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.
TRIAL OVER TESLA TWEETS: Elon Musk is looking to move his upcoming securities-fraud trial involving his conduct running Tesla out of San Francisco, arguing negative publicity and his recent management of Twitter (TWTR) have biased local jurors against him, Patience Haggin of The Wall Street Journal reported. In a Friday court filing, Musk’s attorney’s argued San Francisco’s jury pool has been "exposed to excessive and adverse pretrial publicity concerning Defendant Elon Musk that will deprive him of an impartial jury and his constitutional right to a fair trial," according to the Journal.
PRICE CUTS IN CHINA: Tesla is cutting the prices of its Model 3 and Model Y cars sold in China after deliveries of its cars plunged in December, Selina Cheng of The Wall Street Journal reported. The Model 3 prices were reduced by 13%, now starting at $32,700, while the Model Y reduced by 6%, now starting at $37,000. While Tesla delivered over 710,000 electric vehicles in 2022, the company is facing greater competition in China. Chinese rival BYD Co. generally has cheaper cars and delivered around 911,000 fully electric vehicles last year.
Commenting on the news, GLJ Research analyst Gordon Johnson says Tesla’s 10.5% "across the board" price cuts in China are "much worse than you think." The cuts come after factory production was cut by 30% last month and a 14-day shutdown is planned for this month, Johnson tells investors in a research note. He adds that the bulk of Tesla’s China factory production currently is being exported. In Tesla’s largest market of China, "it seems new orders are close to zero," contends Johnson. The analyst maintains his view that Tesla "will go down as the single-greatest stock short of all time." Johnson has a Sell rating on the shares with a $73 price target.
After Tesla announced "a relatively significant price cut" in China, Piper Sandler analyst Alexander Potter said he was "unsurprised" by the decision given that he has been flagging this risk for several months. If Tesla’s China-related volume, mix, fixed costs, and input costs don’t change materially, then this price cut could drive Tesla’s EPS downward by about 70c per share over the course of a full year, but using those assumptions about a lack of changes in those factors "is a big if," Potter said. He maintains an Overweight rating and $340 price target on Tesla shares.
Hundreds of Tesla owners gathered at the automaker’s showrooms and distribution centers in China over the weekend, demanding rebates and credit after sudden price cuts they said meant they had overpaid for electric cars they bought earlier, according to Reuters. On Saturday, about 200 recent buyers of the Tesla Model Y and Model 3 gathered at a Tesla delivery center in Shanghai to protest against the U.S. carmaker’s decision to slash prices for the second time in three months on Friday, the publication adds.
MOVING TO THE SIDELINES: BofA analyst Ming Hsun Lee downgraded XPeng (XPEV) to Neutral from Buy with a $12.40 price target after Tesla cut Model 3 and Y prices to "new lows" on January 6. Tesla’s price cuts could pressure some peers’ sales and market share, and "XPeng could be one of them" as its main product, the P7, has similar pricing and brand positioning as the Model 3, Lee tells investors.
LONG-TERM GROWTH OPPORTUNITIES: On Thursday, Edward Jones analyst Jeff Windau upgraded Tesla to Buy from Hold and added the shares to "Edward Jones Stock Focus List." The shares have significantly declined on concerns of slowing economic growth and Elon Musk’s time spent managing Twitter, Windau tells investors in a research note. While slowing economic growth could pressure auto sales in the near-term, the electric vehicle market will continue to expand due to global regulations, says the analyst. He believes Tesla’s current share price does not reflect its long-term growth opportunities and "strong position" in the growing electric vehicle market.
ENDURANCE PRODUCTION: In a regulatory filing, Lordstown Motors (RIDE) stated, "As previously disclosed by the Company, the Company began commercial production of the Endurance during the third quarter of 2022 and in the fourth quarter of 2022, the Company achieved full homologation and received certification from both the EPA and CARB to begin customer sales. The Company indicated that production volume would ramp slowly and accelerate as it resolves supply chain constraints. Through January 3, 2023, the Company has produced 31 vehicles for sale, of which six have been delivered to customers. Of the remaining units, the Company intends to use approximately fifteen for sales, demo drives, marketing and service training purposes prior to sale and the balance will be sold following completion of updates, final inspection and establishment of service arrangements to meet customer specifications. The Company expects a slow rate of production through the first quarter of 2023, with supply chain constraints, particularly with respect to the availability of hub motor components, continuing as the primary factor governing volume and timing."
ELECTRIC AIRCRAFT: Stellantis (STLA) and Archer Aviation (ACHR) announced that they have agreed to significantly expand their partnership by joining forces to manufacture Archer’s flagship electric vertical take-off and landing aircraft, Midnight. Stellantis will work with Archer to stand up Archer’s recently announced manufacturing facility in Covington, Georgia at which the companies plan to begin manufacturing the Midnight aircraft in 2024. The goal is for Stellantis to mass produce Archer’s eVTOL aircraft as its exclusive contract manufacturer. As a further sign of its commitment, Stellantis will provide up to $150M in equity capital for potential draw by Archer at its discretion in 2023 and 2024, subject to achievement of certain business milestones which Archer expects to occur in 2023. Stellantis also intends to increase its strategic shareholding through future purchases of Archer stock in the open market.
Deutsche Bank analyst Edison Yu says Archer Aviation’s deal with Stellantis should help alleviate the overhang on the stock. While Archer has operationally delivered on several key objectives in the past few months, the stock has continued to languish, Yu tells investors in a research note. He attributes this to two tactical factors, "both of which are getting addressed by the Stellantis deal." Yu keeps a Buy rating on Archer’s shares.
NEXTERA UPGRADE: Raymond James analyst Pavel Molchanov upgraded NextEra Energy Partners (NEP) to Market Perform from Underperform without a price target. NextEra Energy is a play on decarbonization of power generation, a key aspect of climate mitigation, Molchanov tells investors in a research note.
POSITIVE ON CLEAN ENERGY SECTOR: Wells Fargo analyst Michael Blum upgraded SunPower (SPWR) to Equal Weight from Underweight with a $21 price target. The analyst has turned positive on the clean energy sector for 2023. While continued Federal Reserve tightening will likely act as a near-term headwind, the fundamental and regulatory backdrop is "much improved" in 2023 and beyond, Blum tells investors in a research note. He recalibrated ratings inn the sector. The analyst also upgraded First Solar (FSLR), Sunnova (NOVA), and Sunrun (RUN) to Overweight from Equal Weight.
BUY ARRAY TECHNOLOGIES: BofA analyst Julien Dumoulin-Smith initiated coverage of Array Technologies (ARRY) with a Buy rating and $24 price target. Consensus estimates for Array miss the mark, positioning Array as a higher risk accelerated growth story in 2023-plus, Dumoulin-Smith tells investors in a research note. Further, he thinks Array is a lower risk margin accretion story as reversion in raw materials and logistics cost supports a return toward legacy low-20% gross margins.
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