What You Missed This Week in EVs and Clean Energy

Institutional investors and professional traders rely on The Fly to keep up-to-the-second on breaking news in the electric vehicle and clean energy space, as well as which stocks in these sectors that the best analysts on Wall Street are saying to buy and sell.

From the hotly-debated high-flier Tesla (TSLA), Wall Street’s newest darling Rivian (RIVN), traditional-stalwarts turned EV-upstarts GM (GM) and Ford (F) 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.

TARIFFS ON CHINESE EVS: The Biden administration is preparing to raise the levy on Chinese electric vehicles by roughly quadruple as it gets set to hike tariffs on clean-energy goods from China in the coming days, people familiar with the matter told The Wall Street Journal’s Andrew Duehren and Andrew Restuccia. Some U.S.-listed Chinese EV makers include Nio (NIO), XPeng (XPEV), Li Auto (LI) and Zeekr (ZK).

TESLA VOLATILITY: Morgan Stanley sees Tesla’s upcoming shareholder vote “having significance to the long-term strategic direction of the company” and expects the event could “drive material volatility in the stock.” On June 13, shareholders will vote on two main topics, namely redomiciling Tesla’s headquarters from Delaware to its “business home” of Texas and a roughly $50B executive pay package for Elon Musk, which was voided by a Delaware judge in January, the analyst noted. From its talks with investors, the firm finds “a surprisingly little amount of attention being paid to its significance to the performance of the stock,” but it recommends “Tesla watchers keep June 13th highlighted on the calendar” as Elon Musk has expressed his concern and discomfort with moving Tesla further into the field of AI without having around 25% voting in the event this “powerful technology goes awry.” While an approval of the CEO’s 2018 pay package would not, by itself, give Elon Musk a 25% voting block, “we view the outcome as significant,” added Morgan Stanley, which keeps an Overweight rating and $310 price target on Tesla shares.

Click here to check out Tesla’s recent Media Buzz Sentiment as measured by TipRanks.

QUARTERLY RESULTS: Rivian reported Q1 EPS ($1.45), with consensus at ($1.17), and Q1 revenue $1.2B, with consensus at $1.16B. Adjusted EBITDA for the first quarter of 2024 was $(798) million as compared to $(1,020) million for the same period last year. Rivian also backed FY24 unit production view 57,000.

Following the results, Cantor Fitzgerald lowered the firm’s price target on Rivian to $15 from $23 but kept an Overweight rating on the shares. While Rivian reaffirmed its annual 2024 production guidance of 57,000, Cantor expects Q2 to be the weakest quarter in the year and is modeling a decrease in both vehicle production and deliveries, relative to Q1. The firm is encouraged by the company’s reaffirmation to fulfill its agreement with Amazon (AMZN) to deliver up to 100,000 EDVS, and to achieve positive gross margins in Q4.

CUTTING ORDERS: Ford has initiated reductions in orders from battery suppliers in response to mounting losses in the electric-vehicle sector, Keith Naughton, Archie Hunter, and Heejin Kimof Bloomberg reported, citing sources familiar with the situation. This move comes as Ford scales back its ambitions in a market for plug-in models that is showing signs of slowing down. Despite these adjustments, Ford reportedly remains committed to its partnerships with battery suppliers, which include SK On Co. and LG Energy from South Korea, as well as China’s Contemporary Amperex Technology.

CLOUDY RECOVERY TIMING: Susquehanna downgraded SolarEdge (SEDG) to Neutral from Positive with a price target of $56, down from $92, post the Q1 report. The timing of a recovery “remains cloudy,” the firm tells investors in a research note. Susquehanna says demand has yet to recover in both the U.S. and Europe with channel inventory remaining overstuffed. As a result, it expects under-shipping could last at least through the end of this year. SolarEdge is also undertaking targeted price reduction actions to help reduce inventory, while competitive pressures likely require additional price concession, particularly in the European market, notes the firm.

On Thursday, Northland also downgraded SolarEdge to Market Perform from Outperform and removed the firm’s price target. SolarEdge has burned through $720M in cash over the last five quarters, and while the company believes cash bottomed in Q1 and will work down $1.55B inventory on the balance sheet to generate cash in the future, the firm says. “It remains to be seen what the inventory is worth.” While Northland says it hesitates “to throw in the towel at the bottom,” it adds that SolarEdge continues to struggle operationally.

BUY ARRAY: Oppenheimer upgraded Array Technologies (ARRY) to Outperform from Perform with a $20 price target. Array delivered “solid” Q1 results and strong bookings while reiterating 2024 guidance, says the firm, which believes the company has successfully addressed the firm’s two primary concerns. Oppenheimer believes the H250 and OmniTrack products meet the needs of incremental market segments for Array and that its DuraTrack price adjustment, in line with cost declines, is driving significant sales acceleration. In addition, the firm believes the company delivering on cost discipline while continuing to invest in incremental product enhancements and anticipates that cost discipline will likely translate to better than expected operating leverage.