What You Missed This Week in EVs and Clean Energy

RBC says Tesla’s utility battery business may be worth more than car business

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.

BATTERY BUSINESS: 

RBC Capital says its takeaway from the firm’s battery storage facility tour is that the unit may be worth “substantially more” than the company’s standalone car business, even though it continues to view autonomous driving for Full Self Driving, or FSD, and Robotaxi remaining central to the investment case for the stock. RBC keeps an Outperform rating and $297 price target on Tesla.

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

‘DISAPPOINTING’ Q4: 

Citi downgraded Fisker (FSR) to Neutral from Buy with a price target of 80c, down from $4. The firm sees a “disappointing Q4 outcome” for Fisker, which revealed additional financial reporting issues, a significantly weaker 2024 outlook and a worsening liquidity runway. The tone of the earnings conference call was also “noticeably more cautious,” the firm tells investors in a research note. Citi says that while the announcement of an investment and partnership negotiation with a large car maker is encouraging, that alone cannot underpin the investment story at a time when liquidity is tightening, accounting issues still linger and demand not seemingly gaining much momentum. The quarter showed Fisker is struggling to overcome recent setbacks, the firm contends.

R.F. Lafferty also downgraded Fisker to Hold from Buy with a price target of $2, down from $3, after the company announced a preliminary Q4 GAAP loss of ($1.23) per share on revenue of $200.1M, which fell short of consensus by approximately $110M. When the company files its SEC Form 10-K for 2023, Fisker will include that “there is a substantial doubt about its ability to continue as a going concern,” the company disclosed. The firm cites the ongoing concern Fisker plans to disclose as well as weaker-than-expected deliveries in 2024 for its downgrade.

FEBRUARY DELIVERIES: 

Nio (NIO) said it delivered 8,132 vehicles in February. The deliveries consisted of 4,765 premium smart electric SUVs, and 3,367 premium smart electric sedans. Cumulative deliveries of Nio vehicles reached 467,781 as of February 29th.

XPeng (XPEV) also announced its vehicle delivery results for February. The company said it delivered 4,545 Smart EVs. Deliveries of XPeng X9 reached 1,448 units, with nearly 4,000 units of X9 delivered in the first two months of its launch, achieving a leading position in the electric MPV segment as well as in the three-row seater BEV segment. With the capacity ramp-up and the debottlenecking of certain components’ supply post-Chinese New Year, the company will accelerate the delivery of the X9 in March.

Lastly, Li Auto (LI) announced that the company delivered 20,251 vehicles in February, up 21.8% year over year. The cumulative deliveries of Li Auto vehicles reached 684,780 as of the end of February.

DEMAND UNCERTAINTY: 

Janney Montgomery Scott downgraded Sunnova Energy (NOVA). Many investors are focused on potential dilution or liquidity impacts related to the company’s strategy for its 2026 convertible notes, but the firm thinks there is still a healthy amount of time to refinance or pay down the notes. However, its 2024 and 2025 estimates are both below current Street estimates and company guidance as it sees a “difficult and uncertain demand environment,” especially beyond the second half of 2024.

Janney Montgomery Scott also downgraded Sunrun (RUN), voicing similar concerns. The firm’s revised stance on shares reflects the view that U.S. residential solar demand is more uncertain than current expectations; tailwinds of lower equipment costs and higher ITC adders will be more subdued than previously expected; its view that the near-term translation of this potential demand will be more muted than the math appears on paper; and the contention that valuation and trading multiples are likely to remain depressed and below net earning assets for the near term. While the firm remains bullish on margins moving higher, it is “less confident in demand.”

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Originally Posted March 4, 2024 – What You Missed This Week in EVs and Clean Energy