What You Missed This Week in EVs and Clean Energy

Electric vehicle sales have faced stiff headwinds recently, but Stifel believes these EV hurdles will shrink over the next few years

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.

RIVIAN: 

Stifel initiated coverage of Rivian Automotive. Electric vehicle sales have faced stiff headwinds recently, but the firm believes these EV hurdles will shrink over the next few years, paving the way for sales growth. Stifel says key positives to the Rivian story include high-quality driving brand awareness, an agreement with Amazon (AMZN) for 100,000 EDVs, and recently opening commercial van for purchase from other fleets and several drivers of 2024 and beyond margin expansion.

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

LEASING PROGRAM: 

Rivian has added a leasing option to its online configurator, within a week after announcing the leasing program was “in the works,” wrote Scooter Doll for Electrek. The program will debut on November 27, and allow customers in 14 states to “sign up to lease an R1T pickup from the automaker’s existing inventory,” added the Electrek story.

ON THE SIDELINES: 

Stifel initiated coverage of Lucid Group (LCID). The key positives to the Lucid story include that the Lucid Air is an “outstanding vehicle” and that the recently unveiled Gravity SUV creates access to the critical SUV segment, but the firm’s main concerns include brand awareness and market for the Lucid Air sedan is still developing and that production, while improving, is still in the “prove-it-to-me” stage, with margin progression “hard to pinpoint.” In addition, cash burn remains high and additional capital is likely to be needed in 2025, Stifel tells investors.

JOB CUTS: 

Nio (NIO) is weighing further job cuts after the company announced plans to cut 10% of its workforce last month, Bloomberg reports. According to people familiar with the matter, some departments were asked to prepare reserve lay off lists, which may widen the original dismissals to 20% to 30% within the unit. Cuts would mainly impact non-core businesses or those requiring heavy investment that won’t generate quick returns, the people said, adding that central parts of Nio’s business are still hiring.

BATTERY PRODUCTION UNIT SPINOFF: 

Nio plans to spin off its battery manufacturing unit as a move to help the company turn profitable, improve efficiency, and reduce costs, Reuters’ Zhang Yan, Zhuzhu Cui, and Brenda Goh report. According to two people familiar with the matter, the battery unit will seek external investors after the spinoff that could happen as early as the end of this year, adding that a valuation will be decided “later.”

NOT ENOUGH CATALYSTS: 

B. Riley downgraded ChargePoint (CHPT), post the Q3 report. The company did not provide guidance for Q4 given the challenges around near-term visibility from both commercial customers, who appear to be taking a step back from discretionary spending, and fleet customers, who are impacted by delays in vehicle deliveries, B. Riley tells investors in a research note. The firm does not see enough near-term catalysts to stay Buy-rated on the stock as it believes it will take a few quarters before visibility on growth returns and the new management team can build credibility in its plans and execution of spending reduction.

LIQUIDITY CONCERNS: 

Morgan Stanley downgraded Plug Power (PLUG). Rising interest rates and renewable electricity prices leave green hydrogen economics increasingly reliant on subsidies, where visibility remains poor, Morgan Stanley tells investors in a research note. The firm says this could delay project pipelines and slow adoption. It cites liquidity concerns and worsening hydrogen economics for the downgrade of Plug Power.

CITI AND SEAPORT: 

Citi initiated coverage of NextEra Energy (NEE). The firm is bullish on the fundamental outlook at FPL into the next rate case to be filed in early 2025 given the strong fundamental Florida economic growth outlook. Citi believes NextEra will favorably execute on power asset sales and tax credit transfers with limited downside.

Meanwhile, Seaport Research downgraded NextEra Energy to Sell from Neutral with a $44 price target. The firm has “growing unease” with FPL’s conduct and NEER’s financing structure and “couldn’t defend” the current P/E premium, “even without any concerns surrounding FPL, and those are mounting.”

Seaport Research also downgraded NextEra Energy Partners (NEP). The recent sale of Texas pipelines, short-term interest rate hedges and wind project repowering “won’t be enough” to continue NextEra Energy Partners’ 6% annual growth in distributions per unit beyond 2024, the firm contends. Seaport expects a “sharp” 50% cut in Partners’ distributions by late 2024, the analyst added.

LESS CLARITY: 

BofA downgraded Bloom Energy (BE), as the firm sees less clarity on orders and backlog into 2024. Management indicated a heightened focus on pipeline conversion through year-end on the Q3 call in early November and historically bookings have been Q4-weighted, but the firm still finds it “a bit challenging” to see clarity on year-over-year growth in 2024 as Bloom will be rolling off “a litany of lumpier sales this year.”

ATTRACTIVE RISK/REWARD: 

Morgan Stanley upgraded First Solar (FSLR). After the 20% selloff in the past three months, First Solar shares have an attractive risk/reward profile, the firm tells investors in a research note. Morgan Stanley believes the company offers one of the strongest risk-adjusted earnings profiles within the U.S. clean technology sector with its sold-out position through 2026. When combined with its cost hedging, First Solar should see relatively low-risk margin expansion through 2026, contends Morgan Stanley.
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Originally Posted December 11, 2023 – What You Missed This Week in EVs and Clean Energy