North American OEMs Launch Their Own Charging Network to Fight Against a Tesla Monopoly

In February 2024, IONNA began its operations in North America. IONNA is a Joint Venture (JV) between seven major OEMs: BMW, General Motors (GM), Honda, Hyundai, Kia, Mercedes-Benz, and Stellantis. Between them, these automakers accounted for 21.6% of Battery Electric Vehicle (BEV) sales in the United States in 2023 and around half of all light vehicle sales. The JV was announced in July 2023 with plans for 30,000 Direct Current Fast Chargers (DCFCs) targeting the US$5 billion in funding available under the National Electric Vehicle Infrastructure (NEVI) program. Its stations will be built along major highways and in metropolitan areas; the first of these stations are expected to arrive in late 2024.

This is an ambitious project: IONNA aims to be a major force in the North American charging industry. There are currently around 46,000 DCFCs in the United States and Canada and by 2030, ABI Research forecasts a total of 193,693 DCFCs across North America. The 30,000 DCFCs planned by IONNA accounts for a significant proportion of North America’s future charging infrastructure. If IONNA reaches its target, the network will have a 15% market share in the fast-charging sector.

Adding 30,000 DCFCs would account a significant proportion of North America’s fast charging infrastructure. There are currently around 46,000 DCFCs in the United States and Canada. By 2030, ABI Research forecasts a total of 193,693 DCFCs across North America. If IONNA reaches its target, the network would have a 15% market share in the fast charging sector.

The collection of OEMs is somewhat of a mixed bag, including a range of automakers that have made very different levels of progress in the Electric Vehicle (EV) transition and with a few notable omissions. Volkswagen (VW) is already involved in the charging industry through Electrify America, with over 4,000 chargers installed, and Tesla operates the Supercharger network—North America’s largest with over 20,000 chargers. Toyota, Ford, and Nissan, meanwhile, have avoided direct involvement in the EV charging business. They offer some branded charging apps and passes, but rely on partnerships with Charge Point Operators (CPOs) to handle the installation, operation, and maintenance of chargers.

All of IONNA’s members have adopted Tesla’s North American Charging Standard (NACS) and are expected to give their drivers access to Tesla’s Supercharger network, but this agreement does away with any expectations that they are now simply relying on Tesla and accepting its dominance in North America. IONNA will offer both NACS and Combined Charging Standard (CCS) plugs; the latter is required to fulfill NEVI funding rules, but it is clear that the de facto standard for charging in North America is now NACS.

Tesla’s Supercharger network is, by far, the largest and has proven extremely popular with customers by offering a more reliable service than its competitors. Other CPOs’ chargers are often faulty, leading to a poor user experience and a negative reputation for EVs that puts off new buyers. Some, such as ChargePoint and Blink Charging, are also facing severe financial difficulties that could threaten their long-term viability. This, coupled with vehicles from other OEMs having access to its network, could lead to Tesla solidifying an effective monopoly over the EV charging industry in North America, something that its rivals are clearly eager to avoid. This JV is comparable to other activities such as the acquisition of HERE by a consortium of automakers—a defensive move to avoid losing control over a key ecosystem that will be essential to the future of the automotive industry.

Of course, the most similar venture to IONNA is IONITY, the European CPO owned by BMW, Ford, Hyundai, Kia, Mercedes-Benz, and VW. IONITY was founded in 2017 to spread ultra-fast charging throughout Europe, a technology that had not been rolled out at the time, and improve perceptions of EVs by offering 20-minute charging. IONITY’s network consists of over 3,300 charging points in 24 European countries, all of them DCFCs capable of delivering 350 Kilowatts (kW), which gives it a market share of around 3%. IONITY plans to have 7,000 chargers by 2025, and it is unlikely that it will be aiming for the market share or number of chargers that IONNA is targeting for the end of the decade.

IONITY was founded to show what is possible and make EVs a viable technology in the eyes of European customers. IONITY has now done its job and fostered a competitive market with a variety of companies such as Allego, EVBox, and Fastned offering ultra-fast charging. In the long term, there is no need for it to exist and it will likely fall by the wayside or be sold off as the European market does not need OEMs to be involved in charging. IONNA was founded because Tesla has now built an excellent EV charging network that is strongly associated with its brand, and OEMs need to show that Tesla's are not the only technologically advanced cars on the market.

This creates a difficult challenge for OEMs, as they are competing with an experienced and established CPO. Capital cost issues will be helped by the generous funding available from the federal and state governments, but there must be a great focus on user experience and reliability. There are two key components to reliability. The first is that many CPOs installed chargers that were designed and manufactured by inexperienced companies; with their established relationships with vendors built through the IONITY network, this should be easier in North America. The second is that reliability requires maintenance, which is expensive and difficult to justify for chargers that are not profitable. To reduce maintenance costs, IONNA should look for chargers that offer smart connectivity features, allowing remote monitoring, diagnostics, and predictive maintenance. To increase the profitability of chargers, utilization rates are key. This may require the acquisition of existing CPOs, which have already secured premium charging station locations and have access to data on customers’ charging patterns.