Elon Musk, Tesla's chief executive, caught competitors, suppliers and his own employees by surprise this week by reversing course on his aggressive push to build electric vehicle chargers in the United States, a top priority of the Biden administration.
Musk's decision to fire the 500-member team responsible for installing charging stations and dramatically slow investment in new stations rattled the industry and raised questions about whether the number of public chargers would grow fast enough to keep the pace with sales of battery-powered cars. He has put the onus on other charging companies, raising doubts about their ability to build fast enough to address a shortage that appears to be discouraging some people from buying electric cars.
As the owner of the largest charging network in the United States, Tesla has a strong effect on people's opinions about electric cars.
“There's definitely a psychological component,” said Robert Zabors, senior partner at consulting firm Roland Berger. “Availability and reliability are critical to the overall adoption of electric vehicles.”
Tesla's change of direction, just days after telling shareholders in a securities filing that it would “rapidly” expand its charging network, which it calls Supercharger, risks delaying the construction of fast charging stations, which are concentrated along both coasts and in parts of Texas.
Wildflower, a New York real estate developer, was on the verge of signing a lease with Tesla to build a charging center near the intersection of Interstates 278 and 495 in Queens. Then Adam Gordon, the firm's managing partner, received a text message from the Tesla executive he had been working with.
“'Hey, I got fired at 4 in the morning and my boss got fired too,'” the Tesla manager said, according to Mr. Gordon. “This was the only communication we received from Tesla,” he added.
Another charging company is likely to take over the site, which has a permit to obtain power, Gordon said. But Tesla's withdrawal will inevitably delay the project.
No other company has as much experience and expertise as Tesla in installing charging stations, which range from a handful of outlets in the corner of parking lots to dozens at dedicated sites, often along highways.
According to federal government data, the automaker accounts for 25,500 of the 42,000 fast chargers installed in the United States. A fast charger can recharge an electric car's battery in 10 minutes to an hour, depending on the car and charger. There are around 132,000 slower public charging stations that can fully charge electric cars in around 8-12 hours.
Tesla began building its Supercharger stations in 2012 to give Model S sedan owners a place to refuel during road trips. Buyers of the previous model, the Roadster sports car, mostly paid at home.
Other companies may not be able to build chargers as quickly or as efficiently as Tesla, said Daniel Bowermaster, senior manager of electric transportation at the Electric Power Research Institute, a Palo Alto nonprofit group, in California, where Tesla once had its headquarters.
“There are significant opportunities no matter what Tesla does,” Bowermaster said. “The market will solve it. How do they do this in a timely and cost-effective manner?
But some in the industry say Tesla won't be missed as much as it would have been a few years ago. Government subsidies and private capital are fueling a surge in charger construction that doesn't depend on Tesla: The number of public fast chargers in the U.S. increased by nearly 11,000, or about 36%, from April 2023 to April 2024 .
“The public charging experience will become easier,” said Peter Slowik, an automotive expert at the International Council on Clean Transportation, a research organization. “I don't think the charging market and the electric vehicle market are slowing down because of Tesla.”
Tesla makes charging hardware for Supercharger stations at a factory in Buffalo, which was necessary a few years ago when there weren't many suppliers. Since then, many companies have started selling charging equipment and the technology has become standardized.
Last year, virtually every major automaker that sells cars in North America agreed to use the Tesla-developed charging plug starting in 2025, reducing complexity. Electric cars in Europe and China are based on different standards than the one used by Tesla in North America.
Tesla's withdrawal “is a normal step towards the professionalization of the market,” said Jörg Heue, chief executive of EcoG, a Munich company that provides charging software.
Musk did not explain his reasons for cutting charger construction, but some analysts said he had likely concluded that it would become harder to make money from charging as more companies entered the market.
Tesla doesn't disclose the financial performance of its charging business, but analysts say it requires capital that Musk would prefer to invest in artificial intelligence and robotics, which he says will fuel the company's future growth.
“My guess is that the costs of electricity and infrastructure to operate the grid far exceed the rates provided thus far by Tesla and other drivers,” Ben Rose, president of Battle Road Research, said in an email . “Now they can focus on making the most of what they have installed.”
Tesla did not respond to a request for comment.
Another reason Musk may have soured on charging is that he may regret Tesla's decision last year to open its U.S. stations to vehicles from other manufacturers. By opening the door to Ford, Cadillac, BMW and other automakers, Tesla has made it easier for others to sell electric vehicles, which could help those automakers undermine Tesla's dominance in the U.S. market.
Musk's rationale “may be that people will use Tesla's infrastructure and buy another manufacturer's car,” said Raj Rajkumar, a professor of electrical and computer engineering at Carnegie Mellon University. He added that he sees Musk's decision to retire the new chargers as a mistake that would make it harder for more car buyers to switch to electric vehicles.
Tesla was one of many companies that applied for subsidies under a federal program that aims to have half a million fast and slow chargers in operation by 2030, up from nearly 200,000 today. Combined with state and local incentives, government money can cover almost the entire cost of a charging station.
“If Tesla no longer bids on these products, the agencies that distribute them will go to other carriers,” said Badar Khan, chief executive of EVgo, a charging company in Los Angeles. “There are a lot of different participants.”
The 500 employees laid off by Tesla will likely take their experience elsewhere, Khan said. “There is a very talented pool of people entering the market,” he said. “We're having conversations with people right now.”
EVgo said in March it had nearly 3,000 charging locations at the end of last year, up 37% from the end of 2022.
Electric utilities, which need to upgrade their equipment to support the growth of charging options, said the fast charging network is just one component of a larger strategy that Tesla's decision will not change.
“It's no secret that Tesla is a major player” in electric vehicle charging, said Chanel Parson, director of clean energy and demand response at Southern California Edison, the state's second-largest investor-owned utility. But, she added, “I'm not the only player.”
The company has 500 projects in various stages of development for 14,000 chargers focused on light, medium and heavy-duty vehicles. To reach California's goal of net zero greenhouse gas emissions by 2045, Parson said, 90% of light- and medium-duty vehicles must go electric, along with 80% of buses and 54% of heavy-duty vehicles.
“And there are many partners in this space that we are working with to make this a reality,” he said.
Government officials responsible for funding and promoting electric vehicles said they were not dismayed by Tesla's decision to withdraw charging.
Thousands of chargers come online every month, the Biden administration's Joint Office of Energy and Transportation said in a statement, adding: “We do not expect individual business decisions to impact electric vehicle charging projects.” .