Nasdaq 100 Outlook: Tesla stock hits highs as Rivian adopts charger

Key takeaways

• Rivian becomes latest carmaker to adopt Tesla’s charging connector and gain access to its Supercharger network from 2024.
• Follows similar deals struck by Tesla with Ford and General Motors.
• Wedbush says latest deal means its ‘game, set and match’ for Tesla owning charging infrastructure across North America and says sums-of-parts valuation is coming into play.
• Reports suggest Hyundai is considering adopting Tesla’s connector, although there are some barriers.
• Deal has sent Tesla shares to their highest level in almost nine months.

Rivian joins Tesla charging network

Electric vehicle startup Rivian has announced it is joining Tesla’s charging network, providing Rivian drivers with access to Tesla’s 12,000 Superchargers across the region from as early as spring 2024. Rivian also plans to incorporate Tesla’s charging connector, known as the North American Charging Standard (or NACS), into its new vehicles from 2025. Rivian said it will continue to build out its own charging network, known as the Rivian Adventure Network, but said the deal with Tesla will provide more options for customers.

Ford, General Motors and Rivian now signed-up to Tesla

The deal struck with Rivian comes hot on the heels of similar deals signed by Tesla with automotive giants Ford and General Motors. Both of them have also secured access to the Supercharger network from 2024 and will also start including NACS to their vehicles from 2025.

That has effectively cemented Tesla’s system as the standard charging method across North America. Tesla, Ford and General Motors are among the three largest electric vehicle brands in the region and, while Rivian is a much smaller player right now, the latest addition is only fuelling expectations that more will tap into Tesla’s charging network.

Ultimately, these deals are set to bring millions more users to Tesla’s charging network over the coming years. General Motors and Ford alone expect to be producing millions of electric vehicles annually within the next three years.

Supercharging is ‘still a relatively small part’ of Tesla’s business but could be significant over the long-term. While today is all about selling as many cars as possible, Tesla plans to lean more into services in the future when – or if – its self-driving technology takes off, and charging will be vital in the same way that a petrol station is today for vehicles with a combustion engine.

Plus, opening up its network to other carmakers is a condition needed for Tesla to try and secure some of the billions of dollars in subsidies on offer from the US government as it tries to push for a standardised network and expand the US network to around 500,000 chargers.

Game, set and match for Tesla?

Dan Ives, managing director of equity research at Wedbush, said the addition of Rivian means its ‘game, set match for Tesla’ owning the charging infrastructure across North America and reiterated that the recent deals mean the sum-of-parts valuation – whereby investors independently value each individual part of the business rather than the whole – was ‘coming into play’.

Ives said this is an ‘AWS moment’ for Tesla, referring to when Amazon reaped rewards from investors assigning more value to the cloud computing arm that generates its profits over its core ecommerce operations. He added that ‘batteries and AI are next’ on the list for Tesla.

Will Hyundai be the next to join the Tesla network?

There are signs that more will follow. Hyundai CEO and president Jaehoon Chang said at an investor day that the South Korean firm would consider making its vehicles more compatible with Tesla’s network if it was in the best interest of customers, according to Reuters.

However, there are potential barriers to Hyundai joining Tesla’s Supercharger network. Hyundai is reportedly concerned that its newer electric vehicles can’t charge as fast using a Tesla Supercharger as they can on its own network, the report said. Hyundai is thought to be consulting with Tesla to see if adaptations can be made to facilitate faster charging.

Plus, separate reports from Bloomberg have also suggested Hyundai is worried about becoming too dependent on Tesla. ‘That may make Hyundai rely on Tesla’s overall system too much,’ Chang said.

Where next for TSLA stock?

The news has propelled Tesla shares higher, with the stock trading at its highest level in almost nine months today.

Tesla has now risen over 40% in the last month alone and continues to rise closer toward the 61.8% retracement from the lows we saw at the start of 2023 at $295. The shorter-term moving averages are trending higher and look on course to break back above the 200-day average for the first time in over a year within the coming days, and trading volumes have remained elevated versus its 100-day average over recent sessions to suggest there is still growing appetite at these levels.

However, it is looking harder and harder for Tesla to keep up the momentum. Tesla is the most overbought stock in the S&P 500 based on the Relative Strength Index (RSI), which sits at a lofty 86.6. Anything above 70 points toward it being overbought. The stock recently broke above the 50% retracement at $258, suggesting this should provide some support if it comes under renewed pressure. Any slip below here could see it unravel back toward $222.

Nasdaq 100 forecast: Where next for the index?

Tesla carries a 4.3% weighting in the Nasdaq 100, making it one of the largest individual components of the tech-heavy index. However, its rise today is defying a broader downturn as markets step back from the rally in tech stocks, which is putting the index on course to lose ground for a second consecutive session after hitting 18-month highs last week.

We can see the index managed to get within touching distance of the 78.6% retracement at 15,333 from the lows we saw last October before facing some resistance, with the RSI having been thrusted into overbought territory. We could see it slide back toward 14,574 if it remains under pressure but a sharper pullback could see it unravel back toward the 61.8% retracement and back below 14,300.