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.

‘TOUGH’ Q1 SETUP: Keeping a Neutral rating on Tesla with a price target of $224 on the shares, Citi said it remains on the sidelines on the name as it awaits a more compelling entry point. Tactically, the Q1 setup looks tough with consensus still elevated and recent data points suggesting Q1 will need a strong finish to hit numbers, the firm tells investors in a research note. That said, Citi has been of the view that electric vehicle sentiment would likely not improve until spring or summer, in part on the back of new products. In Tesla’s case, besides Cybertruck, the firm views the Model 3 refresh as a key determinant of spring/summer sentiment. Citi says it is “tough to get bullish with consensus still high, but the Model 3 refresh is showing some early promise that’s worth keeping an eye on.”

TESLA TARGET CHANGES: On Tuesday, Morgan Stanley lowered the firm’s price target on Tesla to $320 from $345, while keeping an Overweight rating on the shares. Despite the company’s continued price cuts, demand for EVs continues to decelerate, with fleets dumping EVs and amid “strong” hybrid momentum competition, the firm tells investors in a research note. Tesla’s product is also “relatively aged” as it may now be the oldest of any major OEM, Morgan added.

Meanwhile, RBC Capital raised the firm’s price target on Tesla to $298 from $297, keeping an Outperform rating on the shares. The firm now includes Megapacks in its price target. At the same time, RBC lowered its autonomy valuation given lower licensing penetration expectations. The firm remains conservative on Tesla’s car business, not giving credit to Model 2 affordability. Given its expectation that management’s goal is to increase volumes in order to sell autonomy, RBC has Tesla’s car gross margins falling from 18% in 2023 to 11% by 2035.

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

RIVIAN NARRATIVE HAS CHANGED: UBS raised the firm’s price target on Rivian Automotive to $9 from $8, while keeping a Sell rating on the shares. The narrative around Rivian has changed, the firm said in a research note on Friday. The strategic pivot to produce R2 in Normal vs Georgia and save over $2.25B, extending cash runway is positive, UBS argues. The reveal of the R2 and R3 allows investors to think about what can be and diverted attention away from tougher demand for R1. Sacrificing growth for slower burn is the right move, but UBS still believes capital is needed and, if the capital markets permit, thinks they will rise.

SELL 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.

SLOWER GROWTH: CLSA downgraded Nio (NIO) to Outperform from Buy with a price target of $6, down from $9.80. The company’s Q4 net loss continued to grow, and a new brand will be launched in Q3, the firm tells investors in a research note. CLSA also notes that while Nio has made steady progress on the construction of its battery swapping network, it sees slower growth, driving reduced estimates.

MOVING TO THE SIDELINES: Morgan Stanley downgraded Sunnova Energy (NOVA) to Equal Weight from Overweight with a price target of $14, down from $24. The firm believes there is “a large dislocation” between the stock price and the value of the company’s asset base, but sees a less clear path to realizing that value over the next 12 months, driving its decision to downgrade the stock.