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.

MOVING TO THE SIDELINES: Mizuho downgraded Tesla, Rivian and Nio (NIO) to Neutral from Buy, citing slowing EV, rising inventories, high prices with subsidy sunsets, and few new launches near-term. The firm remains constructive on the broader electric vehicle landscape with the long-term trend to electrification, but says near-term electric vehicle demand and tightening liquidity are creating challenges into 2025.

REDUCED PRODUCTION: Shares of Tesla were under pressure on Friday following a Bloomberg report that the company has reduced electric car production at its plant in China amid sluggish sales growth and intense competition. Earlier this month, employees at its Shanghai facility were instructed to work five days a week instead of the usual 6 1/2 days to lower production, people familiar with the matter told Bloomberg. Staff have not been given a clear update as to when production will return to normal, the report added.

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

RESEARCH TACTICAL IDEA: Morgan Stanley named XPeng (XPEV) a “Research Tactical Idea” on the belief the share price will rise in absolute terms over the next 45 days. The stock has traded off recently, making XPeng’s short term valuation “much more compelling,” the firm tells investors in a research note. Morgan Stanley thinks the company’s “weak” Q1 volume is largely priced into the shares and expects volume resurgence from Q2 as well as more updates on collaboration with VW, advanced driver development, and upcoming new model cycle. The firm has an Overweight rating on the shares with an $18 price target.

REDUCED Q1 DELIVERY VIEW: Li Auto (LI) provided an updated delivery outlook for the first quarter. Due to lower-than-expected order intake, the company now expects its vehicle deliveries for Q1 to be between 76,000 and 78,000 vehicles, revised from the previous vehicle delivery outlook of between 100,000 and 103,000 vehicles.

“I want to reflect on a couple of the key issues that we faced in March and provide some insights and solutions. First, we want to acknowledge that the operating strategy of Li MEGA was mis-paced. We planned operations of Li MEGA as if the model had already entered the 1-to-10 scaling phase, while in fact, we were still in the nascent 0-to-1 business validation period. Similar to Li ONE and our EREV technologies, Li MEGA and our BEV technologies will also need to undergo this 0-to-1 validation process. Next, we will first focus on our core user group and target cities with stronger purchasing power, recalibrating the Li MEGA strategy back to the 0-to-1 phase. After that, we will expand our reach to a broader user base and more cities. Second, we put excessive emphasis on sales volume and competition, distracting us from what we excel at – creating value for our users and driving operating efficiency. We will lower our delivery expectations and restore sustainable growth by refocusing on enhancing user value instead of competition, while maintaining operating efficiency,” commented Xiang Li, chairman and chief executive officer of Li Auto.

TRANSACTION TALKS TERMINATION: In a regulatory 8-K filing, Fisker (FSR) stated that, “After the market closed on March 22, 2024, Fisker received notice from the large automaker with which the company had been in negotiations for a potential transaction that the automaker terminated the negotiations. Following such termination, the company continues to evaluate strategic alternatives. Such alternatives may include in or out of court restructurings, capital markets transactions, repurchases, redemptions, exchanges or other refinancings of its existing debt, the potential issuance of equity securities, the potential sale of assets and businesses and/or other strategic transactions and/or other measures… As a result of the termination of discussions with the automaker, the company will not be able to meet a closing condition to the financing commitment and term sheet the company entered into with an investor on March 18, 2024. As a result of the inability to meet such closing condition, the company intends to engage in discussions with the Investor regarding a waiver of such closing condition.”

BUY SUNNOVA: Janney Montgomery Scott upgraded Sunnova Energy (NOVA) to Buy from Neutral with an unchanged fair value estimate of $12. While the firm is not adjusting its overall thesis on the growth and margin outlook, it notes that the several weeks of significant trading weakness following the company’s Q4 report have been “generally more acute and pronounced than what we had originally expected in February.” Janney notes that its 2024 and 2025 estimates are below current Street estimates and company guidance, but it says the magnitude of the selloff since earnings has led it to re-evaluate its rating and view the risk/reward at the current valuation as one that “warrants buying shares.”