Exploring the Electric Vehicle Landscape: Tesla, Rivian, and Fisker
Tesla Faces Challenges as India Opens Its Doors
Sentiment toward electric vehicle stocks was mixed in the week ending on March 15, with the industry experiencing a rollercoaster fueled by concerns surrounding market leader Tesla, Inc., and broader economic uncertainties arising from unexpected increases in inflation rates.
Tesla’s Diminished Outlook and India’s Invite
As indicated by Future Fund’s Gary Black, Wall Street analysts began recasting their delivery projections for Tesla, expressing doubts about the short-term prospects. Deutsche Bank led the charge by revising down its March quarter delivery forecast from 476,000 units to 427,000 units. This adjustment factored in sluggish production uptakes for the Model 3 refresh and Cybertruck, along with a slower global adoption of electric vehicles. While maintaining a “Buy” rating, the firm slashed the stock’s price target from $250 to $218.
Conversely, Wells Fargo’s Colin Langan downgraded Tesla from “Hold” to “Sell” and lowered the price target from $200 to $125, highlighting the absence of growth in the company’s trajectory. UBS also joined the chorus, reducing its price target from $225 to $165 due to sluggish EV demand in Western markets, competitive pressures in China, and a conservative outlook on Model 2 volume for 2025.
On a brighter note, Tesla seems poised to advance into the Indian market following the government’s unveiling of a new EV policy designed to attract investments. The policy contemplates a reduction in import duties for EVs, under the condition that manufacturers commit to investing a minimum of $500 million and commence domestic production within three years. This beckons a stark shift from the previous 100% duty rate. Reuters outlined that under the new policy, eligible companies can annually import up to 8,000 EVs valued at $35,000 or higher at a reduced tax rate of 15%.
Moreover, Tesla is gearing up for a robust quarter-end, teasing a potential $1,000 price hike across all variants of its Model Y line-up effective April 1.
Fisker Teeters on the Brink of Bankruptcy
The plight of the struggling EV player Fisker, Inc. took a turn for the worse this week, with shares plummeting over 50% amid rumors circulating about an imminent bankruptcy filing. Reports surfaced that the company engaged FTI Consulting and law firm Davis Polk to grapple with the possibility of filing for bankruptcy. A “going concern” warning accompanied the release of fourth-quarter results, further clouding the company’s future.
Reacting to these speculations, Fisker refrained from commenting on market rumors and committed to seeking additional capital while aiming for a strategic partnership with a major automaker. Earlier gossip alluded to discussions between Japanese giant Nissan Motor Co., Ltd. and the beleaguered EV player.
Rivian Finds Favor on Wall Street
Piper Sandler’s analyst Alexander Potter made waves by elevating Rivian Automotive, Inc. from “Neutral” to “Overweight,” coupled with a price target boost from $15 to $21. The analyst justified the upgrade by citing a recent product showcase, capital expenditure reassessment, and a post-Q4 selloff. Potter acknowledged the risk of a mid-year retooling that could affect deliveries but remained optimistic about the warm reception to the fresh R2 SUV unveiling. He further hailed the upcoming R3 as a potential crowd-puller in the market, brimming with innovative design.
Amid this enthusiasm surrounding new releases and plans to delay capital expenditures while leveraging existing facilities to manufacture R2, investors are encouraged to adopt a more bullish stance, per Potter’s analysis.
Former Ford CEO Reflects on Electric Vehicle Transition
Mark Fields, former CEO of Ford, emphasized in a CNBC interview that the transition to electric vehicles is inevitable but will unfold gradually. Fields projected a niche market for internal combustion engines that caters to purists even as electric vehicles gain mainstream traction. He outlined that early adopters are driven by innovation and eco-consciousness, while the average consumer prioritizes cost and convenience.
Fields flagged premium pricing, inadequate charging infrastructure, and lengthy charging durations as significant barriers to widespread EV adoption. In his view, the current landscape favors hybrid vehicles as a middle ground between traditional ICE models and fully electric alternatives.
Polestar Makes Strategic Pricing Move
Swedish EV manufacturer Polestar Automotive Holding UK PLC, now under the auspices of China’s Geely Automobile Holdings Limited, announced a strategic pricing adjustment for its forthcoming SUV, the Polestar 3. The SUV, set for a U.S. launch later this year, will debut with a starting price of $73,400, far below the initial $84,000 estimate shared when the vehicle was unveiled in October 2022. All Polestar 3 versions will include the Pilot pack as a standard offering, incorporating driver-assistance features such as adaptive cruise control.
The Rise and Fall of Electric Vehicle StocksThe Electric Vehicle Stock Rollercoaster
Signs of the (Stock Market) Times
The trading week for the KraneShares Electric Vehicles and Future Mobility Index ETF was a wild one, like a Tesla Roadster on Ludicrous mode. Closing Friday’s session on a modest high, up 0.27% to $22.52, the ETF still managed to eke out a weekly gain of 1.08%. This performance left investors both relieved and apprehensive as the electric vehicle sector continued to display its volatile nature.
The Winners, The Losers, and The Sidelined
With a mix of exhilaration and dread, the week saw a diverse range of performances in the electric vehicle space. Tesla, the bellwether of the sector, experienced a tumultuous ride, ending the week down 6.71%. Meanwhile, Nio, XPeng, and Li Auto faced their own challenges, with losses of 3.79%, 1.26%, and 3.94% respectively. Fisker and Workhorse Group plummeted a shocking 54.80% and 14.19% each, leaving investors feeling like they were on a sinking ship.
A Glimmer of Hope
Despite the overall market turbulence, some companies managed to navigate the storm with aplomb. Hyzon Motors shone bright with an impressive gain of 13.98%, a ray of optimism in an otherwise stormy sea. However, the saga was not without its casualties. Rivian, Lucid Group, Faraday Future Intelligent Electric, Nikola Corp., and VinFast Auto Ltd. all experienced their own share of setbacks, closing the week down by 13.62%, 12.90%, 27.07%, 3.88%, and 4.38% respectively.
A Snapshot in Time
The stock market, like the open road, is full of twists and turns, with investors strapped in for a heart-pounding journey. Electric vehicle stocks, with their promise of a cleaner and greener future, continue to captivate the market’s imagination. However, as this week’s performances show, the road to success in this sector is far from smooth. It’s a bumpy ride, with exhilarating highs and gut-wrenching lows that leave even the most seasoned investors reaching for the investment seatbelt.
