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.
TESLA AUTOPILOT PROBES: Tesla is under criminal investigation by the U.S. Department of Justice over the company's claims that its vehicles can drive themselves, three people familiar with the matter told Reuters' Mike Spector and Dan Levine. The DOJ launched the previously undisclosed probe last year following more than a dozen crashes, some of them fatal, involving Tesla's Autopilot driver assistance system, the report published on October 26 said.
Subsequently, a person familiar with the matter told The Wall Street Journal's Dave Michaels and Rebecca Elliott that the Justice Department is looking at statements that Tesla and its executives made about the safety and functionality of the system known as Autopilot. The Securities and Exchange Commission is conducting a similar civil investigation, people familiar with the matter also said, according to the Journal's report.
NEW COMBUSTION ENGINE BAN IN EU: The European Union has reached an agreement to effectively prohibit new combustion-engine cars starting in 2035, Bloomberg's John Ainger reports. The EU's three key institutions struck a deal that will mandate carmakers reach a zero-emission target by 2035, the author says, noting that the deal also requires a 55% reduction in emissions this decade.
EV STRATEGY: Toyota (TM) is weighing an overhaul of its electric vehicle strategy in an effort to compete in a booming market it has been slow to enter, and has paused some work on existing projects, Reuters' Norihiko Shirouzu reports, citing four people with knowledge of the still-developing plans. The plans under review, if adopted, would mark a major shift for the car maker and rewrite the $38B EV rollout plan the company announced last year to better compete with companies such as Tesla, the author notes.
SELL XPENG: Citi analyst Jeff Chung double downgraded XPeng (XPEV) to Sell from Buy with a $3.18 price target after reducing forecasts for sales volumes, margins and free cash flow through 2024. XPeng's model cycle faces "serious challenges" in 2023 as foreshadowed by its recent market share loss on "poor" sales and order in-takes, Chung tells investors in a research note. Chung's 2022 and 2023 revenue forecasts are now 59% and 57% below consensus, respectively. He does not expect breakeven until at least 2026 for XPeng.
ELECTRIFICATION PROGRAM: Lear (LEA) announced it has been selected by General Motors to exclusively supply the Battery Disconnect Unit on all full-size SUVs and trucks built on the automaker's Ultium EV Platform through 2030. Lear is working with state and local officials on a plan to open a new manufacturing facility in Michigan with an anticipated investment exceeding $80M. The site, which will manufacture BDUs and other electrification components, is expected to generate $500M in annual electrification sales when it reaches full production. The BDU award also expands Lear's existing business with GM and represents the single largest electrification platform win for Lear's E-Systems division - reinforcing its continued growth as a leading provider of fast-to-market, system-solutions for electric vehicles.
ARGO BUSINESS: Ford CEO James Farley said along with earnings last week that the company will wind down its Argo business. "I'd like to share an important strategic shift in our autonomous vehicle strategy. 5 years ago, we committed to invest $1 billion in Argo AI to develop autonomous Level 4 technology. In 2020, we completed the transaction that resulted in Ford and VW (VWAGY) both owning the majority of Argo at equal levels. We still believe in Level 4 autonomy that it will have a big impact on our business of moving people. We've learned though in our partnership with Argo and after our own internal investments, that we will have a very long road. It's estimated that more than $100 billion has been invested in the promise of Level 4 autonomy. And yet no one has defined a profitable business model at scale. Based on the change in this outlook and our increasing promise and focus on Level 2+ and Level 3 autonomy, we've decided to wind down the Argo business and impair the investment. We're working closely with Argo and VW on all the details. But here's what I want to focus on. Advancing Level 2 hardware and software beyond what Blue Cruise can do today and ultimately enabling our customers to travel in very large ODDs, or operating domains, with their eyes off the road will give them back the single most valuable commodity in our modern lives, time. This has become mission-critical for us at Ford. Ford has deployed Blue Cruise on many vehicles across hundreds of thousands of Blue zone miles. We have strong technology partners working alongside us. And now we're going to bring in several hundred people from Argo, a brilliant collection of minds, who've done a great job, who have done wonderful work in the L4 space, but their job and mission now is to help us create a differentiated Level 4 Blue Cruise system. Yes, there are huge -- this is a huge addressable market and the potential for highly accretive new revenue streams tied to Level 3."
ON THE SIDELINES ON LUMINAR: Rosenblatt analyst Kevin Cassidy initiated coverage of Luminar Technologies (LAZR) with a Neutral rating and $8 price target. Luminar has an "impressive" LiDAR design and list of automotive partners, but the positives are priced into the shares, Cassidy tells investors in a research note. The next obstacle for the company is to move the Iris into series production, says the analyst, who sees "many risks for ramping into volume production." He believes investors can wait until these risks have been resolved before building a position in Luminar.
