What You Missed This Week in EVs and Clean Energy

Analysts call Tesla investor day light on details, company issues recall notice for Model Y vehicles

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 INVESTOR DAY: 

Tesla said it is planning to create up to 6,000 positions at its first Mexican auto plant and is weighing producing batteries in the center of Mexico as it eyes additional investment.  The company is also planning to cut assembly costs by half in future generations of cars.

While Tesla didn’t disclose much in terms of details during its highly anticipated investor day, and “failed to meet” expectations, the company did say it expects to use 75% less silicon carbide in vehicles without compromising the performance or the efficiency of the car. The claims sent shares of Wolfspeed (WOLF), On Semiconductor (ON), and STMicroelectronics (STM) down in Thursday morning trading.

TESLA RECALL: 

The National Highway Traffic Safety Administration, or NHTSA, posted a recall notice from Tesla for 3,470 Model Y vehicles in the U.S. built between 2022-2023. Bolts in the second-row seats may be loose in the second-row seat back frames of Model Y vehicles, which the NHTSA says could reduce the performance of the seat belt system and increase the risk of injury during a crash, according to the notice dated February 27.

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

BUY RIVIAN: 

Needham reinstated coverage of Rivian Automotive (RIVN) with a Buy rating after its Q4 results. The company’s initial vehicle production guidance for FY23 is well below consensus delivery estimates, likely causing a material reset in investor expectations, but Rivian was adamant on achieving positive gross margins in FY24 and its ability to manage through FY24 without requiring further capital, the firm tells investors in a research note. The firm remains positive on the stock based on demand given in Rivian’s last communication on net reservations and current vehicle owner satisfaction levels.

Meanwhile, Rivian Automotive, which said along with earnings that it sees 50,000 vehicles produced this year, has told staff that production of 62,000 electric vehicles is possible in 2023, a boost from the output target it told shareholders earlier this week, Bloomberg’s Edward Ludlow reports, citing people familiar with the matter. The company’s production plan is to make as many as 62,000 vehicles, executives told workers at an all-hands meeting on Friday, the author says. Rivian shares are up nearly 10% after the news.

MOVING TO THE SIDELINES: 

Needham downgraded Fisker (FSR) to Hold from Buy after reinstating coverage of the name. The firm sees the company’s asset-light, contract manufacturing model as “intriguing,” particularly following its initial FY23 guidance calling for positive adjusted EBITDA, but he also believes that the stock is “fully valued.” Needham adds that it would turn more constructive on Fisker if the stock price saw a pullback or given the management’s consistent reiteration of FY23 guidance metrics.

Meanwhile, JPMorgan downgraded Nio (NIO) to Neutral from Overweight. The company’s Q4 results missed on unexpected vehicle margin contraction and higher than expected spending, the firm tells investors in a research note. JPMorgan is concerned that Nio’s Q1 margin could trend down further while the magnitude of improvement from Q2 will be shy of Street expectations, considering the “challenging competition environment.” It adds that Nio’s 2023 delivery forecast is below management’s “ambitious target.” JPMorgan believes the stock will likely trade sideways in the near-term.

Barclays also downgraded Nio to Equal Weight from Overweight, on higher spending and low margins. The company’s bottom line has gone from a loss of RMB 300M in Q1 of 2021 to a loss of over RMB 6.0B in Q4 of 2022, Barclays tells investors in a research note. The 20-times increase in losses was largely driven by the sharp increase in spending while gross profits have been fairly stable excluding write-offs, the firm contends.

OVERLY BULLISH EXPECTATIONS: 

Needham reinstated coverage of Blink Charging (BLNK) with a Hold rating and no price target. While the firm doesn’t doubt that there will be growth ahead for U.S. public EV charging infrastructure, it believes that Blink’s shifting revenues and “four-pronged business model” creates uncertainty given the recent growth in direct hardware sales. The firm also sees “overly bullish” expectations given that longer-term consensus growth expectations rely on Charging Service revenue in the U.S. market, where that business model may not be in favor.

F-150 LIGHTNING: 

Ford intends to restart production of its electric F-150 Lightning pickup on March 13, over a month after a battery problem caused one of trucks to catch fire, CNBC’s Michael Wayland reports. The car maker said that the production timing will allow SK On, Ford’s battery supplier, to resume output and deliver battery packs for the pickups, the author notes. “In the weeks ahead, we will continue to apply our learnings and work with SK On’s team to ensure we continue delivering high-quality battery packs – down to the battery cells. As REVC ramps up production, we will continue holding already-produced vehicles while we work through engineering and parts updates,” Ford told CNBC.

STRENGTHS PRICED IN: 

KeyBanc initiated coverage of SolarEdge Technologies (SEDG) with a Sector Weight rating and no price target. The firm  likes SolarEdge’s “strong positioning” in the U.S. market and diversified international growth opportunities. However, following the stock’s recent outperformance, these strengths are reflected in the company’s valuation, the firm contends. It believes SolarEdge is close to fairly valued.

BULLISH ON FIRST SOLAR: 

UBS upgraded First Solar (FSLR) to Buy from Neutral. UBS sees First Solar as the most significant beneficiary of the Inflation Reduction Act, with high visibility on capacity, revenue and earnings growth through 2026, the analyst tells investors in a research note. The scale of the domestic manufacturing tax credits more than absorbs concerns about the potential impacts of startup and ramp costs driving margin dilution in 2023-2024E as First Solar ramps U.S. manufacturing, the firm says.

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Originally Posted March 6, 2023 – What You Missed This Week in EVs and Clean Energy