Charged: Analysts weigh in on Tesla Q3 deliveries, robotaxi event

Barclays sees Tesla Q3 deliveries topping consensus estimate, BofA says robotaxi event offers potential catalyst

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.

Q3 DELIVERIES: 

Barclays expects Tesla to report Q3 deliveries of 470,000 units, up 8% year-over-year and above the consensus estimate of 461,000. A deliveries beat could drive continued stock strength and be a reminder of “dissipated concerns on fundamentals,” the firm tells investors in a research note. Barclays believes Q3 volume strength will be driven almost entirely by China as Europe is weak. Given the positive data points reported thus far in the quarter, particularly in China, Tesla’s sales trajectory is well understood, and investors are expecting a stronger result, contends the firm.

Wolfe Research says the firm’s review of daily, weekly and monthly figures across key markets leads it to believe Tesla is on-track to deliver about 460,000 vehicles in Q3, which appears to be largely in-line with the consensus forecast of 461,000 and within the range of buyside expectations. One of the bigger near-term debates is likely to be around profitability, specifically Q3 Auto Gross Margins ex-Credits, and the firm sees potential for “modest” quarter-over-quarter improvement in Auto Gross Margins ex-Credits to 15.2% in Q3. Wolfe, which sees EPS in the low-60c range, which it notes is close to consensus at 61c.

Meanwhile, Goldman Sachs said that for Q3 vehicle deliveries, the firm now expects about 460K, which is about in line with Visible Alpha Consensus Data. Regionally, it believes that sales have been strong in China, flattish in the U.S., and weak in Europe on a year-over-year basis. For the October 10 robotaxi event, the time frame to begin commercial operations in robotaxis and the business outlook are some key items that will be in focus for investors, the firm adds.

ROBOTAXI EVENT: 

UBS maintained the same rating on Tesla ahead of the October 10 robotaxi event. The firm says hype and expectations ahead of the event are building, and believes there is an opportunity for Tesla to not only convince that investor base that the current valuation is justified, but that there is significant upside opportunity from here. UBS wouldn’t be surprised to see relative strength in the stock leading into the event, but is “less convinced” that Tesla can live up to expectations and sustain momentum following the event.

On the flip side, BofA kept the same rating on Tesla ahead of its robotaxi event as the firm views it as a potential catalyst for the stock. The firm notes that the event was postponed from August 8 reportedly to make an engineering change to the robotaxi vehicle and give the company time to build multiple prototypes. Expectations for the event have tempered since it was pushed back, but the event will nonetheless be helpful for investors to understand the current capabilities of Tesla’s Full Self Driving technology, how the robotaxi business might operate and be structured, and for any updates on regulatory approvals in Europe, China and other countries, BofA argues. The firm believes a robotaxi service is unlikely to be available until 2025-plus.

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

SUPERCHARGERS: 

Beginning September 18, General Motors will open up access to more than 17,800 Tesla Superchargers for its customers, with the use of a GM approved NACS DC adapter, a move that will help accelerate fast and convenient charging options for current and future EV drivers. With the addition of the Tesla Supercharger Network, GM customers will have access to more than 231,800 public Level 2 and DC fast chargers in North America – a number which will grow as GM continues to help accelerate the deployment of infrastructure in communities and heavily traveled corridors through its various charging collaborations.

GM approved NACS DC adapters will first be made available to customers in the United States, followed by availability for Canadian customers later this year. To access the Tesla Supercharger Network, U.S. customers will be able to purchase a GM approved NACS DC adapter through GM vehicle brand mobile apps for an MSRP of $225. Customers will be able to also use the same apps to seamlessly locate available Tesla Superchargers, check station status, initiate a charge, and pay for charging sessions.

PRICING HEADWINDS, DELAYED EV RAMP: 

Bernstein downgraded General Motors. The shares have appreciated 85% since last November, but Bernstein’s data now signals rising earnings headwinds, the firm tells investors in a research note. Bernstein’s thinks there is a risk GM will announce additional capital requirements during its October capital markets day. As such, the firm wants to “wait and see” which updates GM shares with the market. Continued inventory build in the U.S. will lead to pricing headwinds next year, a delayed ramp on electric vehicles and Cruise pushes losses into next year, and headwinds in GM’s international businesses are increasing, contends Bernstein.

EV IN FOCUS, HYBRIDS IN THE MIX: 

Commenting on the upcoming GM Investor Day, BofA said it expects General Motors will discuss its product pipeline, provide an update on its EV strategy and long-term EV targets, review its plan for Cruise, approach to augmenting revenue from software, and capital allocation, among other topics. The event will likely provide a glimpse into GM’s efforts to balance the slowdown in EV adoption with its Future business plan, which the firm still expects will be centered on electrification, but with a greater emphasis on hybrid technology. BofA maintains the same rating on GM, which is predicated on its view that it remains a leader among the industry in its Core to Future transition.

LICENSING DEALS: 

Lucid Motors (LCID) SVP of product and chief engineer Eric Bach said more licensing deals might be on the horizon after the company opened a new engineering and research center in Michigan, Electric Vehicle’s Claudio Afonso reports, citing Bach. Recent reports claim that Hyundai Motor (HYMTF) CEO Jang Jae-hoon visited Lucid’s headquarters earlier this year to explore potential cooperation and Bach reiterated that the company is open to licensing its technology to other manufacturers, stating that it is in discussions with “many” of them.

END OF SALES PARTNERSHIP: 

Shares of Sunrun (RUN) were under pressure on Thursday after disclosing that the company and Costco (COST) have mutually agreed to terminate their sales partnership. Sunrun will wind down its lead generation activities in Costco warehouses, with the current expectation of exiting its warehouse presence no later than December 31. Given that Costco sales constituted less than 10% of first half of 2024 volumes for Sunrun, Truist does not expect to see any significant financial impact from the break-up.

BULLISH ON NEXTERA ENERGY PARTNERS: 

Jefferies initiated coverage of NextEra Energy Partners (NEP). The company owns about 10 GW of renewable capacity, but needs to address $3.75B of CEPF – convertible equity portfolio financing -buyouts over 2025-32, likely driving a 50% dividend cut, the firm tells investors in a research note. Jefferies adds, however, that the market has already digested that scenario, while noting that the shares trade at a surprisingly high average dividend yield of 7.0% over the buyout period.

ON THE SIDELINES: 

Jefferies initiated coverage of NextEra Energy (NEE). The company is the largest U.S. clean energy developer and looks well positioned to capitalize on the further increasing demand for renewables, between revised load forecasts and continued grid de-carbonization, though that said, Jefferies is launching the stock at Hold as shares have substantially outperformed and now trade at a 30% earnings multiple premium relative to the average utility on a 3-year basis, the firm tells investors in a research note.

SELL SOLAREDGE: 

Jefferies downgraded SolarEdge (SEDG). Given “significant headwinds” in Europe from “persistently high” inventory levels and Chinese competition, as well as “stiff competition” in U.S., there is more downside to the stock as estimates are revised lower, the firm tells investors in a research note. Jefferies says uncertainty around SolarEdge’s CEO and backdrop on succession are concerns as well. The company’s pricing pressure is not priced into the shares, contends the firm.

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Originally Posted September 23, 2024 – Charged: Analysts weigh in on Tesla Q3 deliveries, robotaxi event