KEY POINTS
Slower-than-expected production ramp-ups of the Model 3 refresh and Cybertruck could hurt volume in the near term, analysts say.
Wells Fargo's Colin Langan went to the extent of calling Tesla, a growth company with "no growth."
Sentiment toward electric vehicle stocks was mixed in the week that ended on March 15, impacted by the worsening outlook for market leader Tesla, Inc. and the broader market weakness caused by hotter-than-expected inflation data.
Tesla Estimates Take Hit, India Cheer And More: As warned by Future Fund’s Gary Black, Wall Street analysts began lowering their deliveries estimates for Tesla, reasoning that the near-term outlook does not evoke confidence. Deutsche Bank set the ball rolling by lowering its March quarter deliveries estimate from 476,000 units to 427,000 units, citing slow production ramp-ups of the Model 3 refresh and the Cybertruck as well as slowing global EV adoption. The firm reduced the price target for the stock from $250 to $218, even as it maintained a “Buy” rating.
Wells Fargo’s Colin Langan downgraded the stock from “Hold” to “Sell” and cut the price target from $200 to $125, calling Tesla a “growth company” with no growth. UBS, meanwhile, reduced its price target from $225 to $165, attributing the tempered expectations to slower EV demand in Western countries, competitive pressure in China and a muted outlook for Model 2 volume in 2025.
On a positive note, Tesla could finally make headway in India as the government rolled out a new EV policy to attract investments into the country. The country is considering an import duty cut for EVs, provided that automakers make a commitment to invest at least $500 million and look to start domestic manufacturing within three years. Reuters reported that the new EV policy will allow eligible companies to annually import up to 8,000 EVs that cost $35,000 or more at a reduced tax rate of 15%, down markedly from the 100% duty that prevailed previously.
Tesla is going all out with its quarter-end push by hinting at a potential $1,000 price hike for all variants of its Model Y vehicles, effective April 1.
Fisker Rumored To Be Close To Bankruptcy Filing: Shares of struggling EV market Fisker, Inc. slumped over 50% this week as rumors suggested that the company is close to filing for bankruptcy. The Wall Street Journal reported that Fisker hired FTI Consulting and law firm Davis Polk to work on a potential filing. Following the release of fourth-quarter results, the company warned of a “going concern.”
Reacting to the report, the company said it would not comment on market rumors and speculation. It also said it is focused on raising additional capital and engaging in a strategic partnership with a large automaker. Previously, separate rumors said Japanese automaker Nissan Motor Co., Ltd. was in talks to invest in the beleaguered EV startup.
Rivian Upgraded By Piper Sandler: Late Thursday, Piper Sandler analyst Alexander Potter upgraded Rivian Automotive, Inc. from “Neutral” to “Overweight” and upped the price target from $15 to $21.
“After watching last week’s live stream, re-assessing our capex outlook, and considering the post-Q4 selloff, we feel compelled to upgrade RIVN,” the analyst said.
While flagging the risk of a midyear retooling effort that would potentially impact deliveries, the analyst said he was positive about the strong reception to the newly-unveiled R2 SUV.
“The R3, could be one of the most compelling designs on the market when it is released,” he added.
“This excitement around new products, coupled with a plan to delay capex and build R2 in an existing plant, should prompt investors to adopt a more bullish stance.”