What You Missed This Week in EVs and Clean Energy

Oppenheimer downgrades Tesla to Perform on Twitter-related risks

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.

TWITTER-RELATED RISKS: On Monday, Oppenheimer analyst Colin Rusch downgraded Tesla to Perform from Outperform. While the analyst continues to see Tesla evolving EV and autonomous technology in advance of peers and driving costs to levels those peers will struggle to match-and has tried to separate Elon Musk’s non-Tesla endeavors from his analysis on Tesla-he believes Musk’s acquisition and subsequent management of Twitter now make that separation untenable. The combination of Twitter’s unclear cash needs and diminishing options for Musk to serve those needs amid the broad public backlash driven by inconsistent standards application for Twitter users, notably banning select journalists, is pushing Rusch to the sidelines on Tesla. The analyst believes increasing negative sentiment on Twitter could linger long-term, limiting its financial performance and become an ongoing overhang on Tesla’s stock.

MUSK SELLS SOME TESLA STOCK: Elon Musk disclosed last week the sale of 21.995M shares of Tesla at an average price of $162.81 for a total value of $3.58B. The sales were made between December 12 and 14. Musk still owns over 423.6M shares of the the company.

NIKOLA, PLUG POWER PARTNERSHIP: Nikola (NKLA) and Plug Power (PLUG) announced a strategic relationship focused on moving the hydrogen economy forward. The Nikola Tre fuel-cell electric vehicle – FCEV – is a hydrogen-powered cabover for longer or continuous metro-regional applications and is expected to have a range of up to 500 miles. Plug will purchase up to 75 Nikola Tre FCEVs over the next three years, with the first trucks being delivered in 2023. The acquired FCEVs will be paired with Plug’s liquid hydrogen tankers. Nikola’s hydrogen hub project in Buckeye, Ariz., is currently going through a permitting and rezoning process. Plug has been selected to provide its fully integrated liquefaction system for the project which will be engineered to produce 30 metric-tons per day in its first phase, scaling up to 150 metric-tons per day. The companies have also executed a 125 metric-tons per day Green Hydrogen Supply Agreement. This green hydrogen supply and offtake partnership is expected to provide Nikola with a minimum of 100 metric-tons per day of hydrogen, with the option to increase volume over time. The Nikola Tre battery-electric vehicle, with a range of up to 330 miles, started serial production in March 2022.

ZEEKR FILES FOR U.S. IPO: Zeekr, the upscale unit of Chinese EV maker Geely Automobile (GELYF), has confidentially filed for a U.S. initial public offering that values the company at more than $10B, Reuters‘ Julie Zhu and Scott Murdoch report, citing people familiar with the matter. "The plans come as the brand, which competes with Tesla and Chinese peer Nio (NIO), sets its sights on marketing its 001 crossover" in Europe for 2023, added the Reuters story.

BUY LUCID: BofA analyst John Murphy resumed coverage of Lucid Group (LCID) with a Buy rating and $21 price target after the company reported Q3 results and raised $1.5B of capital through a common stock sale. The analyst believes Lucid is "one of the most attractive among the universe of start-up electric vehicle automakers" and also a relative competitive threat to incumbent automakers.

WEAKENED COMPETITIVENESS: Daiwa analyst Kelvin Lau downgraded XPeng (XPEV) to Sell from Buy with a price target of $8, down from $13. The analyst sees challenges for XPeng going forward given more intense market competition and likely slower sales momentum for new energy vehicles in 2023. Xpeng’s "weakened competitiveness" is not just the result of weaker than expected deliveries of its G9 in Q4, but also due to its segment price overlapping with those of BYD and other "strong competitors," Lau tells investors in a research note. He is now "more downbeat" than the market on XPeng’s profitability over 2023 and 2024.

SELL QUANTUMSCAPE: Goldman Sachs analyst Mark Delaney downgraded QuantumScape (QS) to Sell from Neutral with a price target of $5, down from $8 as part of a broader research note on U.S. Autos & Industrial Tech. The company’s long-time to market is likely resulting in continued negative EPS and free cash flow for several years, the analyst tells investors in a research note. Delaney adds that as investors increasingly focused on earnings power and free cash flow in light of the tough macro conditions, QuantumScape shares will underperform his broader coverage.

VIRTUOUS SOLAR CYCLE: On Monday, Northland analyst Gus Richard upgraded Enphase Energy (ENPH) to Outperform from Market Perform with a $365 price target after the California Public Utility Commission, or CPUC, passed NEMS 3.0 last week, which increases incentives for storage and reduces them for residential solar. The analyst, who estimates that roughly 8%-12% of Enphase’s revenue is from California, notes that Hawaii and California have the highest percentage of renewable energy and argues that electrification drives natural gas prices higher, which drives solar and storage adoption, which drives the electrification of appliances and the need for more electricity in what he calls the "virtuous solar cycle."

This comes just days after Susquehanna analyst Biju Perincheril downgraded Enphase Energy to Neutral from Positive with a price target of $365, up from $310 as he updated estimates for the firm’s residential solar coverage. Despite "modestly higher" installation forecasts in the U.S. and strong international growth potential, Perincheril is downgrading Enphase Energy given its "relatively rich valuation," the analyst noted. Although Enphase’s execution "has been nearly flawless," the stock is "now priced for near perfection," Perincheril argues.

ON THE SIDELINES: Wolfe Research analyst Steve Fleishman initiated coverage of SunPower (SPWR) with a Peer Perform rating and fair value range of $24-$26 per share. The business model allows for "cleaner financials" and less rate exposure and he sees a lot of growth tailwinds longer-term, but in the near-term he is concerned about SunPower’s exposure to new homes and California’s new net metering rules, Fleishman tells investors.

BULLISH ON BLOOM ENERGY: UBS analyst Manav Gupta initiated coverage of Bloom Energy (BE) with a Buy rating and $35 price target. While Bloom Energy is still in the process of commercializing its Solid Oxide electrolyzer, these are 20% more efficient than the PEM electrolyzer, and higher efficiency should allow Bloom to gain market acceptance and price its Solid Oxide electrolyzer at a premium to a PEM electrolyzer, Gupta tells investors in a research note.

MORE CONFIDENT ON MICRO DYNAMICS: Barclays analyst Christine Cho upgraded SolarEdge Technologies (SEDG) to Overweight from Equal Weight with a price target of $396, up from $389. Following a trip to Europe, the analyst feels more confident about the macro dynamics that will underpin SolarEdge’s growth and ability to take market share in the near-term.

BUY SUNNOVA: Citi analyst Ryan Levine initiated coverage of Sunnova Energy (NOVA) with a Buy rating and $26 price target. Sunnova is currently a U.S. residential solar power financing platform that is positioned to benefit from rising utility customer bills, Inflation Reduction Act support for solar, its "strong" balance sheet and ability to leverage its platform to expand into new product and services, Levine tells investors in a research note. He says the stock’s risk/reward tradeoff is tilted toward the positive.

Keywords: charged, ev, electric vehicles, clean energy, solar, batteries, bev