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.

TESLA DELIVERIES: Tesla said it produced 479,700 vehicles in Q2 and delivered 466,140 of them. The company produced 19,489 of the Model S and X with deliveries of 19,225 and 8% subject to operating lease accounting. Tesla also produced 460,211 of the Model 3 and Y with deliveries of 446,915 and 5% subject to operating lease accounting.

Commenting on the news, Barclays says Tesla “cleared the bar” in Q2 as its deliveries of 466,140 vehicles beat the consensus estimate of 447,000. The focus now shifts to the company’s Q2 margin, the analyst tells investors in a research note. Tesla’s production continues to outpace deliveries, albeit at a declining pace, and it is on track to meet its 1.8M 2023 guidance, says the firm. However, Barclays believes questions remain on a “margin floor” and demand elasticity as inventory build continues. It keeps an Equal Weight rating on Tesla with a $260 price target.

More upbeat on the name, Wedbush noted that Tesla just announced its highly anticipated Q2 delivery numbers, which strongly beat the Street’s targets in what the firm believes is proof to combat the narrative of a murky backdrop and put the bears back into hibernation mode in what could be a short covering for the ages. Price cuts implemented early in 2023 have paid major dividends for Tesla as demand appears to remain very strong and production efficiencies have allowed for the massive deliveries beat this quarter, the firm says. Overall, Wedbush believes Tesla is still on track to hit its 1.8M-unit delivery bogey for the year with this performance and should be able to do it with a margin story that troughs over the next 1-2 quarters and ramps back up into FY24. The firm has an Outperform rating on the shares with a price target of $300.

Meanwhile, several firms raised their price targets on the name following Q2 deliveries update. Deutsche Bank raised its price target on Tesla to $270 from $260, while keeping a Buy rating on the shares as Q2 deliveries handily beat the Street consensus and Deutsche’s estimate of 448,00. At the very least, Tesla’s deliveries suggest its price cuts are working, and are also aided by Inflation Reduction Act consumer incentives in the U.S, says the firm. It is now modelling Q2 operating income of $3.04B versus $2.84B previously, representing a 12.3% operating margin. Beyond the Q2 results, Deutsche still sees some incremental risk of additional price cuts over the rest of the year and into 2024, although it models them “somewhat less steep than previously.”

JPMorgan also raised the firm’s price target on Tesla to $120 from $115, but maintained an Underweight rating on the shares. Tesla has delivered upon its unit volume expectations when the shares were last trading at this level, but at the sacrifice of “substantial” revenue and margin, which investors, at the moment, appear to be largely looking through despite the clear implications to its long-term earnings power, JPMorgan tells investors in a research note. As such, the firm expects suggests “caution” on Tesla with the shares up 113% year-to-date.

Both Canaccord and Truist also upped their price targets on the EV maker’s shares to $293 and $240, respectively.

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

CHARGING STATIONS: A group of EV charger makers and operators is pushing back against Texas’ plan to mandate the inclusion of Tesla technology in charging stations, saying it is “premature,” according to a document seen by Reuters and a source aware of the matter. Reuters reported last week that Texas would require charging companies to include both Tesla’s North American Charging Standard as well as the nationally recognized rival Combined Charging Standard technology to be eligible for a state program to electrify highways using federal dollars. Five electric vehicle charging companies, including operator ChargePoint Holdings (CHPT) and manufacturer ABB, and a clean energy association have written to the Texas Transportation Commission, calling for more time to re-engineer and test Tesla’s connectors, Reuters’ Abhirup Roy reports.

Bernstein analyst Toni Sacconaghi notes that recently, Tesla’s North American Charging Standard, or NACS, has been adopted by competitors like Ford, GM and Rivian as well as third party networks, and appears to be on track to become a de facto standard in the U.S. The firm sees the near-term financial impact of NACS adoption in the U.S. as neutral to slightly negative, and growth in Supercharging is likely to be driven primarily by the growth in Tesla’s own installed base. Longer term, under “very generous assumptions,” Bernstein estimates that supercharging could be a $12B revenue opportunity for Tesla in 2030, albeit on low margins. The firm has an Underperform rating on Tesla’s shares with a price target of $150.

DELIVERIES: Rivian Automotive announced production totals for the quarter ending June 30. The company produced 13,992 vehicles at its manufacturing facility in Normal, Illinois and delivered 12,640 vehicles during the same period. These figures remain in line with the company’s expectations, and it believes it is on track to deliver on the 50,000 annual production guidance previously provided.

Meanwhile, Nio (NIO) announced its June and second quarter 2023 delivery results, saying it delivered 10,707 vehicles in June 2023. The deliveries consisted of 6,383 premium smart electric SUVs, and 4,324 premium smart electric sedans. Nio delivered 23,520 vehicles in the second quarter of 2023. Cumulative deliveries of Nio vehicles reached 344,117 as of June 30, 2023.

Additionally, Li Auto (LI) announced that the company delivered 32,575 vehicles in June 2023, surpassing the 30,000 monthly delivery mark for the first time and representing an increase of 150.1% year over year. This brought the company’s second quarter deliveries to 86,533, up 201.6% year over year. The company has already surpassed its total vehicle deliveries for the entire year of 2022 with its deliveries in the first half of 2023.

XPeng (XPEV) also announced its vehicle delivery results for June and the second quarter 2023. In June 2023, XPeng delivered 8,620 Smart EVs, representing a 15% increase over the prior month, with the P7 series deliveries up 17% over the prior month. The company has achieved positive delivery growth for five consecutive months. Total Smart EV deliveries for the second quarter of 2023 were 23,205 units, representing a quarter-over-quarter increase of 27%. As of June 30, 2023, XPeng has delivered over 300,000 Smart EVs.

SOME UNCERTAINTY: CLSA downgraded XPeng to Outperform from Buy with a price target of $13.10, up from $10. Xpeng launched its G6 model on June 29 with the official price starting from Rmb 209,900. The firm thinks G6 could reach 10,000 monthly sales units, helping Xpeng’s sales return to 15,000 units per month in Q3. However, citing still some uncertainty on the increase of G6 capacity, CLSA downgrades XPeng to Outperform.

ON THE SIDELINES: Citi resumed coverage of Lucid Group (LCID) with a Neutral rating and $8 price target. The firm remains constructive on Lucid’s leading technology position, anchored by a miles/kWh advantage estimated to be worth $4-5k/vehicle. With the cash/liquidity runway having been extended, the focus shifts back to near-term demand for the Lucid Air and the company’s gross margin progression, which were challenged in Q1, Citi adds. The ideal outcome would see improvement on both fronts, followed by the unveiling of the Gravity SUV. Given the stock’s relative valuation, recent EV price discounts and the time gap until Gravity SOP, a bullish stance on the stock requires some conviction on the H2 Air volume ramp and margin progression, the firm says.

CHAPTER 11: Lordstown Motors (RIDE) announced that the United States Bankruptcy Court for the District of Delaware entered orders granting approval, on an interim or final basis, of all of the company’s “first day” motions filed in its chapter 11 cases on June 27. Lordstown continues to operate with significant unencumbered cash-on-hand. Additionally, the court granted interim approval of the company’s first day employee wages and benefits motion, which enables the company to continue paying all employee wages, salaries, and providing benefits – without interruption. The hearing for final approval of that motion is scheduled for July 27. Bankruptcy courts routinely grant final approval of the relief requested. The company can also continue paying suppliers/vendors for all authorized goods delivered and services rendered after the filing date of June 27. Following the hearing, the company is prepared to turn its attention to the expedited marketing and sale process for its assets, including the Endurance assets, as proposed in the company’s motion for approval of that process filed on the petition date. The company is also poised to continue vigorously pursuing its pending litigation against global technology company Hon Hai Technology Group and certain of its affiliates.

‘MORE DIGESTIBLE’ VALUATION: B. Riley upgraded Enphase Energy (ENPH) to Buy from Neutral with a price target of $214, down from $247. The selloff in the shares year-to-date has brought an attractive entry point for long-term investors, B. Riley tells investors in a research note. Enphase’s valuation is now at a “more digestible level,” providing an attractive entry point for long-term investors, says the firm. While concerns about growth in the U.S. residential solar market in the second half of 2023 and 2024 remains a key risk, the company’s “continued runway for growth” in European markets gives confidence that estimates are achievable, contends B. Riley.

ESTIMATE REVISIONS: Janney Montgomery Scott initiated coverage of Array Technologies (ARRY) with a Buy rating and $37 fair value estimate, which represents 80% upside. The company’s leverage to torque tube 45X investment tax credits could generate an average of $186M annually in the 2024 – 2026 modeling period, Janney Montgomery Scott tells investors in a research note. The firm says this provides a “clear pathway for positive estimate revisions and deleveraging” in 2024 for Array. It believes the shares are trading at an attractive relative valuation, noting the five-turn discount on 2025 EBITDA estimates to its closest peer, Nextracker (NXT).