Welcome to The Fly's latest edition of "Charged," where we look back at some recent analysts' notes, news and activity in the electric vehicle and clean energy space.
FSD WIDER RELEASE: Tesla (TSLA) CEO Elon Musk said on Twitter that he is aiming for a wider release of its Full Self-Driving feature this month. "We should be there with Beta 10, which goes out a week from Friday (no point release this week)," Musk said in response to a user asking for an update on the public beta. "It will have a completely retrained NN, so will need another few weeks after that for tuning & bug fixes. Best guess is public beta button in ~4 weeks."
EV TECH CREDENTIALS: On September 9, Citi analyst Itay Michaeli initiated coverage of Lucid Group (LCID) with a Buy rating and $28 price target. The analyst believes Lucid has the "necessary building blocks" to benefit from his car of the future thesis. The company offers leading electric vehicle technology credentials, years of development experience, brand momentum and speed-to-market, Michaeli told investors in a research note. The analyst also likes the company's initial "L2+/AV sensor/software approach." Lucid "resembles much of what we like about Tesla, but without the lofty 2030 share & FSD/AV outcomes that one must underwrite," Michaeli added.
ON THE SIDELINES: On September 8, Bank of America analyst Ryan Greenwald initiated coverage of ChargePoint (CHPT) with a Neutral rating and $26 price target. As the operator of the largest online network of independently-owned EV charging stations, with over 5,000 customers, the company has a competitive advantage in its asset-light B2B operating model, in contrast to some peers who own and operate the chargers, Greenwald said. While he sees relative value in the model compared to other EV charging peers, the analyst cautions about potential pressures to shares from the pending lockup expiration on September 28, supply chain challenges, emerging competition, and elevated expectations.
SOLAR POTENTIAL: The U.S. Department of Energy last week released the "Solar Futures Study," which it said details "the significant role solar will play in decarbonizing the nation's power grid." The study shows that by 2035, solar energy "has the potential to power 40% of the nation's electricity, drive deep decarbonization of the grid, and employ as much as 1.5 million people - without raising electricity prices." In 2020, the U.S. installed 15 gigawatts - to total 76 GW, representing 3% of the current electricity supply. The Solar Futures Study, prepared by DOE's National Renewable Energy Laboratory, shows that, by 2035, the United States would need to quadruple its yearly solar capacity additions and provide 1,000 GW of power to a renewable-dominant grid.
By 2050, solar energy could provide 1,600 GW on a zero-carbon grid-producing more electricity than consumed in all residential and commercial buildings in the country today, the agency said. Decarbonizing the entire energy system could result in as much as 3,000 GW of solar by 2050 due to increased electrification in the transportation, buildings, and industrial sectors, it added. The study modeling shows that solar will employ 500,000 to 1.5 million people across the country by 2035. Publicly traded companies in the solar space include Canadian Solar (CSIQ), First Solar (FSLR), JA Solar (JASO), SunEdison (SUNEQ), SunPower (SPWR), Trina Solar (TSL) and Yingli Green Energy (YGE).
FIRST SOLAR MARGINS SEEN NARROWING: On September 9, Needham analyst Vik Bagri initiated coverage of First Solar with a Hold rating. The company is the only top-10 U.S.-based solar module manufacturer with differentiated CdTe technology as its competitive advances led to increase in backlog this year, the analyst told investors in a research note. Bagri added, however, that because of higher freight costs and a projected 11% degradation in average selling price next year, First Solar's margins should narrow.
BUY SUNRUN: At the same time, Needham's Bagri also initiated coverage of Sunrun (RUN) with a Buy rating and $75 price target. Sunrun is "the leader in the crowded U.S. residential solar industry" with about 15% share, which Bagri identifies as almost twice that of its closest competitor. He thinks the industry can keep growing at a fast pace due to EV adoption and sees the shares trading "at a compelling entry point" with Sunrun down over 50% from its highs, he added.
