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.

TACTICAL IDEAS LIST: Wells Fargo added Tesla to the firm’s Q3 “Tactical Ideas List” as an Underweight. The firm sees declining delivery growth for Tesla, driven by lower demand and “diminished return” on price cuts. Wells estimates the company’s auto gross margin excluding credits will fall by 210 basis points year-over-year in Q2 given the likelihood of more price cuts and lower volumes. It remains concerned with recent moderating trends across all three of Tesla’s key regions: U.S., European Union and China. Few levers remain for Tesla to increase volumes outside of pricing and model refreshes, as the company has resorted to financing promotions with seemingly little effect, contends Wells. The firm has an Underweight rating on the shares with a $120 price target.

BUY TESLA: Stifel initiated coverage of Tesla with a Buy rating and $265 price target. The firm thinks the revamped Model 3 and upcoming Model Y refresh should bolster sales, followed by the commencement of its next-generation vehicle Model 2 production, leading it to believe Tesla is very well positioned to deliver robust multi-year growth in 2025-27 and beyond. In the near term, which will likely garner very strong demand. The firm also believes the AI-based Full Self-Driving, or FSD, initiative has the potential to generate significant value through sales of FSD, possible licensing agreements, and as a critical driver of longer-term RoboTaxi initiatives, Stifel tells investors.

DELIVERIES TO MISS: New Street expects Tesla to deliver 425,000 units in Q2, which the firm notes would be 4% below consensus expectations. New Street says production disruptions in the U.S. and China have abated, but it sees no signs of a material improvement in demand and likely sees no inflection until 2025 when the low-cost Model 3/Y launches. The firm maintains a Buy rating on Tesla with a $235 price target on the shares.

Meanwhile, RBC said that Based on registration data and app downloads, it estimates Tesla deliveries of 410,000 in Q2, down 23% from the firm’s prior estimate of 533,000 vehicles and 4.3% below consensus. The firm, which expects Tesla to report deliveries during the first week of July, has an Outperform rating and $227 price target on Tesla shares.

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

VW INVESTS IN RIVIAN: The Management Board of Volkswagen AG Volkswagen AG (VWAGY) resolved with the approval of the Supervisory Board of Volkswagen AG that Volkswagen will enter into a Convertible Promissory Note Purchase Agreement with Rivian Automotive (RIVN). Under the terms of this agreement, Volkswagen will grant Rivian Automotive a convertible note in the amount of $1B. The note will convert into a direct shareholding of Volkswagen in Rivian Automotive, upon the receipt of the necessary regulatory approvals, but not before December 1, 2024, VW announced last week.

In addition, Volkswagen and Rivian Automotive intend to establish a joint venture for the purpose of the joint creation of next generation electrical/electronic architecture, or so-called E/E-architecture, for electric vehicles. Volkswagen and Rivian shall each hold a 50% stake in the joint venture, and it shall be equally controlled.

STAFF CUTS: In a regulatory 8-k filing, Lucid Group (LCID) stated that, “On May 24, 2024, Lucid Group announced a restructuring plan intended to optimize the Company’s operating expenses in response to evolving business needs and productivity improvements through a reduction of the Company’s current employee workforce by approximately 400 employees, or approximately 6%. The Company expects to substantially complete the Plan by the end of the third quarter of 2024, subject to local law and consultation requirements. The Company estimates that it will incur a total of approximately $21 million to $25 million in charges in connection with the Plan, which consist primarily of charges related to severance payments, employee benefits, employee transition, and stock-based compensation. The Company expects that charges of approximately $19 million to $23 million will be recognized primarily in the second quarter of 2024, with the majority of such charges anticipated to be paid by the end of the third quarter of 2024. Substantially all of these charges are expected to result in cash expenditures. The charges related to stock-based compensation are not expected to be material.”

DELIVERIES: Nio (NIO) announced its June and second quarter 2024 delivery results. Nio delivered 21,209 vehicles in June, representing an increase of 98.1% year-over-year. The deliveries consisted of 11,581 premium smart electric SUVs, and 9,628 premium smart electric sedans. Nio delivered 57,373 vehicles in the second quarter, representing an increase of 143.9% year-over-year. Cumulative deliveries of Nio vehicles reached 537,020 as of June 30.

XPeng (XPEV) also announced its vehicle delivery results for June and first half of 2024. In June, XPeng delivered 10,668 Smart EVs, representing a 24% increase year-over-year and up 5% over the prior month. This month the XPeng X9’s deliveries reached 1,687 units, with its cumulative total up to 13,143 units just half a year after its launch, maintaining its streak as the top seller in both the all-electric MPV and three-row model segments in China. Overall, XPeng delivered 52,028 Smart EVs in the first half year of 2024, a 26% increase from last year.

Lastly, Li Auto (LI) announced that it delivered 47,774 vehicles in June, up 46.7% year over year. This brought the company’s second-quarter deliveries to 108,581, increasing 25.5% year over year. As of June 30, its cumulative deliveries reached 822,345 vehicles, ranking first among China’s emerging new energy auto brands. As of June 30, the company had 497 retail stores in 148 cities, 421 servicing centers and Li Auto-authorized body and paint shops operating in 220 cities, and 614 super charging stations in operation equipped with 2,726 charging stalls in China.

MOVING TO THE SIDELINES: RBC Capital downgraded NextEra Energy Partners (NEP) to Sector Perform from Outperform with a price target of $30, down from $38. With insufficient growth from wind repowerings and about $3.7B CEPF liabilities post-2026, the firm believes the model will not be able to sustain long-term dividend growth of 5%-8% and that the company will need to evaluate a dividend cut.