Tesla’s supremacy in the electric vehicle (EV) market continues to expand, encompassing not only vehicle production but also EV-related infrastructure. Recently, both GM and Ford announced plans for their EVs to be compatible with Tesla chargers, solidifying Tesla’s position as a leader in the charging network space.

Tesla’s foray into the charging business was originally unintentional. The ongoing debate about charging infrastructure prompted Tesla to construct its own network, not with the aim of generating profit but rather to assure buyers that they could travel across the country without concerns of running out of power.

However, charging infrastructure has the potential to become a significant revenue stream for Tesla. According to investment bank Piper Sandler & Co., opening up Tesla’s charging network to other automakers could yield over $5 billion in annual revenue for the company within the next decade. Jonathan McNeill, a former Tesla executive and current GM board member, likened this to Amazon Web Services (AWS), which started as a cost-saving measure for Amazon but evolved into a major revenue source. Tesla, McNeill suggests, is turning a cost burden into a profitable venture.

Nevertheless, profitability in the EV charging industry remains uncertain. Companies such as Blink Charging, EVGo, and ChargePoint have developed various charging networks for consumers and businesses, exploring revenue streams through fleet charging and tailored charging solutions for office parks. While these models hold potential, market skepticism persists. Stock prices of these companies have declined significantly, despite the surge in electric vehicle investment.

Business model innovation often receives less attention than technological advancements, both in public discourse and within corporate settings. However, a greater focus on business model innovation is crucial, particularly in the sustainability sector. A report by Boston Consulting Group highlights that companies emphasizing sustainability tend to prioritize technology and product innovation over business model innovation. Shifting this focus could expedite the deployment of clean energy technologies and create new revenue opportunities for established companies.

Discussions on the energy transition frequently revolve around technological breakthroughs, yet the EV charging space underscores the significance of business model innovation. While the necessary technologies to combat climate change largely exist, the next step involves finding profitable ways to implement these solutions.

By Impact Lab