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What You Missed This Week in EVs and Clean Energy
The Fly

What You Missed This Week in EVs and Clean Energy

Guggenheim downgrades Tesla to Sell, thinks estimates need reset amid price cuts

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.

TESLA PRICE CUTS: Tesla has reduced prices for some of its vehicles sold in the U.S. by nearly 20%, which may allow some buyers to qualify for a $7,500 U.S. government tax credit, The Wall Street Journal’s Rebecca Elliott reports. The price of Tesla’s baseline Model Y crossover has been cut by almost 20% to $52,990, not including certain fees, while Tesla also cut the price of a high-performance version of its Model 3 sedan by 14% to $53,990.

Meanwhile, Guggenheim analyst Ronald Jewsikow downgraded Tesla to Sell from Neutral with an $89 price target. Jewsikow forecasts a "sizable" gross margin miss in the fourth quarter to be driven mainly by price reductions and incentive actions taken during the quarter. Assuming incremental price cuts in Europe, the latest price cuts announced last night in the U.S., and no incremental reductions in China, his view is currently 650 basis points below the consensus gross margin estimate and he believes full year 2023 estimates "need a reset," Jewsikow tells investors. Tesla used prices are declining at about three times the rate of the market over the last three months, which "represents another signal of near-term oversupply," he adds.

XPENG PRICE CUTS: Chinese automaker Xpeng (XPEV) announced price cuts for some models in a notice on its official WeChat account, following similar moves by rivals Tesla and Seres, reported Reuters’ Zhang Yan and Brenda Goh. Competition is intensifying in the electric vehicle sector in China and these price cuts are fueling expectations of a wider price war, the report stated.

On Wednesday, JPMorgan analyst Nick Lai downgraded XPeng to Neutral from Overweight with a price target of $9, down from $11. The reopening trade in autos is "playing out rapidly and could run out of steam in near term," Lai tells investors in a research note. The market appears to be rapidly pricing in a 2023 recovery scenario as economic momentum resumes, but the recent rally "has priced in a rosy scenario while corporate earnings and underlying industry data are still lagging," says the analyst. Lai cites valuation and potential for estimate cuts for the downgrade of XPeng.

EXPANSION DELAYED: An expansion has been delayed at Tesla’s Shanghai plant over data concerns, Bloomberg News reports, citing people familiar with the matter. The phase-three expansion was originally set to start mid-year would have doubled the plant’s capacity to 2M cars a year, people told Bloomberg. However, some central government officials expressed concerns of a U.S. company with links to Musk’s internet-from-space initiative Starlink having such a large presence in Asia’s largest economy, one of Bloomberg’s sources said. While Tesla vehicles are not equipped with Starlink equipment, Beijing has become increasingly concerned about data security and stability.

BUY JINKOSOLAR: Roth Capital analyst Philip Shen upgraded JinkoSolar (JKS) to Buy from Neutral with a price target of $70, up from $50. The analyst cites the recent Uyghur Forced Labor Prevention Act releases and "the expected progress ahead" for the upgrade. Policy risks that have challenged JinkoSolar are starting to wane the company’s outlook is improved, Shen tells investors in a research note. Beyond the improving U.S. policy situation, the analyst sees potential for margin expansion on poly price declines.

Keywords: charged, ev, electric vehicles, clean energy, solar, batteries, bev

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