Musk says Tesla will accept bitcoin payments when miners use more clean energy
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.
BITCOIN AS A PAYMENT: Tesla's (TSLA) CEO Elon Musk said via Twitter that, "Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market. When there's confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions."
CHINA DELIVERIES: Tesla's China deliveries were up 29% in May to 33,463 compared to 25,845 in April, Bloomberg reported, citing data from China's Passenger Car Association. PCA Secretary General Cui Dongshu said he expects even higher retail sales of Tesla in June.
Commenting on the news, Wedbush analyst Daniel Ives noted that there was "a lot of nervousness on the Street" heading into the CPCA numbers out of China for the month of May after Tesla saw a very soft April performance. The Street was bracing for the worst and instead this morning got a robust 33,463 deliveries including 21,936 sold domestically and 11,527 exported, he adds. Ives pointed out that this was a 29% jump from the month of April and that the domestic cars sold in country were north of 20k as Tesla appears to have handled the shaky China PR issues and turbulence well as demand rebounded well ahead of expectations. The analyst believes starting in the month of June Tesla will be on a 300k run-rate for deliveries in China as the growth story appears back on track in this linchpin region despite "the skeptics and haters piling on from the month of April," which he continues to view as an anomaly rather than the norm. Ives has an Outperform rating and a price target of $1,000 on the shares.
Meanwhile, GLJ Research analyst Gordon Johnson said he believes Tesla's China orders during the first two months of the second quarter were down 69% versus the the first two months of the first quarter. With Tesla's orders "in free-fall," deliveries in China will likely disappoint for the second quarter, Johnson told investors in a research note. The analyst believes believes Tesla's sales in China have peaked at around 20,000 cars per month. "Should this prove to be the case, that would take a massive chunk out of the TSLA bull case," Johnson said. The analyst has a Sell rating on the shares with a $67 price target.
LORDSTOWN CEO, CFO RESIGN: Shares of Lordstown Motors (RIDE) are under pressure on Monday after the electric truck maker said its CEO Steve Burns and CFO Julio Rodriguez have resigned, effectively immediate. The company also said it has received a statement regarding the results of the investigation conducted by the Special Committee of its Board of Directors into the report published by Hindenburg Research on March 12, 2021. The Special Committee's investigation concluded that the Hindenburg Report is, "in significant respects, false and misleading. In particular, its challenges to the viability of Lordstown Motors' technology and timeline to start of production are not accurate." The investigation did, however, identify issues regarding the accuracy of certain statements regarding the company's pre-orders.
R.F. Lafferty analyst Jaime Perez downgraded Lordstown Motors to Sell from Hold with a price target of $3, down from $9, after the company announced that CEO Steve Burns and CFO Julio Rodriguez resigned their positions, effective immediately. "With the level of uncertainty increasing in the future" of the company, the analyst believes a downgrade to Sell is prudent.
ADDITIONAL FUNDS: Lordstown Motors shares had rallied to positive territory on Wednesday afternoon after the electric truck maker said it was in talks with multiple parties to raise funds, a disclosure that comes a day after Lordstown warned that there was "substantial doubt" about its ability to continue as a going concern in the next year due to problems in funding production of its vehicle, Reuters' Ben Klayman and Chris Prentice reported. In a statement, the company said it has "adequate capital to continue operations, meet supplier obligations and begin limited production," but will need to raise additional funds and was in talks to do that. "We are debt free, have significant tangible assets and multiple viable avenues to raise capital including asset-backed financing, equity, equity-related or debt financing, loans, as well as potential strategic investments over the longer term," the company added. "We are already in active conversations with multiple parties to do so."
On Tuesday, RBC Capital analyst Joseph Spak initiated coverage of Lordstown Motors with an Underperform rating and $5 price target. The fleet pickup market Lordstown is going after has "attractive characteristics" but is "ultimately small and fiercely competitive," Spak told investors in a research note. The analyst sees risk from the company's hub motor tech choice and his forecasts are significantly lower than management targets and consensus estimates. Spaks also views "significant capital raises as necessary" for Lordstown.
CALIFORNIA HVIP: California's Hybrid and Zero-Emission Truck and Bus Voucher Incentive is now accepting new voucher requests, with a total of $165M available in two waves: half of the amount on June 8 and the other half two months later on August 10. Class 8 trucks performing drayage operations as well as any vehicles purchased by a public government entity are exempt from the two-month pause.
Commenting on the program kick off, Colliers analyst Michael Shlisky said he views the initiative as an "important development" for the electric and clean vehicles stocks in his coverage universe, as the vouchers encourage trial. The analyst noted that fleets can only obtain 30 vehicles with a voucher. At the high-end, this could mean a $7.2M benefit for a fuel-cell electric bus fleet, but for a typical large delivery fleet using Class 6 Walk-in Vans, the maximum benefit is likely to be closer to $2.5M, he added, noting that the maximum benefit to a Class 8 fleet is $3.6M. His top picks in the EV-CV space include Lightning eMotors, Electric Last Mile, and Hyzon Motors. Electric Last Mile is going public thanks to a special purpose acquisition company merger with Forum Merger III Corp. (FIII), while Hyzon is combining with SPAC Decarbonization Plus Acquisition Corp. (DCRB).
Discussing the voucher program's potential impact for some EV-CV names, Shlisky noted that there are no Hyzon vehicles in the California HVIP program for this year. Most of Hyzon's near-term sales will be in Europe, Asia, and Australia. But when Hyzon is ready for California, which he believes will happen in 2022, Class 8 FCEVs can get double the subsidy versus BEVs under current rules. Regarding Electric Last Mile, its Class 1-2 Urban Delivery vehicles are not of the right weight class to qualify for HVIP Vouchers. However, the company's Urban Delivery is eligible for the federal $7,500 EV credit in all states. This will have the effect of making the upfront cost compared to an internal combustion engine, or ICE, truck essentially equal, with fuel and maintenance savings to boot. The analyst views this subsidy as a "game-changer" for Electric Last Mile, as it makes the adoption of its vehicle a "no-brainer" for cost-minded customers. The analyst also highlighted that Lightning eMotors has a full set of Class 3-6 vehicles eligible for vouchers, including $45,000 for a Class 3 Transit T-350, $60,000 for an F-550 passenger vehicle, and $85,000 for a Class 6 Chevrolet/Isuzu truck, among many others.
According to the State of California, no Nikola (NKLA) vehicles are currently eligible for HVIP Vouchers as the company's Tre BEV and other vehicle models are not commercially available at this time, Shlisky said. He expects the Tre BEV to be included in next year's program, if Nikola's development and production milestones are met. While Shyft Group (SHYF) does not currently make EVs, many EV Class 5-7 delivery vans are on California's approved-vehicle list and the company likely will have ample upfit opportunities, the analyst contended. He believes this includes many products from Motiv, with which Shyft has a JV for Walk-In Vans. Lastly, Shlisky pointed out that Workhorse (WKHS) has obtained approval for its C-650 and C-1000 Standard and Extended Range Walk-In Vans, all of which can generate a $45,000 voucher.
BUY FISKER: RBC Capital analyst Joseph Spak initiated coverage of Fisker (FSR) with an Outperform rating and $27 price target. Fisker's plans to bring battery electric vehicles to market utilizing third-party platforms and contract manufacturing is "differentiated," said Spak, who thinks saving capital on building out a platform and production facility should allow Fisker to spend resources to differentiate the customer experience. Because of this asset-light strategy, he compares Fisker to Apple (AAPL) and sees it having less risk than other BEV startups on hitting it start-of-production target.
TRACKING MARKET GROWTH: FTCI Piper Sandler analyst Kashy Harrison last night initiated coverage of FTC Solar (FTCI) with an Overweight rating and $15 price target. FTC manufactures utility-scale tracking mounting systems which move solar panels throughout the day and improve productivity, Harrison told investors in a research note. The analyst believes the tracking market has the potential to grow to $5.0B by 2023 from $2.8B during 2020. The company is navigating a "challenged" inflationary environment, but this is reflected in the equity performance since the initial public offering, Harrison added.