Welcome to The Fly's latest edition of "Charged," where we look back at some recent analysts' notes, news and activity in the electric vehicle and clean energy space.
MOVING HEADQUARTERS: Tesla (TSLA) CEO Elon Musk confirmed that the car maker is moving its headquarters from Fremont, California to Austin, Texas, where the company has been constructing a new factory for a little over a year, The Verge's Sean O'Kane reported. The CEO said the company will continue to operate its electric vehicle factory in Silicon Valley and that he even intends to attempt to boost production there by 50%, the author noted.
Meanwhile, Musk said via Twitter that Tesla's FSD Beta 10.2 software update is "now rolling out to cars with 100/100 safety score over 100 miles" after delays due to "a few last minute concerns."
TRADE SECRETS: Tesla has accused Rivian of stealing trade secrets and poaching staff even after Tesla filed a lawsuit in 2020, Bloomberg's Peter Blumberg reported. According to the court filing, Tesla is accusing rival EV-maker Rivian, which is backed by Amazon (AMZN) and Ford (F), of stealing "highly proprietary" battery technology this summer, saying that in one instance, Tesla defectors were "caught red-handed" stealing the core technology for its next-generation batteries, "the most essential element for any electric vehicle."
GM'S TARGETS: General Motors (GM) plans to double annual revenues by the end of the decade while growing EBIT-adjusted margins "as it transitions to an all-electric future." GM noted that it has already announced plans to invest $35B through 2025 in all-electric and autonomous vehicles and launch more than 30 new EVs globally. The company is also planning "to reach leadership in EV market share in the U.S. while growing its profits from internal combustion engine, or ICE, vehicles. GM's growth will be driven by the Ultium modular EV platform the company developed to launch a broad portfolio of highly desirable EVs using common, scalable components. The array of Ultium-powered EVs will include high-volume entries, including a Chevrolet crossover priced around $30,000, Buick crossovers, trucks from Chevrolet, GMC and HUMMER EV, as well as exquisitely crafted Cadillac EVs such as the upcoming LYRIQ and CELESTIQ."
Commenting on the announcement, Deutsche Bank analyst Emmanuel Rosner noted that General Motors outlined "bold revenue and margin targets" by the end of the decade enabled by its transition to an all-electric and connected lineup, demonstrating the material upside presented by the company's Autos 2.0 business model as he previewed. The company is now targeting to double its revenue and expand its Ebit margins by 2030, as it shifts to electric vehicles, which will be further supported by an expanded software/services suite and autonomous services through Cruise, the analyst added. Rosner also pointed out that the 2030 revenue goal includes $50B revenue from Cruise, and "it will be important to see if this means GM plans on keeping a majority stake." At the same time, the automaker introduced its new Ultra Cruise ADAS system, which will allow GM drivers to drive truly handsfree on nearly 95% of all roads in the U.S. and Canada, the analyst highlighted.
On Monday morning, Citi analyst Itay Michaeli reiterated a Buy rating on General Motors with a $90 price target following last week's investor day. GM's 2030 target for $20B-$25B in high-margin connected vehicle revenue "could catalyze a re-think" of the broader automaker total addressable market, Michaeli told investors in a research note. The analyst says that while Cruise's deployment and scaling timetable with a $50B revenue target "understandably got the most immediate attention," he was "equally intrigued" with the role that Cruise will play in GM's consumer autonomous vehicles. He believes the company's 2030 outlook supports a $200 sum-of-the-parts share price.
SELL LORDSTOWN: On October 4, Morgan Stanley analyst Adam Jonas downgraded Lordstown Motors (RIDE) to Underweight from Equal Weight with a price target of $2, down from $8. The company's agreement to sell its plant to Foxconn (HNHPF) for $230M is less than 20% of his plant value estimate, the analyst told investors in a research note. Jonas added that at the current price of over $6 per share, the market is discounting a successful consummation of the Foxconn deal, a modestly successful Endurance program yielding positive free cash flows, and at least 50,000 units of volume on a new platform with Foxconn at approximately $50,000 ATP by 2030.
ET7 POTENTIAL: On October 7, Goldman Sachs analyst Fei Fang upgraded Nio (NIO) to Buy from Neutral with an unchanged price target of $56, which implies 65% upside potential from current levels. Fang increased 2021-2023 revenue forecasts by 2% and 7%, respectively, to reflect the "differentiated" ET7 product launch, but maintains profit estimates and valuation. Nio's shares have sold off by 34% since July 1, with some of the weakness being "Nio-specific" and some of the weakness being market and macro-related, Fang said. Nio unveiled the ET7, its fourth passenger vehicle model and the first sedan product at the Nio Day in January 2021, noted the analyst, who believes Nio's positioning of the ET7 is "strategic." The ET7's price makes it China's most expensive car model ever launched by domestic manufacturers, "strengthening Nio's brand equity in the premium space," he added.
SELL HYLIION: UBS analyst Steven Fisher downgraded Hyliion Holdings (HYLN) to Sell from Neutral with a price target of $5, down from $14. The analyst believes the company is not going to meet revenue expectations for 2022 through 2024, which is a key valuation driver. Further, Fisher argued that Hyliion hitting milestones has taken longer than expected. The analyst expects a "careful" customer adoption rate going rate and notes that market conditions such as supply chain and labor shortages are now more challenging. Fisher also thinks Hyliion shares currently reflect "overly optimistic" expectations for its sales ramp.
BUY VOLTA: DA Davidson analyst Matt Summerville initiated coverage of Volta (VLTA) with a Buy rating and $11 price target. The analyst cited the company's position as a "differentiated provider of public EV charging infrastructure" given its owner-operator model that generates revenues from installation, operation, maintenance, ad-hosting on large media screens as well as kWh sales. Summerville added that he sees Volta revenue growing organically by 160%-170% without considering any potential contributions from future M&A or potential upside that could come from its entry into the European market presently underway.
ANALYST DAY COULD IGNITE MOMENTUM: Barclays analyst Moses Sutton upgraded Plug Power (PLUG) to Equal Weight from Underweight with an unchanged price target of $27. The analyst believes the company's analyst day on October 14 "could reasonably ignite some momentum" and drive the shares toward a new baseline for the next 6-12 months, or at least set a high-$20s "floor." Further, an infrastructure bill is another potential upside driver, even if the potential of passage is under 50%, the analyst added.
MOST ATTRACTIVE: Jefferies analyst Alan Lau initiated coverage of JinkoSolar (JKS) with a Buy rating and $80.20 price target. The analyst expects a seasonal recovery in PV installations in the fourth quarter and "would not be surprised" to see solar demand surge to 200GW in 2022 from about 160GW in 2021. Lau sees JinkoSolar as "most attractive" among Chinese modules players in the alternative energy space and is bullish on the modules segment as he sees strong growth potential supported by carbon neutrality policies around the globe. Modules could be one of the few segments in alternative energy to see both margin and volume improvement in 2022 as upstream costs decrease, the analyst added.
PROVEN PRODUCT: Wedbush analyst Daniel Ives initiated coverage of Xos (XOS) with an Outperform rating and $10 price target. The analyst notes that Xos looks to tap into the growing EV market by leveraging its "highly experienced" management and engineering teams to address the medium to heavy-duty last mile and return-to-base vehicles. Acting as one of the first movers in this burgeoning area of the EV market, Xos has a proven product that is already on the road with the ongoing development of future iterations, Ives contended.
Xos
+0.16 (+3.51%)
JinkoSolar
+3.56 (+7.53%)
Plug Power
+0.93 (+3.42%)
Volta
-0.13 (-1.64%)
Hyliion Holdings
-0.835 (-10.68%)
Nio
+0.49 (+1.37%)
Hon Hai Precision
+0.15 (+1.97%)
Lordstown Motors
+0.005 (+0.10%)
General Motors
+0.14 (+0.24%)
Ford
+0.095 (+0.63%)
Amazon.com
-21.6 (-0.66%)
Tesla
+10.82 (+1.38%)