It's hard to think of EV chargers as a business rather than infrastructure. But then again, the same could be said for gas stations—although just about everyone still on the road today grew up while a station was commonplace. Now, charging companies are beginning to generate a large amount of revenue, and the short-term financial projections look great.

Welcome to Critical Materials, your daily roundup for all things EV and automotive tech. Today, we're talking about Tesla's place in the EV charging space. We'll also chat on the U.S. Court of Appeal's decision to uphold California's EV rules, and a little bit about brand loyalty. Let's jump in.

30%: Tesla Supercharging Network Projected to Generate $7.4 Billion in Annual Revenue by 2030

Tesla Supercharger

With more and more new EVs on the road every day, DC Fast Charging is looking like a hot new market to be in. A new analysis by BloombergNEF projects that by 2030, the charging industry is on track to generate $127 billion in revenue globally by 2030. And coming in hot is Tesla, which is estimated to make around $7.4 billion (or 6%) of that income.

$7.4 billion is nothing to shake a stick at. That's a cool chunk of cash, especially if you consider that Tesla's total revenue for 2023 was a whopping $96.8 billion.

The automaker currently has around 57,000 chargers worldwide. Of those, 25,172 are in the U.S. (across 2,235 stations) at the time of writing. Bloomberg estimates that all of Tesla's chargers raked in around $1.74 billion of charging revenue in 2023, or around 17% of the "Services & Other" segment that Tesla accounts for in its earnings.

Keep in mind that this isn't all profit. Tesla has operating costs, it pays for electricity, and it has to continue expanding its charging footprint to remain competitive. Bloomberg estimates that around 10% of Tesla's Supercharging revenue, or $740 million of the $7.4 billion, will be profit.

Bloomberg also raises a valid point—it's not all about the charging money:

Tesla gets additional value out of its the Supercharger network beyond the sale of electricity, in the form of marketing. To access the company’s vast network, non-Tesla drivers have to download the Tesla app and drive to Superchargers plastered with its brand. This presents ample opportunity for Tesla to advertise its range of products and convert customers from the competition. It also raises the question in the customer’s mind — why can’t my automaker make charging work?

This tactic has worked for other automakers as well. Companies like Lucid have used Tesla charging network as a way to "poach" potential customers by parking near a Supercharger and offering test drives.

Realistically, Tesla needs as much help as it can get right now. Sales numbers are down and 2024 is looking to shape out as a problematic year for the electric automaker—even with a refreshed Model 3 making its debut. If increased charging revenue from non-Tesla brands can help bolster Tesla's income, it seems like a win-win.

60%: California's EV Rules Can be Upheld: U.S. Court

Electrify America Flagship Indoor Charging Station In San Francisco, California

The U.S. Environmental Protection Agency's 2022 decision to reinstate California's authority to set its own emissions and EV requirements is upheld thanks to a recent court ruling.

The U.S. Court of Appeals for the District of Columbia ruled in favor of the EPA's decision following a legal battle enacted by 17 entities and U.S. states which challenged the constitutionality of the Clean Air Act. Essentially, the argument to the court was that the CAA made California a regulatory power over other states.

The court declined that argument, siding with the EPA. It noted that reversing the decision could result in automakers selling fewer EVs or potentially lowering the price of their gas-powered models rather than focusing on improving tailpipe emissions or transitioning towards battery-electric vehicles.

California Governor Gavin Newsom had the following to say:

[T]he court sided with common sense and public health against the fossil fuel industry and Republican-led states. This ruling reaffirms California’s longstanding right to address pollution from cars and trucks, work started by Governor Ronald Reagan and codified by President Richard Nixon. 

The clean vehicle transition is already here – it’s where the industry is going, the major automakers support our standards, and California is hitting our goals years ahead of schedule. We won’t stop fighting to protect our communities from pollution and the climate crisis.

The EPA is also under fire by automakers and industry trade groups after it published the final ruling on fuel economy and tailpipe emissions requirements through 2032. The rules, while by far the strictest to have been enacted on U.S. automakers, are just a shell of what could have been if the EPA got its way with its first draft on the matter. Still, the ruling is a nudge in the right direction to reduce emissions—something that will cost automakers big bucks to do despite having to wear a smile during the transition.

90%: Overwhelming Majority of Tesla Owners Would Buy Another Tesla

Tesla Model 3

Tesla has some of the most loyal brand owners of all automakers—at least on paper.

A new study from Bloomberg Intelligence says that 87% of Tesla owners report that they would buy another vehicle from the electric automaker.

The brand is not just great at retaining customers, but also bringing in new customers from other brands. Bloomberg reports that 81% of prospective Tesla owners in the U.S. hail from competing EV brands.

Now, it's not just Tesla that has bred this loyal cult-like following. EV owners as a whole appear to be all but married to an electric powertrain.

The survey revealed that 93% of owners would stick with their current powertrain for their next purchase, whereas only 34% of gas car owners are considering an EV. This is one of the many reasons that EVs are rapidly penetrating the U.S. auto market: most owners who already own one plan to stick with electric power, and more than 1/3 of those who still have a combustion-powered vehicle are considering the switch.

Bloomberg's lead director for auto market research, Steve Man, says that while all signals on EV adoption are green, the U.S. needs to pick up the pace on charging infrastructure to continue growing (and to keep owners happy):

We’re continuing to witness a profound penetration of BEVs in the US auto market, which promises to reach 25% by the end of this decade.

Tesla, GM and Stellantis’ slew of affordable EV models, set for debut by 2026, may tap more mass-market buyers.  Despite this, the market still has a long way to go to mature, with charging network inadequacy, range anxiety and extended charging wait times topping the list of concerns for all car buyers.

China, a country with a 23% BEV penetration, has an average charge point per BEV almost 5 times higher than the U.S., signaling a critical need for charging infrastructure development in the country to bolster the technology’s penetration in the US auto market.

Despite Tesla's brand loyalty, the automaker is really feeling the heat this year. Tesla projected that 2024 would be a slow one for sales, and its first-quarter sales figures tell that same story.

If the automaker wants to continue to retain customers, it may have to consider making some drastic changes. I've personally spoken with quite a few Model Y owners who have put a deposit down on a Rivian R2. And with no shortage of other options coming to market, alternatives that didn't exist five years ago will soon make it to the road. Can Tesla keep its hold on buyers in the future?

100%: Where's Your Brand Loyalty?

2024 Toyota bZ4X

Look, everyone has a brand preference. In my petrol days, I've always been partial to BMW as my go-to fun car. But my daily drivers have been all over the map. Today, I'm one of those Tesla drivers who have found myself uttering the phrase, "I love my Tesla, but..."

That being said, are you one of the 87% of people that Bloomberg found would buy another Tesla? Or are you loyal to another brand and waiting for the right EV? Let me know in the comments.

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