February 10, 2023

Why Tesla Stock Was Falling on Friday

What happened

Shares of Tesla (NASDAQ: TSLA) were down 5.8% as of 2:05 p.m. ET on Friday. The stock was underperforming the Nasdaq Composite, down less than 1% at the time of this writing, following an exclusive report by Reuters that revealed the Department of Transportation was set to finalize a requirement to force Tesla to open up its supercharger network to non-Tesla vehicles.

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If Tesla doesn’t agree, the electric vehicle maker may lose out on $7.5 billion worth of subsidies for opening up its charging network.

So what

The extra subsidies would seem like a bonus, but some investors are probably concerned about Tesla potentially being forced to sacrifice a key competitive advantage, which is the exclusive availability of its industrial-grade superchargers for Tesla owners.

It’s a difficult problem that creates another element of uncertainty for Wall Street to think about, which explains why the stock is down. Tesla will have to weigh the benefits of the extra revenue from opening up its charging network against the new customers who may choose Tesla over competing electric vehicle manufacturers for its vast, high-quality charging stations.

Tesla charging station.

© Tesla
Tesla charging station.

Now what

Tesla may eventually give in to the government’s desire to expand electric vehicle access to as many people as possible. Tesla has already been offering access to its superchargers to non-Tesla customers since November 2021 in certain locations.

The company may have more to gain than lose. It could compensate for the loss of the exclusive nature of its superchargers by raising fees or costs for other services down the road.

Moreover, the experience of using its stations with the Tesla brand displayed everywhere may win over converts from non-Tesla customers. Overall, this could be an opportunity, considering many of Tesla’s stations are already located in populated areas and routes.

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John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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