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.
MUSK DEFENDS TESLA'S SOLARCITY ACQUISITION: A group of Tesla (TSLA) shareholders have alleged Musk engineered the $2.6B acquisition of SolarCity, a company Musk helped found, to bail out the company that ran out of funding options, Financial Times' Sujeet Indap reported. Musk claims SolarCity and Tesla were a natural combination and that he "had no financial gain one way or the other." If the court decides Musk controlled the deal and it was not in the shareholders' interests, he could be liable to pay the amount Tesla is deemed to have overpaid.
SEC SUBPOENAS: In a regulatory filing last week, Lordstown Motors (RIDE) stated that, "The company has also received two subpoenas from the SEC for the production of documents and information, including relating to the merger between DiamondPeak and Legacy Lordstown and pre-orders of vehicles, and the company has been informed by the U.S. Attorney's Office for the Southern District of New York that it is investigating these matters. The company has cooperated, and will continue to cooperate, with these and any other regulatory or governmental investigations and inquiries."
RIVIAN DELAYS PRODUCTION: Rivian, the electric pickup maker that is backed by Amazon (AMZN) and Ford (F), is pushing back plans to start production of its debut vehicle until September due to the "cascading impacts of the pandemic," Bloomberg's Edward Ludlow reported. Production of its first vehicle was supposed to start this month, but Rivian CEO R.J. Scaringe said in a letter sent Friday to customers that "Everything from facility construction, to equipment installation, to vehicle component supply (especially semiconductors) has been impacted by the pandemic," Ludlow added.
SOME CHEVY BOLT EVS MAY IGNITE: General Motors (GM) and the National Highway Traffic Safety Administration, or NHTSA, are now warning owners of certain Chevy Bolt EVs to park outside and away from the home or other buildings after two of the vehicles caught on fire, The New York Post's Will Feuer of The New York Post reported. The NHTSA warned the battery cell packs from 2017-2019 Bolt EVs have the potential to smoke and light on fire, which can then spread to the rest of the car and the surrounding area. General Motors recalled nearly 51,000 cars last year to remedy this issue, but both electric cars that recently caught on fire had already received the recall fix.
PREFERRED PROVIDER: EVgo (EVGO) announced that General Motors has named it a preferred provider for the company's Ultium Charge 360 fleet service. With the announcement, EVgo will deploy comprehensive new charging and infrastructure solutions specifically for GM fleet and BrightDrop customers; in addition, these customers can receive program discounts at EVgo's nationwide network of more than 800 public fast charging locations. Through the GM Ultium Charge 360 service, EVgo will offer GM fleet and BrightDrop customers turnkey fleet solutions tailored to meet their unique and diverse needs, from fleet transition planning to equipment provisioning, infrastructure deployment, dedicated depots, integrated software solutions and ongoing operations and maintenance.
EV VANS: General Motors said it will use German parts supplier Kuka AG (KUKAF) to make the initial small production run of its new electric commercial van in an effort to get the van quickly into the hands of FedEx (FDX), Reuters' Ben Klayman reported. Travis Katz, CEO of the U.S. car maker's BrightDrop commercial van business told Reuters that the decision to turn to Kuka to make the EV600 vans is not typical in the sector, though it shows the company's desire to stick to a plan to launch the vehicle later this year. "We are working alongside Kuka for initial low-volume production to keep up with market demand and remain on track to deliver our first EV600 order later this year," Katz said.
EQT TO ACQUIRE COVANTA: Covanta (CVA) announced that it has entered into a definitive agreement with EQT Infrastructure whereby EQT will acquire all shares of Covanta common stock for $20.25 per share. The purchase price represents an approximately 37% premium to Covanta's unaffected share price of $14.78 on June 8th, the day prior to initial media speculation of a transaction. The acquisition is subject to Covanta shareholder approval, as well as customary government approvals, and is expected to close in the fourth quarter of this year. The agreement resulted from a competitive sale process and is not subject to a financing condition. Covanta will maintain its corporate headquarters in Morristown, New Jersey and its management team is expected to remain in place.
BUY PLUG: On July 15, Seaport Global analyst Tom Curran initiated coverage of Plug Power (PLUG) with a Buy rating and $36 price target. The analyst noted that low-carbon hydrogen economy "finally seems to be incipient" and argued that Plug is "the best-positioned technology provider for its emergence."
ON THE SIDELINES: Seaport Global analyst Tom Curran initiated coverage of Enphase Energy (ENPH) with a Neutral rating. While Enphase should be able to generate peer-leading revenue growth into 2023, the stock is "fully discounting the company's bull case," Curran contended.
CATALYSTS HAVE PLAYED OUT: Citi analyst J.B. Lowe downgraded First Solar (FSLR) to Neutral from Buy with a $100 price target. The analyst said that, since April, the stock has flipped from lagging its module producer peers and the broader solar sector year-to-date to outperforming. Lowe added that several of the catalysts he laid out in his April upgrade have "played out."
'A REFRESHINGLY' PROVEN BUSINESS: Raymond James analyst Justin Jenkins last week initiated coverage of Renewable Energy Group (REGI) with an Outperform rating and $72 price target. Renewable has grown into the country's largest producer of biodiesel with an expansionary vision towards renewable diesel, Jenkins told investors in a research note. The analyst believes the company "presents a refreshingly proven business," playing a role in the world's shift towards lower-carbon fuels.
Evercore ISI analyst Todd Firestone also started coverage of Renewable Energy but with an In Line rating and $65 price target. Renewable Energy is the nation's largest biofuels producer and bulls regard it as having a diverse portfolio with embedded first-mover type of advantages in biodiesel, but bears regard its value as being to tied to credits due to expire at the end of 2022, Firestone told investors. Questions on feedstock access and costs can pressure margins over the next several years, he added.
Lordstown Motors
-0.235 (-2.75%)
Tesla
-8.42 (-1.31%)
Amazon.com
-59.47 (-1.66%)
Ford
-0.38 (-2.79%)
General Motors
-1.25 (-2.25%)
EVgo
-0.84 (-7.14%)
Kuka
+ (+0.00%)
Covanta
-0.04 (-0.20%)
FedEx
+1.28 (+0.44%)
Plug Power
-0.32 (-1.23%)
Enphase Energy
-0.64 (-0.39%)
First Solar
-1.18 (-1.41%)
Renewable Energy
-3.73 (-5.80%)