Charged: Tesla settles technology theft suit with Rivian

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.

THEFT LAWSUIT: Tesla has reached a “conditional” settlement in its 2020 lawsuit accusing Rivian of poaching its employees in order to steal electric-vehicle trade secrets, Malathi Nayak of Bloomberg reports. Tesla did not disclose the specifics about the agreement in a court filing, but told a California judge it seeks dismissal of the case by December 24th upon satisfactory completion of the terms.

POLLUTANTS, WASTEWATER: The door to Tesla’s giant casting furnace in its Austin, Texas plant, which melts metal to be molded into Model Y parts, wouldn’t shut, spewing toxins into the air and raising temperatures for workers on the floor to as high as 100 degrees, Susan Pulliam, Emily Glazer, and Becky Peterson of The Wall Street Journal reports. Additionally, hazardous wastewater from production was flowing untreated into the city’s sewer, in violation of state guidelines. Tesla left the problems largely unaddressed during a ramp-up, resulting in the plant dumping toxic pollutants into the environment near Austin for months.

DRIVEN BY MOMENTUM: UBS raised the firm’s price target on Tesla to $226 from $197 but kept a Sell rating on the shares. The firm notes shares of Tesla have spiked 40% since the U.S. election, adding over $350M of market cap. Since the election, some policy proposals have emerged that could favor Tesla, but UBS tells investors in a research note that the removal of the EV consumer tax credits is not an absolute positive for U.S. electric vehicle and Tesla demand, and if credits go away, further pricing actions may be needed. The firm continues to believe that FSD is improving, but the product is not ready for wide scale robotaxi deployment, and argues that rise in Tesla stock is mostly driven by momentum.

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LOWER FUEL-EFFICIENCY REQUIREMENTS: Donald Trump’s incoming administration is looking to lower fuel-efficiency requirements for new cars and light trucks as part of plans to unwind President Biden policies, Allyson Versprille and Jennifer Dlouhy of Bloomberg report, citing people familiar with the matter. Trump advisers plan to reexamine fuel economy requirements that were finalized in June, and are also targeting related standards imposed by the Environmental Protection Agency that limit tailpipe emissions of carbon dioxide and smog-forming compounds, sources told Bloomberg. The plan takes aim at a collection of President Biden’s policies to cut greenhouse gas emissions and push the auto industry toward electrification, Bloomberg says. Publicly traded companies in the car space include Ford, General Motors, Honda (HMC), Mercedes-Benz (MBGYY), Nissan (NSANY), Stellantis (STLA), Tesla, Toyota (TM) and Volkswagen (VWAGY).

SELL NIO: Goldman Sachs downgraded Nio (NIO) to Sell from Neutral with a price target of $3.90, down from $4.80. The firm expects limited new model pipeline for the Nio brand and slow production ramp-up for Onvo to position the company unfavorably into 2025, with potentially intensified competition starting in the first quarter of next year. In addition, as the company continues to expand the sales network of the Onvo brand, growing expenses will drag down operating losses, hindering Nio’s path to profitability in the next three years, Goldman tells investors in a research note. The firm sees 24% downside risk to the consensus 2025 non-GAAP net loss estimate.

MOVING TO THE SIDELINES: On Wednesday, Macquarie had also downgraded Nio but to Neutral from Outperform with a price target of $4.80, down from $6.60, following weaker demand for the core Nio brand and a slower Onvo production ramp led to an 18% miss for the Q4 revenue guidance midpoint compared to consensus. The firm, which says it is concerned about comments that 50%-60% of Onvo orders were affected by the expiration of local purchase subsidies by end-2024, lowered its FY24 and FY25 sales estimates by 5% each.

Additionally, Goldman downgraded XPeng (XPEV) to Neutral from Buy with a $12.50 price target, citing valuation following the stock’s outperformance over the last two months. The firm remains cautious on XPeng’s competitive environment going into 2025, especially in Q1, which it notes has historically seen intensifying price cuts. There is uncertainty in terms of the continuation of trade-in subsidy, as well as the potential timing and magnitude into 2025, Goldman tells investors in a research note. The firm XPeng’s valuation as fair at current levels.

NEGATIVE CATALYST WATCH: Last week, Citi lowered the firm’s price target on XPeng to $13.70 from $14.60 and kept a Neutral rating on the shares. The firm also opened a “90-day negative catalyst watch” on the share. Citi sees Q4 downside margin risk on expected sharp vehicle selling price decline quarter-over-quarter with “poor” sales mix on the Mona ramp-up. It also sees potential new order decline from the second week of November on subsidy phaseouts. XPeng’s Q4 volume growth has been priced in from now, the firm told investors in a research note.

MINIMAL VISIBILITY: Needham downgraded Blink Charging (BLNK) to Hold from Buy without a price target. The firm sees minimal visibility into a sustained end market improvement for Blink. The company’s leverage to auto dealerships and electric car makers drove triple digit revenue growth in 2023, but its growth has been elusive thus far in 2024, Needham tells investors in a research note. The firm continues to see an “eventual tailwind” for charging equipment given the delta between the growth in electric vehicles on U.S. roads and installed equipment, but says the timing of any tailwind is now more uncertain given the change in White House leadership. This lowers its confidence in a durable equipment ordering cycle that would benefit Blink Charging.

The firm also downgraded ChargePoint (CHPT) to Hold from Buy and removed its previous price target. ChargePoint was the first to signal end market weakness, guiding down revenues in late 2023, notes Needham, which sees minimal visibility into a sustained end market improvement. ChargePoint has demonstrated “commendable” operating expense leverage, but a lack of revenue growth has led to a pushout in previously communicated adjusted EBITDA profitability guidance, says the firm, which also argues that the timing of any EV tailwind is now more uncertain given the change in White House leadership.

POSITIVE CATALYST WATCH: JPMorgan placed EVgo (EVGO) on “Positive Catalyst Watch,” while keeping an Overweight rating on the shares with an $8 price target. The firm came away from management meetings with incremental confidence around the likelihood of the Department of Energy loan closing imminently and the durability of the business model in any electric vehicle demand environment. JPMorgan says this supports a broader preference for EV charging owner-operators over hardware-software providers. EVgo shares will rally on news of the DOE loan closing, followed by positive mid-term guidance revisions to profitability targets, the firm tells investors in a research note.

NEAR-TERM VALUATION CONCERNS: HSBC downgraded Bloom Energy (BE) to Hold from Buy with a price target of $24.50, up from $17.20. The firm has near-term valuation concerns following the stock’s recent rally. The shares have rallied 79% in the previous three trading sessions on a data center deal, the firm tells investors in a research note. HSBC believes that while Bloom “has plenty of excess” manufacturing capacity in the near term, it may need to increase capacity at its Fremont facility.

SHARES LOW ENOUGH: Guggenheim upgraded SolarEdge (SEDG) to Neutral from Sell and removed the firm’s prior $10 price target. The decline in the stock has brought the share price close to the previous target of $10 and though the firm made some additional revisions to its model, at this point it regards the stock as fairly valued.

STRUCTURAL CASH GENERATION: Piper Sandler downgraded Sunrun (RUN) to Neutral from Overweight with a price target of $11, down from $23. The firm sees the potential for Sunrun to generate cash in 2025 with the potential for some safe harbor to extend higher credits into 2026. Nevertheless, a potential return to the pre-Inflation Reduction Act subsidy progression suggests the company would need to significantly reduce costs through the end of the decade while increasing pricing to generate levered cash, Piper tells investors in a research note. The firm lacks conviction on Sunrun’s structural cash generation under a lower tax credit environment and struggles with share catalysts “other than a soft IRA landing or a rapid decline in interest rates.”