Will the New EV Players Dethrone TSLA in 2023?

Amid macroeconomic volatility and supply chain issues, major EV players have had a very gloomy 2022. Stocks like Rivian (RIVN), Lucid Group (LCID), Fisker (FSR), and Tesla Motors (TSLA) have plunged by more than 82%, 83%, 50%, and 65%, respectively in the past year.

Investors have been concerned about the EV market with a looming recession hampering EV demand. Another major concern has been EV major TSLA’s falling share of the EV market to 65% in 2022 from 71% in the third quarter of 2021, citing data from S&P Global Mobility. This has been partly driven by rising competition from new entrants in the EV space and when it comes to countries like China, competitively priced EV models.

Another reason for Tesla’s downfall has been Musk’s leadership (or lack there of ) since he acquired Twitter.

In this scenario, how are the other EV players poised versus TSLA? Would any of them dethrone TSLA this year? Let us take a look.

Rivian Poised For Better 2023

Rivian had an impressive Q3 but that has not prevented the stock from its downslide. After listing on the stock exchange at a price of $78 per share in November 2021, the stock has now dropped to new lows and is currently trading just above its 52-week low of $17.45.

However, RIVN seems to be well-placed to tackle the turbulent macroeconomic environment as at the end of Q3, it had around $14 billion of cash on hand. The company’s management stated on its Q3 earnings call that it remained confident “in our ability to fund operations with cash on hand through 2025, excluding the impact of our investment in the contemplated joint venture with Mercedes-Benz.”

Moreover, as of November 7, RIVN had over 114,000 net preorders of its R1 line of vehicles. The EV player is also optimistic about the launch of its next-generation EV architecture platform R2, in 2026.

RIVN expects that this platform “will unlock a massive global market expansion opportunity for Rivian and are excited about the development work that’s underway.”

Over the long term, the EV player is targeting a gross margin of 25%, an EBITDA in “high teens” and a free cash flow margin of around 10%.

Even Cantor Fitzgerald analyst Andres Sheppard believes that RIVN has a differentiated product offering, AMZN’s (AMZN) strong backing, and a proprietary charging network. The analyst has a Buy rating on the stock but has the lowest price target on the Street of $22.

Other analysts, besides Sheppard are cautiously optimistic about RIVN stock with a Moderate Buy consensus rating based on 12 Buys, four Holds and two Sells.

Will Lucid have a Great 2023?

Lucid Group has now dropped below its IPO price of $10 after reaching a high of $47.59 in the past year. The stock is now trading nearer to its 52-week low of $6.18.

The slide in shares has also been aggravated by consistent production problems that has resulted in the company slashing its vehicle delivery guidance to 6,500 vehicles from around 13,000 vehicles for FY22.

However, it seems to be making headway in resolving these problems heading into 2023.

LCID began delivering Lucid Air in Europe in December last year and has started expanding its presence in the region. The company also opened its first combined service, delivery, and sales centre in the Netherlands.

Furthermore, Lucid Group just successfully completed a capital raise of around $1.515 billion. At the fag end of last year, the company also received funding of $914.9 million from the sovereign wealth fund of the Kingdom of Saudi Arabia, the Public Investment Fund (PIF).

In addition, in a bid to strengthen its supply chain, the company has also entered into a multi-year agreement with Japanese electronics giant Panasonic (OTCMKTS: PCRFY). As a part of this agreement, Panasonic will supply batteries for Lucid’s Lucid Air EV as well as the upcoming Gravity SUV.

At the end of Q3, LCID had cash and investments worth $3.85 billion, which it believes “is sufficient liquidity at least into the fourth quarter of 2023.”

Wall Street analysts remain sidelined about LCID stock with a Hold consensus rating based on three Buys, two Holds and three Sells.

Fisker’s 2023 Outlook is Bullish

California-based EV maker Fisker was co-founded by legendary car designer Henrik Fisker. Late last year, the company announced that the production of its Fisker Ocean all-electric SUV was on schedule. The Ocean is being built in Austria by a unit of Magna International.

In the first quarter of this year, FSR has projected production of over 300 units, with production ramping upto to over 8,000 vehicles in Q2 and over 15,000 in Q3. Overall, this year, Fisker is targeting vehicle production of 42,400 units.

As of October 31, the company had over 62,000 reservations and orders for Fisker Ocean. The company is also working on a second model, a low-cost EV called Fisker Pear. By the end of October last year, Fisker Pear already had reservations over 5,000.

Moreover, Fisker expects supply chain problems to ease this year and prices of key battery raw material like lithium, likely to moderate.

Analysts rate FSR stock a Moderate Buy based on four Buys and three Holds.

Conclusion

As TSLA tries to resolve its leadership issues and tries to gain its market leadership in the EV market, other players are quietly making inroads.

With cash in hand that is expected to ride them through a tough macroeconomic environment and their production problems ironed out, these players could certainly give TSLA a run for its money.