The U.S. Department of Energy has awarded American Axle & Manufacturing Holdings (AXL) $5 million as part of its initiative to fund research projects that advance transportation. The funding will go toward enhancing the development of the Detroit company’s next-generation Electric Drive Technology.
Electric Drive by American Axle, or AAM, is an amalgam of electric propulsion solutions that can be scaled for use in all types of hybrid and battery electric vehicles, from SUVs to low-cost mini cars.
AAM will leverage the cooperative agreement funds to enhance the development of the low-cost, high-performance heavy rare earth 3-in-1 electric drive unit. The electric drive unit under development will integrate power electronics with its electric motor and gearbox. Consequently, it will achieve high-power density performance and cost competitiveness. (See American Axle & Manufacturing Holdings stock analysis on TipRanks)
“We are honored that the Department of Energy recognized the potential of AAM’s electric drive technology to power a wide range of low and zero emission vehicle applications and look forward to advancing these developments with their support,” said AAM CEO David C. Dauch.
Additionally, American Axle & Manufacturing has entered into a strategic partnership with REE Automotive. REE has developed a platform for electric vehicles which is completely flat, scalable, and modular.
Together, they will leverage AAM’s system integration capabilities and REE’s flat chassis technology as they move to bring new e-Mobility technologies to market. The strategic partnership is expected to accelerate AXL’s path to deliver e-Mobility solutions.
AAM is also fresh from reporting solid operating performance and cash flow generation. Sales in Q1 2021 totaled $1.43 billion, up from $1.34 billion a year ago. The company also bounced back to profitability after reporting net income of $38.6 million or $0.33 a share, compared to the net loss of $501.3 million it reported a year ago.
Following the $5 Million award and the inking of a strategic partnership with REE Automotive, KeyBanc Capital Markets analyst James Picariello has reiterated a Hold rating.
“The Co. announced an agreement with REE Automotive to jointly develop a new electric propulsion system for the REEcorners platform. AXL separately announced a ~$5M award from the U.S. DOT to develop next-gen electric drive technology. Together these two awards lend further credibility to AXL’s electrification efforts,” Picariello in a research note to investors.
Consensus among analysts on Wall Street is a Moderate Sell based on 4 Hold and 2 Sell ratings. The average analyst price target of $10.17 implies 2.96% downside potential to current levels.
AXL scores a 5 out of 10 on TipRanks’ Smart Score rating system, implying its performance is likely to align with market expectations.
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