its sales. Moreover, increased production of electric cars will raise the demand for lithium ion batteries, which is a positive for Tesla, as it is planning to become the world’s largest manufacturer of lithium ion battery packs by 2020.

Tesla was planning to form a Supercharger-related partnership with BMW. Tesla said that the auto manufacturer sharing Tesla’s patents must subscribe to Tesla’s business model related to the Superchargers and must contribute to the maintenance and running costs of the same.

Automakers generally cooperate on sharing technologies, engine design and platform sharing. Charging technology cooperation will benefit everyone. However, these three automakers use different charging standards.

Nissan and BMW both use 50 kilowatt direct current methods. This procedure charges 80% of the battery within 30 minutes. Nissan uses the Japanese CHAdeMO quick charge connector, while BMW uses German-derived Combined Quick Charge Standard.

Tesla uses its own proprietary DC quick charge standard known as Supercharging, which can recharge up to 135 kilowatts. It recharges the 85 kilowatt-hour battery pack of Model S by 80% in 40 minutes. The difference mainly lies in range provided by the charge. Nissan Leaf travels 60 miles and BMW i3 travel 80 miles on a 30 minutes charge while Model S travels 170 miles on a charge for a similar amount of time.

In addition, this collaboration will support Nissan in developing the planned longer-range LEAF electric hatchback which is expected to be launched in 2016. Moreover, Tesla’s charging technology will enable Nissan to develop longer range 150 to 200 mile vehicles.

Recently, Tesla announced that it will be sharing many of its patents with its rivals in an attempt to facilitate the transition of the automobile market to environment-friendly electric vehicles. At present, Tesla produces electric systems for Daimler AG (DDAIF) and Toyota Motor Corporation (TM - Analyst Report). This open sharing of patents will further enhance Tesla’s collaboration with other automakers.

Tesla currently carries a Zacks Rank #4 (Sell).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%