What You Missed This Week in EVs and Clean Energy

Tesla announces quarterly results, reportedly secures China’s backing for FSD software rollout

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.

RESULTS: 

On Tuesday, Tesla reports first quarter adjusted EPS of 45c and revenue of $21.3B, with consensus at 51c and $22.15B, respectively. Tesla said, “We experienced numerous challenges in Q1, from the Red Sea conflict and the arson attack at Gigafactory Berlin, to the gradual ramp of the updated Model 3 in Fremont. Excluding Cybertruck and unscheduled downtime, our COGS4 per unit declined sequentially, driven primarily by lower raw material costs. Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs. While positive for our regulatory credits business, we prefer the industry to continue pushing EV adoption, which is in-line with our mission. To support our growth, we have been increasing awareness and expanding vehicle financing programs, including attractive leasing terms for our customers.”

“Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform and we believe the next one will be initiated by advances in autonomy and introduction of new products, including those built on our next generation vehicle platform. In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next generation vehicle and other products. In 2024, the growth rates of energy storage deployments and revenue in our Energy Generation and Storage business should outpace the Automotive business. We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. Furthermore, we will manage the business such that we maintain a strong balance sheet during this uncertain period. While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits,” Tesla added.

Following the earnings report, BofA upgraded Tesla as the firm believes Q1 results were better-than-expected. This, coupled with management commentary, addressed key concerns and “revitalized the growth narrative,” contends the firm, which sees negative catalysts “knocked out” with the Q1 report and positive catalysts building through the rest of the year.

BEARISH ON TESLA: 

Phillip Securities downgraded Tesla. The company’s Q1 results were below expectations due to slower vehicle deliveries and pricing pressures, the firm tells investors in a research note. Phillip Securities also cut Tesla’s fiscal 2024 revenue and EBITDA estimates by 6% and 19%, respectively, to reflect lower unit growth and margin headwinds. The firm says electric vehicle industry growth is under pressure from prioritization of hybrids, with Tesla losing market share to traditional car makers.

FSD SOFTWARE ROLLOUT: 

China has given tentative approval for the rollout of Tesla’s Full Self Driving software in the country, Tesla’s second-biggest market, The Wall Street Journal’s Raffaele Huang reports, citing people familiar with the matter. Tesla will deploy its autonomous driving services based on mapping and navigation functions provided by Baidu (BIDU), the people say.

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

DE-STOCKING COMING TO AN END: 

Barclays upgraded Enphase Energy (ENPH). Current share levels provide a “reasonable entry point” as de-stocking will be completed by the end of Q2 and demand is set to increase from trough levels throughout 2024, the firm tells investors in a research note. Barclays believes Enphase is holding market share as it increasingly penetrates the tier one and two third-party owner market. The firm also expects the company’s product offering to hold up well against Tesla’s in California.

MORE BALANCED RISK-REWARD: 

UBS upgraded Rivian Automotive. The near-term risk-reward on the stock has become more balanced at current levels as shares now price in about $4.5B in 2025 sales vs. consensus that stands still at $7.5B, the firm tells investors in a research note. Short interest on the stock has also climbed to about 19% of free float, positioning the name better if a positive data point or a catalyst emerges, even though shares are likely to remain volatile, UBS added. The firm further notes “solid” demand for Rivian vehicles despite the slowing EV market as one of the factors behind its bull thesis, though a reluctance by investors to buy shares ahead of a likely capital raise underpins the bear case.

HEIGHTENED COMPETITION:

Barclays downgraded Li Auto (LI). The firm says the “fundamental issue here is competition” from Huawei and BYD. Industry sales data show that sales of Li’s L series have been soft in recent weeks, as the company cut prices across its entire L series of SUVs and the Mega model for the first time in its history, Barclays tells investors in a research note. The firm notes this follows disappointing initial sales of the Mega model, which was “the first operational misstep” from the management.

MOVING TO SIDELINES: 

Evercore ISI downgraded SunPower (SPWR). The firm cites persistent high interest rates, continued weakness in California after NEM 3.0, and the possibility of further capital needs following a second tranche of $50M of additional capital announced in their latest earnings call.

—

Originally Posted April 29, 2024 – What You Missed This Week in EVs and Clean Energy