From the hotly-debated high-flier Tesla, Wall Street's newest darling Rivian, traditional-stalwarts turned EV-upstarts GM and Ford 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.
NADER ASKS NHTSA TO RECALL TESLA'S FSD: Ralph Nader, a political and consumer advocate and former presidential candidate, issued a statement calling Tesla's "so-called" full self-driving technology "one of the most dangerous and irresponsible actions by a car company in decades." Nader said that, "Tesla should never have put this technology in its vehicles. Now over 100,000 Tesla owners are currently using technology that research shows malfunctions every eight minutes. I am calling on federal regulators to act immediately to prevent the growing deaths and injuries from Tesla manslaughtering crashes with this technology. The National Highway Traffic Safety Administration has the authority to act swiftly to prevent such disasters. NHTSA has been investigating Tesla and its Full Self-Driving technology for several years. NHTSA must use its safety recall authority to order that the FSD technology be removed in every Tesla. This nation should not allow this malfunctioning software which Tesla itself warns may do the 'wrong thing at the worst time' on the same streets where children walk to school. Together we need to send an urgent message to the casualty-minded regulators that Americans must not be test dummies for a powerful, high-profile corporation and its celebrity CEO."
NEW IMPORT BAN: The U.S. solar industry is facing disruptions as U.S. officials crack down on human-rights abuses in China's Xinjiang region, the same region that produces almost half of the world's crucial components for solar panels, Phred Dvorak and Katherine Blunt of The Wall Street Journal reported. Several Chinese solar-panel suppliers have had shipments detained in the U.S. or sent back as customs agents enforce a new law, industry executives and analysts said, according to the Journal. The extent of the disruption is currently difficult to determine, as importers, suppliers, and customs agents are still determining what it will take to get supplies into the country. In order to pass customs, companies must prove the imports were not produced by forced labor, but the level of documentation required has caught many off guard. Publicly traded companies in the space include Canadian Solar (CSIQ), SunPower (SPWR), First Solar (FSLR), Trina Solar (TSL), JA Solar (JASO), Yingli Green Energy (YGE).
MOVING TO WORKHORSE SIDELINES: Roth Capital analyst Craig Irwin downgraded Workhorse Group (WKHS) to Neutral from Buy with a price target of $3.50, down from $7. The company posted weak second quarter results and management cut guidance "with a laundry list of reasons for the weaker outlook," Irwin told investors in a research note. The analyst downgraded Workhorse to reflect its "deteriorating outlook" and prefers shares of GreenPower Motor (GP). As an upstream chassis supplier to Workhorse, GreenPower should book revenue around two to three months before Workhorse produces the final W750 product, Irwin noted. The analyst believes that while Workhorse's balance sheet "has room for execution," he expects "substantial dilution by year-end to avoid a going concern qualification."
PUSHED OUT CANOO EXPECTATIONS: Roth Capital analyst Craig Irwin downgraded Canoo (GOEV) to Neutral from Buy with a price target of $3.50, down from $7, after the company posted a wider than expected second quarter loss and management pushed out expectations for commercial deliveries. He expects this delayed start for commercial deliveries to increase cash needs by over $150M at a time when management "can least afford this" with $33.8M in available cash exiting Q2 and the balance sheet "already in a precarious position," said Irwin, who cited cash burn and the increased need for additional funding as reasoning for his downgrade.
LOW VISIBILITY AT VOLTA: Roth Capital analyst Craig Irwin downgraded Volta (VLTA) to Neutral from Buy with a price target of $2.50, down from $5.50. His conversations with other charge network operators lead him to believe the market is viewing Volta "more like an advertising company than a charging provider," leaving low visibility on a potential takeout of the company, Irwin told investors. Elevated cash burn and "obvious need for restructuring" lead him to move to the sidelines as he waits for "a credible execution plan," the analyst added.
BUY FIRST SOLAR: KeyBanc analyst Sophie Karp upgraded First Solar to Overweight from Sector Weight with a $145 price target. The introduction of the manufacturing tax credit for domestically produced solar panels makes First Solar the most direct immediate beneficiary of the policy in her coverage, the analyst argued. Despite relative outperformance since the news of the IRA compromise broke, Karp sees further upside, particularly given the company's progress toward capacity additions and efforts toward reducing sensitivity to input costs. She estimates that with just the existing and announced capacity, First Solar could be eligible for as much as $400M in tax credits, and should achieve at least a 20% gross margin by 2025 on $3B-plus in sales.
Guggenheim analyst Joseph Osha also upgraded First Solar to Buy from Neutral with a $135 price target. His confidence in the passage of the Inflation Reduction Act of 2022 has grown after the act passed the Senate on Sunday and of all the names in his coverage he believes First Solar appears positioned to benefit the most from the provisions of the IRA. Osha, who believes his price target is "one of the highest price targets on the street," argued that despite the stock's recent appreciation, investors "have not fully digested how transformational the IRA could be" for First Solar's business. It is not clear to him when the contemplated manufacturing credits will become effective or how exactly the benefits could split between First Solar and its customers, but "to be conservative" he is using 2024 as the basis for his analysis and assumes that the company is able to capture approximately 6c per watt on its own P&L.