What You Missed This Week in EVs and Clean Energy

Barclays sees upcoming Tesla investor day as a possible “sell-the-news event”

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.

INVESTOR DAY: 

Barclays says Tesla’s upcoming investor day may be a “sell-the-news event” given the stock’s recent rally. However, the firm sees the event as likely to reinforce Tesla’s long-term opportunity, reinforcing the firm’s Overweighting. Elon Musk recently tweeted that the investor day will provide a Master Plan 3, “the path to a fully sustainable energy future for Earth,” Barclays tells investors in a research note. While a number of these plans never fully materialized, since Master Plan Part 2, Tesla has solidified its product and accelerated the electric vehicle transition, the firm contends. Further, it says the most anticipated topic at the investor day will be commentary on the third generation platform, which it assumes will be the basis for the “Model 2,” Tesla’s mass-market car.

Meanwhile, Deutsche Bank raised its price target on Tesla, keeping a Buy rating on the shares. The firm believes Tesla’s investor day on March 1 has the potential to help the stock keep rerating higher. Deutsche expects the company to introduce “Master Plan 3” and present the main drivers of its longer-term growth strategy, and in particular its third generation vehicle platform, which could support multiple future vehicles and segments at a lower price point. Tesla will speak about the role of in-house battery manufacturing technology, capacity expansion, and actions to secure raw materials, the firm adds.

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

MOVING TO THE SIDELINES: 

BofA downgraded Lucid Group (LCID) to NEutral from Buy, following the company’s Q4 report and accompanying “light” 2023 outlook and lower than expected 2023 production forecast. The firm is “materially” lowering its 2023 estimates and pushing out 2024-plus estimates, telling investors that it now expects it could take until 2027-plus for Lucid to reach breakeven on an operating and free cash flow basis.

PRODUCTION HALT, ENDURANCE RECALL: 

Lordstown Motors (RIDE) announced that it has experienced performance and quality issues with certain Endurance components that have led the company to temporarily stop production and customer deliveries since its last production update in January. The team is diligently working with suppliers on the root cause analysis of each issue and potential solutions, which in some cases may include part design modifications, retrofits, and software updates. In this regard, LMC has filed paperwork with the National Highway Traffic Safety Administration to voluntarily recall the Endurance to address a specific electrical connection issue that could result in a loss of propulsion while driving. Lordstown is working with its supplier network to implement a corrective action that the Company believes will address this issue. The recall will affect 19 vehicles that are either in the hands of customers or being used internally by LMC. Vehicles waiting for shipment and vehicles in process at the manufacturing plant will also be retrofitted with the corrective action once components are available.

JOB CUTS: 

EVgo (EVGO) announced a reorganization to direct resources towards the company’s highest priorities for 2023. Priorities include building out EVgo’s public network in locations meeting its robust investment criteria, building and operating major EVgo eXtend projects on highway corridors, delivering new hubs and infrastructure projects for fleets, implementing EVgo ReNew to ensure EVgo’s public network operates at the charging industry’s highest standards, and continuing to develop and deploy innovative software tools to create a world-class charging experience for drivers and partners alike. Operational efficiency improvements are expected to enable EVgo to meet its growth objectives while reducing headcount by approximately 40 employees with continued hiring for operational roles. EVgo expects to report 2022 financial and operational results within the guidance ranges provided by the Company on November 2, 2022.

BULLISH ON CHARGEPOINT: 

Janney Montgomery Scott initiated coverage of ChargePoint (CHPT) with a Buy rating. The U.S.-based manufacturer of EV charging hardware, software, and related services’ results are largely tied to EV deliveries, whether in a residential, commercial, or fleet application, and the firm has leaned on its forecasts for EV adoption and EV charger buildout in key countries in arriving at its valuation.

SOLAR TECH COMPANY: 

The solar mobility solutions provider Sono Group (SEV) announced that it decided to pivot its business model to exclusively retrofitting and integrating its solar technology onto third party vehicles, and to terminate its Sion passenger car program, effective today. Termination of the Sion program reflects a decision to focus on a capital-light business model – an estimated 90% of the funding needs for 2023 were generated by the Sion program – in light of depressed capital market conditions. Given the resource-intensive nature of the Sion program, including personnel requirements, the Company is now implementing a significant cost reduction program. “This pivot marks a significant step in Sono Motors’ business development,” said Laurin Hahn, co-founder and CEO of Sono Motors. “Even though we had to terminate our original passion project, the Sion program, shifting our entire focus to business-to-business solar solutions provides us with an opportunity to continue to create innovative products in the solar space. It was a difficult decision and despite more than 45,000 reservations and pre-orders for the Sion, we were compelled to react to the ongoing financial market instability and streamline our business.” Sono Motors is currently working as a development-partner and supplier with companies across ten countries in Europe, Asia, and the United States. Going forward, Sono Motors intends to focus specifically on buses and third-party OEM cars.

Following the news, Craig-Hallum downgraded Sono Group to Hold from Buy. With its #saveSION program unsuccessful, Sono Motors has made the tough decision to sunset its plans for its Sion EV, the firm says. Craig-Hallum points out that this was really its only option as it now plans to focus solely on its solar technology business where it has been making steady traction with 23 partners globally, including numerous LOIs and purchase orders. What this means now is a reduction in headcount, and a meaningful reduction in capital needs, but also the need to repay the reservations and pre-payments that had been taken for the Sion over the last several years, the firm notes.

Cantor Fitzgerald also downgraded Sono Group to Neutral from Overweight, citing the termination of the Sion Car Program, eliminating the possibility of a significant revenue stream and a “disruptive product” for the company. The company announced that it has terminated the Sion Passenger Car Program to focus exclusively on its business-to-business solar business, which includes retrofitting solar technology onto third-party vehicles, the firm tells investors in a research note. Upon cancellation, the Sion passenger vehicle program had 45,000 reservations and pre-orders, the firm points out. Cantor views the announcement as “disappointing since the Sion program was management’s core passion and business model.”

BUY ENPHASE: 

Janney Montgomery Scott upgraded Enphase Energy (ENPH) to Buy from Neutral. Since the firm initiated coverage on the stock on February 2, shares have declined by about 13% while the firm’s view of the relative value has increased by about 18% as public installers have spoken positively about market trends, confirming similar comments Enphase made on their Q4 earnings call. Enphase management also detailed the expected financial impact from 45x ITCs in the coming years, said the firm, which sees expectations regarding softness in domestic residential solar markets as “priced in” with the shares trading at a slight discount to closest competitor Solaredge Technologies (SEDG).

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Originally Posted February 27, 2023 – What You Missed This Week in EVs and Clean Energy