Morgan Stanley says the Mustang Mach-E took major Tesla EV share in February
Welcome to The Fly's latest edition of "Charged," where we look at some analysts' notes, news and activity in the electric vehicle and clean energy space.
BEV MARKET: Morgan Stanley analyst Adam Jonas said on Wednesday that Tesla's (TSLA) share of the battery electric vehicle, or BEV, market dropped significantly in February to 69% versus 81% in the prior year. Jonas told investors in a research note that the Ford (F) Mustang Mach-E accounted for nearly 100% of the share loss. BEV sales outgrew the total market by nearly 40%, the analyst added.
CHINA GROWTH CHINA: Wedbush analyst Daniel Ives believes China could see "eye popping" demand into 2021 and 2022 across the board with Tesla's flagship Giga 3 footprint a major competitive advantage, as domestic players such as NIO (NIO), Xpeng (XPEV), and Li (LI) are also firing on all cylinders and "just scratching the surface" of the overall market opportunity in China. Further, Ives thinks that the China growth story is worth at least $100 per share in a bull case to Tesla as this EV penetration is set to ramp significantly over the next 12 to 18 months, along with major battery innovations coming out of Giga 3.
CHEAPER BATTERY OPTION FOR P7 MODEL: Xpeng, which is called "one of Tesla's most aggressive competitors in China," plans to offer a cheaper, fast-charging lithium iron phosphate, or LFP, battery pack for its P7 all-electric sedan and pass the cost-savings to its customers as pat of a plan to "help it get ahead in the country's cutthroat vehicle market," reported the South China Morning Post's Daniel Ren on Tuesday.
On Wednesday, XPeng confirmed it has expanded its product offering by launching three new vehicle versions powered by lithium iron phosphate, or LFP, batteries for the Chinese market. The three new LFP-battery powered cars, including the rear-wheel drive P7 Standard Range Smart and Premium models, and the G3 460c model, are now available to order in China, the company said. Retail prices, post subsidies, for the new Smart and Premium P7 are RMB 229,900 and RMB 239,900, respectively. Customer deliveries are expected in May 2021.
Additionally, the company announced this week its vehicle delivery results for February. XPeng delivered a total of 2,223 Smart EVs in February, consisting of 1,409 P7s, the company's smart sports sedan, and 814 G3s, its smart compact SUV. Vehicle deliveries in January and February combined represented a 577% increase year-over-year. February deliveries reflect the anticipated seasonal decline in deliveries due to the slowdown in the week-long Chinese New Year holiday, the company said, adding that it is witnessing robust customer demand as sales and delivery activities resumed after the holiday.
CRUISE IN TALKS TO BUY VOYAGE: Cruise, the self-driving vehicle company majority owned by General Motors (GM), is in discussions to buy Voyage, an autonomous technology startup, Bloomberg's David Welch, Mark Bergen, and Ed Ludlow reported, citing people familiar with the matter. The companies are in serious talks, though no agreement is imminent, the authors say. If a deal is reached, it would combine Cruise's engineering and software capabilities with Voyage's presence in the retirement community market, the authors noted.
SECOND BATTERY FACTORY IN U.S.: In an effort to expand its investment in electric vehicles, GM is considering building a second battery factory in the U.S. with joint-venture partner LG Chem, The Wall Street Journal's Ben Foldy and Mike Colias reported. A GM spokesman confirmed to The Journal that the companies are exploring building a second battery-cell plant and said a decision could come in the first half of this year.
Earlier this week, the company extended plant shutdowns due to semiconductor shortage. "GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers. GM has not taken downtime or reduced shifts at any of its truck plants due to the shortage. We continue to work closely with our supply base to find solutions for our suppliers' semiconductor requirements and to mitigate impacts on GM... Our intent is to make up as much production lost at these plants as possible. We contemplated this downtime when we discussed our outlook for 2021 last month," the company said. FOXCONN DEAL 'CHANGED NARRATIVE': Wolfe Research analyst Rod Lache upgraded Fisker (FSR) to Peer Perform from Underperform with a price target of $30, up from $21. The company's memorandum of understanding with Foxconn to form a joint-venture to co-develop an electric vehicle that will use the Fisker brand "changed the narrative," Lache told investors in a research note. The analyst noted that the vehicle is expected to launch by fourth quarter of 2023, and Foxconn is targeting 250,000 units. While Lache acknowledged that there is still "significant execution risk" with Foxconn, he argued that the arrangement helps address a number of investor concerns, including a larger market opportunity, the potential for lower costs, and partnering with a company that has "deep pockets."
ON THE SIDELINES: Baird analyst Ben Kallo initiated coverage of QuantumScape (QS) with a Neutral rating and $52 price target, which reflects his discounted free cash flow mode. The analyst acknowledged that the experienced management team, strong balance sheet, and large TAM leaves him optimistic. However, Kallo is looking for more positive proof points before becoming more constructive.
ANALYSTS DIVERGE ON PLUG: JPMorgan analyst Paul Coster upgraded Plug Power (PLUG) on Monday to Overweight from Neutral with an unchanged price target of $65. In the context of the company's "many long-term growth opportunities," the stock is attractively priced at current levels ahead of potential positive catalysts, Coster told investors in a research note. These include additional "pedestal" customer wins, partnerships and joint ventures that enable Plug Power to enter new geographies and end-market applications quickly and with modest capital commitment, he added.
On Tuesday, Barclays analyst Moses Sutton downgraded Plug Power to Underweight from Equal Weight with a price target of $29, up from $21. The analyst sees a "disconnect" between fundamentals and the stock's valuation. There's value in Plug Power's green hydrogen strategy, but the company is now "shouldering the brunt" of the technology cost curve risk, Sutton told investors in a research note.
That same day, Plug said it was delaying filing its 10-K annual report due to shortened deadline. The company stated that, "For the year ended December 31, 2020, Plug Power became a large accelerated filer for the first time and, as a result, the company has a shortened filing deadline of 60 days rather than 75 days to file its Annual Report on Form 10-K for the year ended December 31, 2020. The company requires additional time to complete the procedures relating to its year-end reporting process, including the completion of the company's financial statements and procedures relating to management's assessment of the effectiveness of internal controls, and the company is therefore unable to file the Form 10-K by March 1, 2021, the prescribed filing due date."
U.S. GREEN ENERGY TRANSITION: Bernstein analyst Meike Becker initiated coverage of NextEra Energy (NEE) with an Outperform rating and $88 price target. The analyst believes the company is in the "pole position" to capture the U.S. green energy transition "dream" and the accelerating opportunities to invest in renewables, storage, hydrogen and electricity networks.
Keywords: charged, ev, electric vehicles, clean energy, solar