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.
BOLT EV RECALL COSTS: General Motors (GM) announced that it has reached an agreement under which LG Electronics will reimburse GM for costs and expenses associated with the recall of Chevrolet Bolt EVs and EUVs due to manufacturing defects in battery modules supplied by LG. As a result of the agreement, GM will recognize an estimated recovery in its third-quarter earnings that will offset $1.9B of $2B in charges associated with the recalls, the company said in a statement. "LG is a valued and respected supplier to GM, and we are pleased to reach this agreement," said Shilpan Amin, GM vice president, Global Purchasing and Supply Chain. "Our engineering and manufacturing teams continue to collaborate to accelerate production of new battery modules and we expect to begin repairing customer vehicles this month."
ANOTHER 'ROBUST' QUARTER: Wedbush analyst Daniel Ives expects Tesla (TSLA) to report another "beat across the board" this week and exceed Street estimates of $13.7B and $1.54, respectively. The analyst noted that earlier this month Tesla announced 241,000 deliveries versus the Street's 221,000 and bull case whisper numbers in the 225,000/230,000 range. With the chip shortage a major overhang on the auto space and logistical issues globally, these delivery numbers combined with this week's likely earnings beat speaks to an EV demand trajectory that looks quite: robust" for Tesla heading into the fourth quarter and 2022, Ives contended. The analyst has an Outperform rating and a price target of $1,000 on the shares.
BUY LI AUTO: Nomura analyst Martin Heung initiated coverage of Li Auto (LI) with a Buy rating and $43.40 price target, which implies 55% upside. Li Auto is "renowned as one of the star domestic EV start-ups" in China along with Nio (NIO) and XPeng (XPEV), Heung noted. He sees Li having differentiated itself from the pack with its unique extended-range-electric-vehicle offering, given his view that EREVs "allow more skeptical car buyers to dip their toes in the EV world" without worrying as much about battery charging. EREV's duel-power-sourced solution not only reduces the common problems experienced by battery EV users, such as range anxiety and long charging queues, they also allows OEMs to unlock regional markets that do not have the necessary recharging infrastructure, Heung contended.
BULLISH ON LEAR: Evercore ISI analyst Chris McNally upgraded Lear (LEA) to Outperform from In Line with a price target of $220, up from $170. While his supplier estimates for revenue and production have been reset 4% and 2% lower, respectively, for fiscal years 2021 and 2022 and by about 20% and 10%, respectively, for those two fiscal years for earnings per share, his fiscal year 2023 estimates are unchanged and his targets are rolled forward to fiscal year23 and move higher by 15%, on average, for the suppliers he covers, McNally told investors.
WELL POSITIONED: Morgan Stanley analyst Stephen Byrd upgraded Plug Power (PLUG) to Overweight from Equal Weight with a price target of $40, up from $35. The analyst believes Plug is well positioned to be a leader in the hydrogen economy, and says the company's investor day, accelerating growth, legislative support and an attractive risk/reward profile drive his upgrade to Overweight. With the announcement of several strategic partnerships, $4B of cash on its balance sheet, accelerating revenue growth and the potential for "significant upside" from legislative support, Plug Power is well positioned "at the outset of a significant transition point" in energy with the adoption and expansion of the use of green hydrogen, Byrd argued.
ON THE SIDELINES: Truist analyst Tristan Richardson initiated coverage of Bloom Energy (BE) with a Hold rating and $25 price target as part of a broader research note. The analyst cited expectations of accelerating positive trends in Solar & Energy Storage, with global policy frameworks around decarbonization driving policy support, along with expectations of 20% growth in residential installations for 2022 and 2023 after a "substantial rebound" coming in 2021. Richardson added that Bloom Energy offers a "unique" C&I opportunity as the solid oxide fuel cell technology that Bloom has developed is focused on always-on baseload power.
UNIQUE DEALER MODEL: Truist analyst Tristan Richardson initiated coverage of Sunnova Energy (NOVA) with a Buy rating and $50 price target. The analyst sees the residential solar installer growing faster than the broader market because of its unique dealer model and comprehensive product offering, resulting in a "ramp of corporate cash flows and value generation for shareholders."