What You Missed This Week in EVs and Clean Energy

Institutional investors and professional traders rely on The Fly to keep up-to-the-second on breaking news in the electric vehicle and clean energy space, as well as which stocks in these sectors that the best analysts on Wall Street are saying to buy and sell.

From the hotly-debated high-flier Tesla (TSLA), Wall Street’s newest darling Rivian (RIVN), traditional-stalwarts turned EV-upstarts GM (GM) and Ford (F) to the numerous SPAC-deal makers that have come public in this red-hot space, The Fly has you covered with “Charged,” a weekly recap of the top stories and expert calls in the sector.

SELL RIVIAN: UBS downgraded Rivian Automotive to Sell from Buy with a price target of $8, down from $24. The firm says it had been optimistic about Rivian’s product and brand ultimately winning out. However, a rapidly changing electric vehicle backdrop caused the firm to reassess its demand view and makes the company’s current strategy “quite onerous on the ramp to profitability and cash flow.” UBS now sees “more tepid” demand for battery electric vehicles and Rivian’s product, and material risk to outer-year consensus expectations. The company likely needs capital raises that now constitute a significant percentage of current market capitalization, the firm adds.

JPMorgan also downgraded Rivian Automotive to Underweight from Neutral with a price target of $11, down from $20, after “slashing” the firm’s estimates to account for substantially slower growth amid continued large losses. The company has fallen “far short” of its own targets for vehicle sales and production, “let alone the seemingly much more ebullient expectations of its investors,” and disappointing new guidance revealed yesterday implies essentially no growth in 2024 that the firm sees hinting at growing demand problems that “leave little likelihood for a re-acceleration of growth” until at least 2026.

Meanwhile, Truist downgraded Rivian Automotive to Hold from Buy with a price target of $11, down from $26. The firm remains constructive on the value of the company’s vertically integrated model and “differentiated” brand, but sees its “imminent capital needs” continuing to put a ceiling on the shares. Rivian is entering an extended plant shutdown period which will drive flat year-over-year volumes, the analyst tells investors in a research note. The firm believes concrete evidence of strength in initial R2 orders will be needed to bring optimism back to the shares.

Click here to check out Rivian’s recent Media Buzz Sentiment as measured by TipRanks.

BEARISH ON LUCID: Cantor Fitzgerald downgraded Lucid Group (LCID) to Underweight from Neutral with a price target of $4, down from $6. The firm cites the company’s “persistently high” negative gross margins, lower than expected annual production guidance, and lower demand for the downgrade. Cantor also cut estimates to reflect a reduction in expected vehicle production and deliveries as well as lower expected selling prices. The firm says Lucid continues to lower vehicle prices in an effort to remain competitive with the industry.

CONSENSUS ESTIMATE RISK: JPMorgan downgraded Nio (NIO) to Underweight from Neutral with a price target of $5, down from $8.50. The firm’s revised 2024 revenue forecast is about 10% below the consensus, which assumes a sales volume forecast of around 220,000 to 240,000 units, higher than the firm’s 191,000 units. Nio has only one new model targeting the mass market segment this year and it may only hit the showroom and contribute to sales mainly in Q4, JPMorgan tells investors in a research note. On top of this, competition in the mass market may only intensify, especially considering the number of new launches from peers, says the firm. The downgrade reflects JPMorgan’s cautious view on Nio’s sales and earnings momentum in a very competitive market and a belief that consensus forecasts are subject to potential downside risk.

TEAM UP ON CHEAP EVS: Volkswagen (VWAGY), Renault (RNLSY) and Stellantis (STLA) are exploring tie-ups with sworn competitors to make cheaper electric vehicles and fend off existential threats, Bloomberg’s Albertina Torsoli, Stefan Nicola, and Monica Raymunt report. As Chinese rivals and Tesla expose competitive weaknesses at Europe’s biggest mass-market carmakers, it’s become clear that a sense of urgency is growing and a business-as-usual approach is a losing option, the authors say.

BULLISH ON CHARGEPOINT: Benchmark initiated coverage of ChargePoint (CHPT) with a Buy rating and $4.25 price target. ChargePoint’s “land-and-expand approach” of selling EV charging hardware that is further connected via Cloud Services subscriptions has helped it build “an industry leading charging network” that is positioned to capitalize on market growth as the industry matures, the firm tells investors. Recent capital flows into North American electrification “provide confidence in market growth,” Benchmark added.

MOVING TO THE SIDELINES: Northland downgraded Sunnova Energy (NOVA) to Market Perform from Outperform with a price target of $9, down from $12, citing the rising customer termination rate. With the stock down greater than 20% on Thursday, Sunnova’s results and commentary were “clearly viewed in a very negative light” and it “probably doesn’t help” that peer Sunrun (RUN) also reported a Q4 miss and conservative outlook, the firm tells investors.