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.
FORD TO BOOST EV SPENDING: Shares of Ford Motors (F) were on the rise again on Thursday after the company said it will increase spending on electric vehicles to $30B, and that it expects EVs to make up 40% of the company's auto production by 2030. Following the news, RBC Capital analyst Joseph Spak upgraded the stock to Outperform as he has increased confidence in the company's financial targets and believes Ford has addressed investor concerns with its battery electric vehicle strategy.
RIVIAN POTENTIAL IPO: Rivian, which is backed by Amazon (AMZN) and has a partnership with Ford, is said to be seeking about $70B in a potential IPO and has picked the banks to underwrite the deal, Bloomberg's Kiel Porter, Katie Roof, and Edward Ludlow reported, citing people familiar with the matter. Goldman Sachs (GS), JPMorgan (JPM) and Morgan Stanley (MS) are among those said to be selected to work on bringing the company public, the authors noted. The company, which is among several electric-vehicle startups trying to take on industry leader Tesla (TSLA), could come public this year, the report added.
CONSUMER REPORTS TOP PICK STATUS: "Some Tesla vehicles are losing critical performance designations from testing organizations including Consumer Reports and the Insurance Institute for Highway Safety because the government's top vehicle safety rating agency says the vehicles may lack some key advanced safety features, including forward collision warning and automatic emergency braking," Consumer Reports' Keith Barry said. "The missing safety features are the result of the automaker's decision to no longer equip Model 3 sedans and Model Y SUVs with radar sensors, instead relying on a camera-based system called Tesla Vision. In a blog post, the EV carmaker said that Tesla Vision-equipped cars will use a camera and machine learning software called a neural network to perform functions once reliant on radar. However, these vehicles "may be delivered with some features temporarily limited or inactive" for a "short period" of time as the automaker introduces the new technology, according to the post. AEB and FCW are currently standard on almost three-quarters of 2021 passenger vehicles, including many entry-level models.
TESLA TO PAY IN ADVANCE FOR CHIPS: Tesla is set to pay in advance for chips to secure its supply due and is exploring potentially buying a plant to produce chips in an effort to overcome the global shortage on the materials, The Financial Times' Katherin Hille, Edward White, and Richard Waters reported, citing people familiar with the matter. Tesla is actively discussing with operators in Taiwan, South Korea, and the U.S. to secure a chip supply while the purchase of a plant is in the preliminary stage, the sources add.
BUY NIKOLA: BTIG analyst Gregory Lewis initiated coverage of Nikola (NKLA) with a Buy rating and $18 price target. The company continues to move forward with its "dual-pronged strategy" of helping transition the heavy-duty Class 8 truck market to battery-electric trucks and hydrogen fuel cells, Lewis tells investors in a research note. While he expects some initial production delays, Lewis expects Nikola's attery-electric trucks production to start ramping in the second half of 2022 with the hydrogen hydrogen fuel cells solution hitting the market by 2024.
INCREASING REVENUE VISIBILITY, MARKET SHARE: Citi analyst Jeff Chung upgraded Nio (NIO) to Buy from Neutral with a price target of $58.30, up from $57.60, after the analyst lifted his 2021 China new energy vehicles sales forecast to 2.52M units from 1.79M units and 2025 sales forecast to 7.84M units from 6.86M units. For Nio, Chung expects acceleration in the second quarter order backlogs to "substantially increase" its second half of 2021 revenue visibility and market share, followed by a 2022 new model cycle. Chung also expects accelerating orders and believes Nio is the new energy vehicles sector's "Beta proxy."
'CONSIDERABLE UNCERTAINTY': Deutsche Bank analyst Emmanuel Rosner initiated coverage of Lordstown Motors (RIDE) with a Hold rating and $8 price target. The analyst argued that while the market opportunity is large and Lordstown's truck received decent initial interest from potential fleet customers, there is "considerable uncertainty ahead." In the near-term, the company has encountered large operational and supply chain challenges and material cost overruns in its "aggressive ramp up" toward production, and is "now in urgent need of capital," Rosner told investors in a research note. Assuming Lordstown can get new capital, interest from fleets could get negatively impacted by competition from incumbent new electric vehicle entries, including Ford's new F-150 Lightning with lower price point, he added.
Meanwhile, R.F. Lafferty analyst Jaime Perez downgraded Lordstown Motors to Hold from Buy with a price target of $9, down from $35, after the company reported worse than expected first quarter losses and management said it expects production this year "would at best be 50% of [the company's] prior expectations." A 50% decline in production implies less than expected deliveries for 2021, said Perez, who has cut his revenue estimates for 2021 and 2022 as he assumes that ramping up production will depend on Lordstown's ability to raise more capital, higher startup cost, and higher component costs.
GREEN HYDROGEN MOMENTUM: BTIG analyst Gregory Lewis initiated coverage of Plug Power (PLUG) with a Buy rating and $40 price target. Hydrogen energy is "still largely in its infancy" and there remains a lot of work to be done, largely on the cost and infrastructure side, by Plug and its partners to make green hydrogen a widely accepted energy source for industrial and transportation applications, Lewis said. The analyst, however, expects momentum for green hydrogen to build this decade and views Plug as "a well-capitalized, first-mover."
Ford
+0.125 (+0.86%)
Amazon.com
+2.96 (+0.09%)
Goldman Sachs
+9.86 (+2.65%)
Morgan Stanley
+1.77 (+1.95%)
JPMorgan
+2.01 (+1.22%)
Tesla
+1.99 (+0.32%)
Nikola
+0.395 (+2.63%)
Nio
+3.295 (+8.53%)
Lordstown Motors
+0.55 (+5.55%)
Plug Power
+0.06 (+0.20%)