You remember the Supercharger network that Tesla Inc. (TSLA) built a few years ago, right?
The company poured resources into expanding its presence across the U.S., Europe and Asia. In all three continents, particularly in the first two, Tesla has a rather impressive coverage map.
For those unfamiliar with the Supercharger network, it's like a gas station for Tesla vehicles. Only instead of getting gasoline or diesel (obviously), customers can recharge their car. A typically full charge takes about half an hour, which better or for worse allows the driver to catch a nap, grab a coffee or get something to eat.
However, there's talk that Tesla may be joining a new charging network, one that already includes BMW, Mercedes-Benz (Daimler), Ford Motor Co (F) and Volkswagen. Other interested parties also include Volvo, Jaguar and Fiat Automobiles (FCAU) .
The new network, called Ionity, has its sights set on opening up thousands of chargers throughout Europe. According to Electrek, it's "considered the most ambitious electric vehicle charging infrastructure project since Tesla's Supercharger network."
For the record, Tesla's network also has thousands of chargers among its roughly 400 European stations, the latter of which the automaker plans to double over the next few years. The goal for Ionity is to open 100 locations by year-end and 400 by the end of 2020.
Ionity isn't just shooting for a high number of locations, but also for an "ultra fast" charge as well, with capacity of 350 kW. For prospective electric car buyers as well as current electric car owners, the faster the charge and the greater number of locations is a very attractive proposition.
Impact on Tesla
The impact on Tesla is still unclear. According to Ionity, its current partners include BMW, Daimler (Mercedes), Ford and Volkswagen. However, the group is open to bringing in more automakers.
Tesla CEO Elon Musk has been open about his feelings for the electric vehicle (EV) market: The more the merrier.
While initial reactions to his thoughts provoke worries about competition, the argument here is that increasing participation in the EV market increases awareness for the segment. The more popular EVs become, the higher demand goes. That bodes well for Tesla, the leader in EV right now.
At this year's Detroit Auto Show, there was no shortage of EV concepts and plenty of hybrid offers. Ferrari (RACE) is working a potentially silent hybrid, while Mercedes has a number of hybrid options and 10 planned EVs by 2022. Heck, even Bentley is getting in on the hybrid action, as explained by CEO Mark Del Rosso.
So clearly the electrification trend is moving forward and not many in the industry (at least among those I have spoken with) see it slowing down anytime soon.
But again, where does this leave Tesla? As it almost always is, it's complicated.
Tesla has a massive head start in the EV market, given that it manufactures today's premier electric vehicles. Others like BMW and General Motors Co (GM) haven't been able to do much when it comes to denting demand for Tesla with its own EVs.
But can Ford, Toyota Motor Corp (TM) , Mercedes and others tip the scales? With just enough offerings, they could.
For a long time, the Supercharger network was Tesla's way of dangling yet another advantage over its foes. Where would the driver of another electric car charge up on a long road trip? Put simply, Tesla had the best product and the best charging infrastructure.
In the case of current circumstances, it still does.
But if by 2020 we can charge our all-electric Mercedes or our BMW EV at an Ionity station, bountifully scattered throughout Europe, Tesla has one less advantage. That's probably why the company is weighing joining the group, so that Tesla cars will be welcome at Ionity and still have its Supercharger network, even if the latter is twice the size of the former.
By then, though, maybe Tesla figures it won't matter. With the other automakers getting in on the EV trend, it confirms it's not a short-term gimmick or silly motive. It shows there's serious money to be made and tangible customer demand. By gaining such a big lead, perhaps Tesla is banking on figuring out its production issues (which there is no lack of) and leading the EV revolution. At that point, perhaps, the Supercharger network advantage may not matter.
I wouldn't say a charging network for other electric cars is a nail in the coffin for Tesla. However, the automaker needs to move quick and learn how to scale its production without producing too many errors and spending too much money.
BMW, Mercedes, Ford, GM and others have decades of experience and deep pockets. They won't get into the same "production hell" that's plagued Tesla, however justified its hang-ups may be. In order to survive, Tesla will have stay ahead of the pack and if Ionity's development is any suggestion, the pack is gunning for the leader.