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: Goldman Sachs downgraded Tesla to Neutral from Buy with a price target of $248, up from $185. After rallying 108% year-to-date, the shares better reflect Goldman’s positive long-term view of Tesla’s growth potential and competitive positioning, Goldman tells investors in a research note. The firm says in addition to the market giving the stock more credit for the company’s longer-term opportunities, it is cognizant of the “difficult” pricing environment for new vehicles that will continue to weigh on Tesla’s automotive gross margin this year. Goldman believes the trend lower in new vehicle pricing and softening auto supply/demand for the industry will be a headwind for Tesla. However, it thinks Tesla is well positioned to maintain a strong competitive position in the electric vehicle market, “as evidenced by what it is doing in areas like the third generation platform and with software.”

Voicing a similar opinion, Morgan Stanley last week also downgraded Tesla to Equal Weight from Overweight with a price target of $250, up from $200. The firm views Tesla as an AI beneficiary and an auto company, but contends that high expectations on the former has brought the stock to “a fair valuation.” The firm has defended the Tesla Overweight rating all year, but “did not see this 111% YTD rally coming.” Morgan Stanley adds that it is not trying to call “the end” to the Tesla rally as it still views Tesla as a “must own” in any EV portfolio. However, in its discussions with investors the firm continues to find a significant degree of investor skepticism and sees a relatively full valuation and more balanced risk-reward for the stock at this level.

This came just a day after Barclays’s downgrade of Tesla to Equal Weight from Overweight with a price target of $260, up from $220. The stock’s performance amid its recent rally has been “too sharp relative to challenging near-term fundamentals,” given questions on margins and demand elasticity, Barclays told investors. While still “bullish” on the long-term opportunity, the firm thinks long-term initiatives will “take time to show through,” the analyst added. Barclays forecasts Q2 deliveries of 455,000, which it notes is above consensus, though with a further inventory build likely expected, this could add to questions on discounting and the margin floor, the firm added.

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

EV BATTERY FACTORIES: The U.S. Department of Energy’s Loan Programs Office announced a conditional commitment for a loan of up to $9.2B to BlueOval SK LLC for the construction of three manufacturing plants to produce batteries for Ford’s future Ford and Lincoln electric vehicles. Together, the plants, one located in Tennessee and two in Kentucky, will enable more than 120 gigawatt hours of U.S. battery production annually and displace more than 455 million gallons of gasoline per year for the lifetime of the vehicles powered by these batteries, the DOE said in a statement. The project is expected to create a total of approximately 5,000 constructions jobs in Tennessee and Kentucky, and 7,500 operations jobs once the plants are up and running. This effort supports President Biden’s Investing in America agenda to onshore and re-shore domestic manufacturing of technologies that are critical to reaching the clean energy and transportation future, the DOE added. BOSK is a joint venture between Ford and SK On, a Korean EV battery manufacturer.

FOUL PLAY SUSPECTED: Nikola (NKLA) says “foul play is suspected” after a fire at Phoenix HQ. Nikola Motor said in a tweet, “Early this morning behind our Phoenix headquarters, a fire occurred which affected multiple battery electric trucks. No one has been injured. Foul play is suspected as a vehicle was seen in the area of the affected trucks just prior to the incident and an investigation is underway. Our team applauds the Phoenix and Tempe Fire Departments for taking quick action and staying on top of the situation. We will release additional information as it becomes available.”

BUY BROOKFIELD RENEWABLE PARTNERS: Scotiabank resumed coverage of Brookfield Renewable Partners (BEP) with an Outperform rating and $38 price target following the company’s $650M equity raise. The firm views the acquisition of Duke Energy’s renewable platform in the U.S. positively, saying it not only drives strong accretion but also highlights the wealth of opportunities Brookfield is seeing to invest capital.