Tesla Stock Extends Rally On GM Charging Network Deal, Nears 8-Month High

Tesla  (TSLA) - Get Free Report shares extended gains Friday, lifting the stock to its highest levels since early October, after cutting a deal that allows General Motors  (GM) - Get Free Report to use its network of charging stations.

The partnership, which follows a similar deal with Ford Motor Co  (F) - Get Free Report last week, means all three U.S. automakers will now use the same network of 12,000 'fast chargers' that are based on the Tesla North American Charging Standard (NACS), which comprises around a third of U.S. charging stations.

GM said its cars will be made to fit the NACS by 2025, with CEO Mary Barra saying the deal is likely to save the carmaker as much as $400 million. GM cars themselves will be able to connect to NACS ports as early as 2024 with GM-made adaptors.

The deals between Tesla, Ford and GM to share a single charging system represent a central plank in President Joe Biden's effort to accelerate EV adoption under his Green Economy agenda and underpin the extension of billions in federal subsidies.   

"For Tesla, we believe this is a large monetization opportunity for the company in its supercharger story, adding to its growing sum-of-the-parts valuation that we now peg at $300 per share with its developing energy business along with its well-established EV machine," said Wedbush analyst and longtime Tesla bull Dan Ives, who lifted his price target by $85 while maintaining an 'outperform' rating on the stock following Thursday's charging station pact.

"We estimate Ford and GM combined could add another $3 billion to services EV charging revenue for Tesla over the next few years in another accretive poker move by Musk & Co.," he added.

Tesla share were marked 5.4% higher in pre-market trading to indicate an opening bell price of $247.57 each. General Motors shares, meanwhile, jumped 4.9% to $37.60 each.

Shares in Tesla have risen more than 40% over the past month, in fact, after Elon Musk said he planned to carry on as CEO of the clean-energy-car maker, adding that he'll devote less time to Twitter under the new leadership of former NBCUniversal ad executive Linda Yaccarino.

Musk also told investors at Tesla's annual shareholders meeting in Austin, Texas, last month that he sees the  Model Y becoming the top-selling car in the world as early as this year, adding that Tesla would begin experimenting with advertising over the coming months, a move Ives said could be a "major positive" for the stock.

Tesla also posted solid springtime sales in China, the carmaker's biggest and most important market, even amid increased competition and an uneven economic recovery from the country's zero-Covid health policies.

The China Passenger Car Association (CPAC) said Tesla sold 677,695 cars over the month of May, an 2.4% increase from the previous month and 142% higher than the same period last year, when Tesla's Shanghai gigafactory was still under severe Covid restrictions

China's EV sales could accelerate further into the summer months, as well, after state media reports suggested last week that the government would extend tax breaks for the purchase of so-called 'new energy' vehicles.

Tesla posted a record first-quarter delivery total of 422,875 new vehicles, a 36% increase from the year-earlier period, but that tally missed Street forecasts as production outpaced demand. Production rose 45% to 440,808 vehicles as supply-chain disruptions and covid-related closures at its Shanghai factory faded.

The pace is firmly shy of the rate needed to meet Tesla's own target of 1.8 million deliveries over the whole of 2023, and Musk's suggestion that "if it's a smooth year ... without some big supply chain interruption or massive problem" deliveries could reach 2 million.