Electric vehicles were supposed to take over. Purchase tax credits were supposed to help. All of a sudden EV-sales growth slowed dramatically.
The tax credits are part of the problem. They are confusing, divisive, and not helping the people who need them most.
In the U.S., sales of battery EVs grew 46% year over year in 2023, and their share of the new-car market rose to 8%, up from 6% in 2022.
Arguably, President Biden's EV-purchase tax credits, passed in the Inflation Reduction Act, helped. The credits went into effect on Jan. 1, 2023, reducing the purchase price of a new EV by up to $7,500.
In 2023, the credit came back in an individual's tax return. In 2024, things got better. The Internal Revenue Service let the dealer claim the credit. Qualifying EV buyers could lower the price of a new EV right away.
Great. But EV sales grew just 3% in the first quarter of 2024, through capital plans at General Motors, Ford Motor, and others into turmoil. Year-over-year growth recovered to 11% in the second quarter. Still, the credits don't seem to be having the desired effect.
"We're incentivizing all the wrong people," said Rebecca Lindland, senior director of industry data and insights at Cars.com. "We incentivized early adopters...people that were going to buy an electric vehicle anyway."
She has a point. Early adopters are more interested in new technology regardless of cost. Tesla sold 525,000 all-electric cars to Americans in 2022, up almost 50% year over year, without the benefit of tax credits.
The average price of those 2022 Teslas was some $55,000. Today the average price is closer to $43,000.
Freedom Capital Markets analyst Mike Ward puts it a little more bluntly. "Right now [the credit] is a gift to the rich." Most EVs are pricey and benefit those looking for luxury cars.
Both believe the credits are too confusing. There are income limits, supply-chain-related restrictions, and car-price limits. Few models qualify for the full credit. What's more, there is an odd loophole that few understand. Any EV for any price, bought by anyone, qualifies for the $7,500 credit. The reason: Essentially, businesses are allowed to claim the full credit on any EV, and leased vehicles are owned by a leasing company.
It's hard to ignore that the credits have also become political. Senators John Kennedy (R-LA) and Mike Braun (R-IN) railed against tax credits at a Senate Finance Committee hearing this past week. Kennedy claimed people had to be bribed with the credit to buy an EV. Braun said the U.S. government can't afford the handout.
The EV tax credits, however, only cost the government about $1 billion in the first half of 2024, according to the Treasury Department. That's about That's 0.04% of Federal government spending.
The total EV tax credits could be as high as $4.5 billion, since about 600,000 EVs were bought by Americans in the first half of 2024. Using these numbers, however, shows that fewer than 25% of the EVs sold are getting the full credit. The $1 billion actual EV tax credits for the period is mostly due to all the restrictions.
Ward suggests a 2009-style cash-for-clunkers incentive. People replacing an old, polluting car with an EV get a discount funded by the government. The air gets cleaner and the credit flows to lower-income households.
Lindland points out that a big barrier to EV adoption remains charging infrastructure. It would be better to incentivize more charging stations, and even advertise the benefits of EVs, than sticking with the existing system.
Those are two ideas. Whatever happens, incentives should be less complicated, targeted at the right people, and expire when EVs get cheaper to produce.
It would be better for technology-adoption — and U.S. car buyers.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
XPeng XPEV stock is trading lower on Monday after China’s car sales dropped in June.
The Details: China’s car sales decreased by 6.9% in June compared to last year, according to Reuters.
Data from the China Passenger Car Association shows that June is the third consecutive month where Chinese car sales have declined. In April car sales fell 5.8% and in May car sales fell 2.2%.
Of Chinese vehicle sales, electric cars made up a record 48.1% over the prior month. In fact, electric vehicle sales were up 9.9% in June.
In Xpeng’s Vehicle Delivery Results report for June, the company reported a 24% increase year-over-year in smart electric vehicle deliveries. In addition, for the first half of 2024, Xpeng’s smart electric vehicle deliveries were up 26% compared to last year.
How To Buy Xpeng Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in XPeng's case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
This week, Ford Motor Company F revealed it had its second-best quarter despite challenges as its U.S. EV sales improved both during the quarter and in June. General Motors GM also posted its best quarterly sales figures in more than three years and it owes it to notable increases in pickup truck and EV sales. Moreover, its second quarter EV deliveries reached a record, while its full-size pickup truck deliveries were the highest since 2021.
General Motors
In the second quarter, GM delivered 696,086 vehicles, marking a 0.6% YoY increase and highest since the fourth quarter of 2020. GM reported record EV sales that grew 40% YoY to 21,930, boosted by a jump in deliveries of the Cadillac Lyriq. But, EVs still made only 3.2% of its total second-quarter sales. GM sold about 229,000 full-size pickup trucks which is a 6% YoY increase. For the first half of the year, GM’s total sales contracted 0.4% YoY to almost 1.3 million vehicles. On a less bright note, the US Environmental Protection Agency revealed this week thatGM failed to comply with the Clean Air Act and will need to pay a penalty of $145.8 million penalty due to excess CO2 emissions over a six-year span. GM has not addmited to commiting any wrongdoing but stated the problem is the result of a change in testing procedures that the EPA put in place in 2016, showing its willingness to resolve the outstanding issues with the federal government.
Ford Motor
During the second quarter, Ford reported a slight 0.8% YoY growth as it sold 536,050 vehicles. In June, Ford reported it sold 166,448 vehicles which means its sales contracted 6% YoY. But the bigger picture is that Ford grew its all-electric car sales. During last year’s comparable quarter, EVs made 3.5% of its total volume, and their share has now growth to 4.4%. In June, it sold 6,972 EVs which represents a YoY increase of 18%. Also in June, Ford F-150 Lightning sales grew as much as 79% YoY to 2,552 units.
This summer, electric pickups and SUVs are also in for a treat with the release of a solar powered tonneau cover by Worksport Ltd WKSP. Worksport is scheduled to release an innovative power duo as the SOLIS tonneau cover is to be accompanied by COR, a portable battery system. With this revolutionary power duo, Worksport promises to ease range anxiety of EV drivers while providing off-grid power on the go. The Alpha release of this groundbreaking product is expected this summer and is announced to be available for major brands, including GM and Ford.
DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.
Nikola Corp NNKLA shares are trading higher after falling close to 10% on Monday. The company announced Tuesday that it sold more trucks than it expected to in the second quarter.
What Happened: Nikola said it wholesaled 72 Class 8 hydrogen fuel cells trucks in the second quarter, above the high end of its truck sales guidance of 60 units. The company said it wholesaled a total of 112 trucks in the first half of the year.
“We have maintained our 2024 momentum with solid wholesale numbers, new customers such as Walmart Canada, and repeat customers like 4GEN and IMC, purchasing vehicles through our dealer network,” said Steve Girsky, CEO of Nikola.
“We are firmly on the field and are continuing to secure our first-mover advantage in zero-emissions Class 8 trucks in North America, as well as with our HYLA hydrogen refueling solutions.”
The sales update comes after Nikola shares closed Monday down 9.65% on continued weakness following a reverse stock split that went into effect last week. Nikola’s board approved a 1-for-30 reverse stock split to comply with Nasdaq rules for continued listing.
Nikola shares hit new all-time lows on Monday. The stock is now down more than 71% since the start of the year.
By now you're likely curious about how to participate in the market for Nikola – be it to purchase shares, or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. In the case of Nikola, which is trading at $7.40 as of publishing time, $100 would buy you 13.51 shares of stock.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.
NKLA Price Action: Nikola shares were up 4.58% at $7.73 at the time of publication, according to Benzinga Pro.
Tractor Supply Company TSCO is worth investors’ dollars, based on its stable business model and strategies, including the Neighbor’s Club membership program. These traits have helped it carve a niche in the retail industry. Additionally, the company remains on track with the ‘ONETractor’ strategy, which aims to connect store and online shopping.
TSCO’s dominance in rural areas gives it stability during economic downturns when urban retailers struggle to sustain their market positions.
The Zacks Rank #2 (Buy) company’s share performance reflects gains from these strategies and a successful business model. Shares of the largest rural lifestyle retailer in the United States have notched gains of 18.6% in the past year compared with the industry’s growth of 4.2%.
Zacks
Business Model & Strategies in Focus
Tractor Supply looks poised for continued gains from its business model, which specifically caters to the needs and preferences of rural and semi-rural communities. The company has been growing market share and has maintained a competitive edge over competitors, driven by its distinct market focus, diverse product assortments, strategic store locations and commitment to customer service.
TSCO’s idea of tailoring its products to meet the everyday needs of its rural customers has gone a long way in aiding its success. The company’s offerings include farming, livestock, pet care, home improvement and outdoor living products. In addition, the execution of its everyday low-price strategy and reduced transportation continue to bolster its performance. TSCO’s ability to offer high-quality products at reasonable prices makes it a preferred choice for cost-conscious rural consumers.
Tractor Supply’s Neighbor’s Club loyalty program is another key element of its business model. The program rewards frequent shoppers with discounts and special offers, incentivizing repeat business. Moreover, it provides TSCO with valuable customer data on preferences and buying behaviors. This data allows the company to refine its product offerings, optimize inventory and tailor marketing efforts to attract customers.
TSCO’s retail store footprint in rural areas is an added advantage as proximity to customers reduces travel time for them. Tractor Supply is persistently focusing on expanding its store base and incorporating technological advancements to induce traffic and drive the top line. It is well-positioned to expand its footprint to 2,500 stores in the long term.
Simultaneously, the company stays keen on enhancing the store productivity of mature outlets through its Project Fusion program and Side Lot model transformations. These store investments target achieving higher market share and boosting productivity across existing and new stores.
TSCO currently has more than 700 Project Fusion stores, accounting for 30% of its store base. It continues to experience a positive halo impact of the garden center to the present store and vice versa. Adding product categories, greater ease of shopping and modern services enable the company to serve its customers efficiently.
Additionally, Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience through its ‘ONETractor’ strategy. Management looks forward to mirroring the in-store legendary service and the digital experience via personalized and conversational commerce. It aims to leverage AI technologies to boost search, redesign checkout and add a refreshed homepage on personalization.
Conclusion
Tractor Supply’s business model blends market focus, diverse product offerings, strategic store placement, exceptional customer service, community engagement and a robust omnichannel strategy. By concentrating on the specific needs of rural America and continuously adapting to changing market dynamics, TSCO has built a resilient and successful business that serves as a blueprint for excellence in rural retailing. This should continue to drive the company’s success, retaining its position in the market.
Other Stocks to Consider
Some other top-ranked stocks are The ODP Corporation ODP, Abercrombie & Fitch ANF and DICK'S Sporting Goods DKS.
ODP Corp, a provider of business services, products and digital workplace technology solutions to small, medium and enterprise businesses, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ODP’s 2024 EPS indicates 7.7% growth from the year-ago period’s reported level. It has a trailing four-quarter earnings surprise of 8.6%, on average.
Abercrombie, a specialty retailer of premium, high-quality casual apparel for men, women and kids, currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for Abercrombie’s fiscal 2024 sales and earnings indicates growth of 10.4% and 47.3%, respectively, from the year-ago reported numbers. ANF has a trailing four-quarter earnings surprise of 210.3%, on average.
DICK'S Sporting is a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories, and a broad selection of outdoor and athletic equipment. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for DICK'S Sporting’s current financial-year sales and earnings suggests growth of 1.8% and 6.6%, respectively, from the year-ago period’s actuals. DKS has a trailing four-quarter earnings surprise of 4.7%, on average.
This is Part 2 of a series of articles investigating two massive research reports from major brokers Macquarie and Morgan Stanley detailing changes in their outlooks for several major commodities, and the ASX stocks that produce them.
You can read Part 1 on Iron Ore and ASX Iron Ore Stocks here.
Today we’re going to review the brokers’ updates for base metals, so this means aluminium, copper, manganese, and nickel. We’ll also look at each broker’s updated views on key ASX base metals stocks such as Alumina AWC, South32 S32, Sandfire Resources SFR, and Nickel Industries NIC among many more.
Aluminium outlook
Macquarie
Alumina prices targets have been increased by 13% in 2024, 15% in 2025, and by 18% in the long term. Aluminium increases are more modest, 6% in 2024, 2% in CY25, and 4% in the long term.
Macquarie describes its overall view on aluminium as “overweight”. They note they’re more bullish than consensus estimates by around 3-4% out to 2026, by around 5-6% in 2027-28, and by 11% in the longer term (target US$2600/t by 2030).
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Figure 3 - Aluminium Price Update versus consensus (US$/lb). Source: Macquarie Research, Bloomberg, Visible Alpha, June 2024. (From: Commodities update: Hard Knock Li-Fe, Macquarie Research, June 21, 2024)
For alumina, price target increases are steeper due to price induced supply cuts and unplanned disruptions to refining and bauxite mining. These factors have “tightened the near-term balance”.
Morgan Stanley
Morgan Stanley describes the outlook for aluminium as “compelling”. Cost curves are rising for the first time since 2022, they note, and this “making it harder for European smelters to restart”. This could curtail supply.
Market Index
Exhibit 4: Aluminium sees cost curve rising for the first time since mid 2022, making it harder for European smelters to restart...Source: Wood Mackenzie, Bloomberg, Morgan Stanley Research. (From “Strategy Q3: Bulks over Base”, Morgan Stanley Research, June 21, 2024)
On the demand-side, Morgan Stanley points out that Chinese imports of both primary and scrap material remain robust, and that China has been a net importer of aluminium products since September last year. This is “providing scope for upside risk”, the broker says.
Copper outlook
Macquarie
Macquarie describes its overall view on copper as “medium term underweight” and “long term overweight”. They have increased their price targets by 7% in 2024 and by 9% in 2025, citing “supply shortages against a relatively robust demand backdrop”.
Looking further out, to 2026 and 2027, Macquarie is forecasting a supply side response that has led to flat forecasts for prices in those years. The broker notes it is “under the street in the short term” with respect to its forecasts, but above in the longer term.
Market Index
Figure 2 - Copper Price Update versus consensus. Source: Macquarie Research, Bloomberg, Visible Alpha, June 2024. (From “Strategy Q3: Bulks over Base”, Morgan Stanley Research, June 21, 2024)
Macquarie’s 2024 target price stands at US$4.38/lb (versus US$4.43/lb current), and US$9,000/t or US$4.08/lb in 2023 real terms 2030. The broker notes their long term target is 14% above consensus.
Morgan Stanley
Copper supply “continues to be tight” says Morgan Stanley, “driven by demand which continues to accelerate on grid spend”. The broker believes the recent pull-back in the copper price, from around US$5.20/lb to US$4.43/lb, presents consumers with a buying opportunity.
This is due to robust demand fundamentals including higher spending on power grid expansion from China, amidst an environment of “continued supply tightness”. Morgan Stanley notes copper inventories are currently at around 7 days’ supply and this is well below the 20-year average of around 11 days’ supply.
Market Index
Exhibit7: Cu inventories also remain below ~20 year averages of ~11 days vs ~7 days currently. Source: Bloomberg, ICSG, Morgan Stanley Research. (From “Strategy Q3: Bulks over Base”, Morgan Stanley Research, June 21, 2024)
Morgan Stanley’s price targets for copper are as follows: US$4.48/lb in 2024, US$4.65/lb in 2025, US$4.31/lb in 2026-27, US$4.11/lb in 2028-29, and US$4.02/lb in the long term.
Manganese outlook
Macquarie
Macquarie notes that manganese prices have risen due to production issues at major supplier South 32’s GEMCO operation. The broker suggests “tailwinds” should continue for the commodity “over the remainder of 2024”.
Macquarie is forecasting the manganese price will rise from the current US$5.12dmtu to US$7.13dmtu in FY25 before settling back to US$5.50dmtu in FY26, and US$5.00dmtu from FY26.
Morgan Stanley
Morgan Stanley did not provide specific commentary on manganese but did provide the following price targets: US$8.79dmtu in 2024 (+103% vs previous), US$8.75dmtu in 2025 (+75% vs previous), US$5.25dmtu in 2026, US$5.50dmtu in 2027-29 (-3% vs previous in 2029), and US$5.39dmtu in the long term (-1% vs previous)
Nickel outlook
Macquarie
Macquarie describes its overall view on copper as “overweight”. They have increased their 2024 nickel price forecast by 3% to be in-line with consensus. In 2025, their forecast has dipped by 5% to US$19500/t which is 10% above consensus, in 2026-28 their forecast is unchanged at US$21,000-23,000/t which is 15-19% above consensus, and Macquarie’s long term nickel forecast is unchanged at US$20,000/t in 2023 real terms which is around 16% above consensus.
Market Index
Figure 6 - Nickel Price Update versus consensus (US$/lb). Source: Macquarie Research, Bloomberg, Visible Alpha, June 2024. (From “Strategy Q3: Bulks over Base”, Morgan Stanley Research, June 21, 2024)
Morgan Stanley
Morgan Stanley did not provide specific commentary on nickel but did provide the following price targets: US$8.79dmtu in 2024 (+103% vs previous), US$8.75dmtu in 2025 (+75% vs previous), US$5.25dmtu in 2026, US$5.50dmtu in 2027-29 (-3% vs previous in 2029), and US$5.39dmtu in the long term (-1% vs previous)
ASX base metals stock ratings and price target changes
Macquarie: NEUTRAL | Price Target: $0.47⬇️ vs $0.50
Broker notes price target change is “due to rolling forward our EV/EBITDA to 3QCY25-2QCY26, and altering our assumed equity funding assumptions.”
The broker cites the restart of Capricorn after the severe flooding event as a “key risk to both the upside and downside”
Morgan Stanley: OVERWEIGHT | Price target: $0.55
“We update our model for higher CY24/25/26 copper and CY24/25 zinc prices. In all, CY24-26 EPS estimates increase.”
“We adjust our risk weighting for Capricorn Copper from 100% to 50% and see room for upside driven by derisking of the site as 29M proceeds with measures to re-start the mine”
Macquarie: NEUTRAL | Price Target: $0.26⬇️ vs $0.30
Broker has applied a 1-10% EPS uplift in FY24-28 “largely driven by stronger gold outlook”
Broker notes price target change is “due to rolling forward our EV/Ebitda to 3QCY25-2QCY26 in line with the rest of our coverage”
Broker points out that the balance sheet is a “key risk” with the “potential for additional debt or equity if base metals prices don't improve in CY24”
Macquarie: OUTPERFORM | Price Target: $12.80⬆️ vs $12.60
“Our pure-play copper preference is CSC”
“It is a copper producer with a lot to like including organic brownfields/greenfields growth (164kt in CY23 to ~380kt by CY29e, 130% growth), portfolio optimisation potential (Santo Domingo minority selldown & potential divestment of Cozamin), future index inclusion, and strong relative value versus SFR”
Broker’s preference for CSC is due to the company showing an “EV/EBITDA multiple of 4.1x in CY25E (Macquarie forecasts) and 3.7x in FY25e (Spot)”
“CSC has a CY25 FCF yield of 16% which improves to 18% in a spot price scenario”
Broker notes price target change is “driven by a decrease in our WACC”
Macquarie: NEUTRAL | Price Target: $7.00⬇️ vs $7.40
“There is minimal EPS changes for ILU, as we have not changed our mineral sand price outlook”
Broker notes price target change is “due to the downgrade to DRR and as we roll our model forward”
“Updates on studies and the Eneabba refinery are key catalysts for ILU”
Morgan Stanley: EQUAL-WEIGHT | Price target: $6.70⬇️ vs $7.00
Broker notes mineral sands forecasts are unchanged, but EPS changes are “driven by updates to AUDUSD. Our base case falls due to model date roll forward”
Morgan Stanley: UNDERWEIGHT | Price target: $4.85⬇️ vs $5.35
“LYC's plan to get to 12ktpa NdPr is well understood, but we think costs could be higher (with consensus underestimating the combined impact of operating in higher cost jurisdictions and with higher mining costs), while further production expansion is likely not a current focus capping potential upside”
“LYC's balance sheet is in a good position even if low NdPr prices remain (net cash 1HFY24 A$514mn), but a capital management surprise is unlikely, in our view, with LYC likely to maintain a protective cash buffer, especially given debt covenants in place”
“We see potential for positive revisions to forecasts on decreasing Ni market surpluses and Ni prices trading above both Morgan Stanley and consensus estimates”
“We see payabilities having the potential to revert to historical averages of the past 5 years; this could be significantly positive”
Macquarie: OUTPERFORM | Price Target: $4.50⬆️ vs $4.25
“We prefer S32 over iron ore majors”
“S32 sees 21%/49% upgrades to EPS across FY24/25 with base alumina/aluminium price changes benefiting the base metals focussed name”
“S32 is trading at a suppressed multiple (under our forecast prices)”
“Since our S32 upgrade, we note its share price performance has benefited from the commodity basket, but there are still catalysts to play out”
Morgan Stanley: EQUAL-WEIGHT⬇️ vs OVERWEIGHT | Price target: $3.80⬆️vs $3.35
Rating is downgraded on “valuation” grounds, given recent share price movements to within 4% of broker’s price target
“S32 is mainly affected by changes to aluminium, alumina and manganese. Our increase in FY24-26 for the aforementioned commodities drives an increase in our FY24-26e EPS estimates”
“The majority of S32 assets are well positioned in the the global cost curve and will likely benefit from rising base metal prices however, we see the opportunities as being largely priced-in”
Macquarie: OUTPERFORM | Price Target: $11.20⬆️ vs $10.80
Broker notes price target change is “driven by earnings upgrades from higher silver, zinc, and lead prices”
Broke upgrades SFR’s EPS forecasts by 2-6% in FY24-FY28, “buoyed by 5-11% upgrades in our silver price outlook during CY24-CY28 and a 9% lift in our LT real silver price outlook of US$22.50/oz”
Morgan Stanley: EQUAL-WEIGHT | Price target: $8.25⬇️ vs $8.40
Broker notes that increases in its FY24-26e copper price forecasts drive increases to SFR’s FY24-26e EPS forecasts
“Whilst we forecast an improving balance sheet on lower gearing levels, higher FCF's by FY25e and potential for improvement at MATSA operation we see the stock fairly pricing this in”
“Catalysts include any improvement in energy prices (and costs at MATSA) thanks to softening gas prices, successful build and ramp-up at Motheo, and operational stability”
Nikola Stock Forecast: Should You Buy or Sell Ahead of the Reverse Stock Split?
Nikola NKLA stock hit record lows last week after the maker of hydrogen fuel cell trucks announced a 1-for-30 reverse stock split, which was the maximum ratio it could have gone for. The reverse stock split, which will go into effect after today's closing bell, will correct Nikola’s violation of Nasdaq listing rules, as its share price was consistently trading below the exchange's minimum threshold of $1.
To be sure, maintaining its Nasdaq listing is important for Nikola, as the company needs to raise cash frequently by selling its shares. However, the reverse stock split might not be the end of Nikola’s woes, as we’ll discuss in this article.
Nikola Went from Boom to Bust
As one of the first green energy companies to capitalize on the special purpose acquisition company (SPAC) boom of 2020, Nikola became a flag bearer of the renewable energy euphoria.
At its peak in 2020, Nikola’s market cap surpassed that of Ford Motor F – which was possibly the first warning about an impending bubble in the EV industry, as Nikola hadn’t even started delivering its vehicles by then.
Barchart
The bubble eventually burst in late 2021, but not before Tesla’s TSLA market cap surpassed $1 trillion, while newly listed Rivian RIVN was valued at over $150 billion.
Since that peak, EV companies have been in the news primarily for reverse stock splits, guidance cuts, bankruptcies, and capital raises – with Nikola itself raising capital at regular intervals.
NKLA Has Restructured Its Business
Nikola has restructured its business, and is now a more focused company. Among others, it has sold the Badger pickup truck program, cashed out of its joint venture in Europe, and announced the liquidation of Romeo Power, which it acquired for $144 million in an all-stock deal in 2022.
Nikola Management is Working on Volume Growth
Nikola’s CFO Tom Okray who has worked with companies like Amazon AMZN and General Motors GM in the past, is spot-on about the way forward for the company. During the Q1 2024 earnings call, Okray said “profitability will not be where we want it to be until we can build scale. Simply put, it is not practical to optimize our cost structure without a meaningful level of volume.”
The same holds true for other startup companies in the green energy space, as not running plants to capacity leads to negative operating leverage and takes a toll on profits.
Okray, who joined Nikola as recently as March, also talked about how the company plans to increase volumes. First, he said the company is targeting national carriers that have a fleet of over 1,000. Second, he said, Nikola would be “more forgiving on the economics of the initial deal to build confidence with our end fleet users.” That’s a way to sugarcoat the fact that Nikola will continue to sell trucks below its production costs to increase adoption.
Finally, according to Okray, the company will expand its geographical reach beyond its focus markets of California and Canada.
NKLA Stock Forecast
While Wall Street analysts have a consensus rating of “Hold” on Nikola, last month, Bryan, Garnier & Co. initiated coverage on the stock with a “buy” rating and a $1 target price. In January, Baird also initiated a coverage on NKLA with an “outperform” rating and a $2 target price.
Amid the continued fall in its share price, Nikola trades below even its Street-low target price of $0.50, while the mean target price of $1.12 implies the stock more than tripling from current levels.
Barchart
Nikola is a Play on Hydrogen Technology
Nikola is a play on the expected increase in the hydrogen economy. Carriers have been looking to transition to green vehicles, and hydrogen fuel cell electric vehicle trucks stand out over battery electric vehicles due to their higher range and low refueling time - both of which are quite important for trucks.
There is also regulatory impetus towards the green energy transition, and Nikola cited the Inflation Reduction Act of 2022, supportive policies in states like California, and the EPA Clean Ports Program as enablers of its business.
The company is also building out hydrogen infrastructure in North America under the Hyla brand, which it can monetize later if the hydrogen industry gains traction. Sales of particulate matter (PM) credits would be another line of revenue for Nikola. Incidentally, in the current quarter, the company expects to recognize the revenue from its first sale agreement for credits generated from the model year 2022.
Nikola has been getting new customers on board, and expects its order book to increase significantly - which Okray believes should be used to measure the progress on its business plan.
NKLA Now Needs to Execute Well
However, after a dismal track record since it went public, Nikola now has to execute on that plan – which means growing deliveries meaningfully with a clear roadmap to profitability.
As Nikola’s CEO, Steve Girsky, said during the Q1 2024 earnings call, “We are in the execution phase, not the planning or concepting phase.” He also touted the viability of its trucks and said, “At Nikola, we emphasize that this is not a science project."
The road ahead is not easy, and Nikola might need to raise more cash by selling shares, which would mean more dilution. The company’s outstanding share count has risen to over 1.3 billion, which is over 3.5x what it was at the time of its 2020 listing.
However, while Nikola stock has fallen to record lows and might appear attractive, I would still stay away from the company, as it looks like a risky proposition due to the weak balance sheet. With there being a widespread sell-off in the startup green energy space, there are a lot of other attractive stories with a much clearer roadmap to growth and profitability when compared with NKLA.
On the date of publication, Mohit Oberoi had a position in: F , GM , AMZN , TSLA , RIVN . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Yesterday, the company announced that its board of directors had approved a 1-for-30 reverse stock split. The reverse stock split will be effective as of June 24 at 4:01 p.m ET, and the stock will begin trading on a split-adjusted basis beginning on June 25.
A company can use a reverse stock split to increase its stock price by significantly decreasing the total number of shares available, thereby preventing potential delisting from an exchange.
The board already approved the reverse stock split earlier this month during the company’s annual meeting.
However, the EV maker’s headwinds do not ease here.
Earlier in June, Trevor Milton, Nikola’s convicted founder, said he filed a multi-billion derivative lawsuit against the company’s present chief legal officer, Britton Worthen, and its directors.
Milton announced the lawsuit via a social media platform. “Just filed a multi billion dollar derivative malpractice lawsuit against Nikola motor company’s directors and chief legal officer Britton Worthen. GET READY!” Milton wrote.
In addition, the company’s removal from the Russell 3000 Index, as per FTSE Russell’s preliminary list, casts a shadow.
Related: Nikola’s Rocky Road: Reverse Stock Split Approved, But Removal From Russell 3000 Looms
The Russell 3000 Index, a key benchmark, measures the performance of the 3,000 largest publicly traded U.S. companies by market capitalization.
Inclusion in this index significantly boosts a company’s visibility and can attract mutual funds and ETFs.
In its first-quarter results, the company reported sales of $7.5 million, vs. $10.7 million a year ago, missing the analyst consensus estimate of $15.8 million. Adjusted EPS loss of $0.09 versus $0.22 Y/Y, beat the analyst consensus loss estimate of $0.10. Nikola produced 43 trucks in the quarter compared to 63 a year ago and shipped 40 trucks compared to 31 a year ago.
Price Action: NKLA shares are trading higher by 4.07% to $0.3430 premarket at last check Friday.
Read Next: Tesla’s Top Rival, BYD’s Yuan Family Hits 1M Sales Milestone As SUV Lineup Drives NEV Success: Report
** Hong Kong shares of Li Auto 2015 drop 8.5% to HK$105, their lowest since late-Jan
** Stock is biggest pct loser in Hang Seng Tech Index HHSTECH, Hang Seng China Enterprises Index HSCEI and Hang Seng Index (.HIS), which are down between 1%-2.4%
** Co launches its L6 Pro and Max premium family SUV at 249,800 yuan ($34,509.44) and 279,800 yuan respectively with deliveries in April
** Citi says model pricing is reasonable given adequate configurations of the variants and co may launch an Air variant with lower pricing in the future depending on market competition
** "We expect intensified competition and a price war for BEVs (battery electric vehicles) to start to impact Li Auto in 2024 when it launches BEVs, and given Li Auto still differs from BYD which has a dominant cost advantage" - Citi
** Rivals NIO NIO, BYD 002594, Geely 175, Xpeng XPEV and Leapmotor 99863 down between 1.5% and 7.7%
** Li Auto's Hong Kong stock down 26.8% YTD, U.S.-listed shares down 22% YTD
($1 = 7.2386 Chinese yuan renminbi)
General Motors And Ford Are Facing The Same Challenge As They Run Back To Gas-Powered Trucks
General Motors GM and Ford Motor F will report their first quarter results next week. They both need to answer how they intend to grow their profits amid the EV slowdown to which even the EV king, Tesla Inc TSLA, isn’t immune. Tesla warned of slower growth this year. With the EV sales slump, Tesla shares tumbled as much as 39% year to date. Along with growing competition in China, Tesla has also found itself in the mud, let alone legacy automakers struggling to make their biggest ever transformation for the all-electric era that is still coming, just not as fast.
GM
GM is yet to outline its strategy for restructuring its business in China. Last year, GM delivered 2.1 million vehicles in the world’s greatest EV market. Besides the restructuring, GM also needs to address its struggling Cruise Robotaxi division. But when it comes to seeing consistent profitability, GM is expected to report strong sales of its Chevrolet and GMC trucks, along with SUVs.
Ford
Ford,is getting its power from combustion trucks, along with its Ford Pro commercial vehicles. Ford did affirm its core profit guidance for the year to be in the range between $10 billion and $12 billion.
Last year, Ford lost nearly $4.7 billion EVs. This year, it forecasted the loss of $5 billion. In February, it clearly stated that it will launch the next generation of EVs only a time when they can be profitable. Earlier in April, Ford announced it intends to slow down its major EV programs. Ford has been forced to reconsider to launches of three-row EVs in Canada and its next-generation electric pickup truck built in Tennessee. In a separate announcement, Ford announced it will delay the deliveries of its all-new EV truck it will build at a new plant in western Tennessee until 2026. Last year, it planned to kick off production in late 2025, aiming for an annual output of 500,000 electric trucks. But after reconsidering, it decided to build the output gradually. Meanwhile, Ford continues to boost its hybrid offerings.
Ford and GM are running back to gas-powered trucks.
One thing that is clear is that both Ford and GM are getting power from their combustion trucks at the moment, but the EV era is still coming. GM and Ford are due to provide more details on the tweaking of their strategies as they report their results on Tuesday and Wednesday, respectively.
DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.
Nikola Corp NKLA is in focus today after Bob Lutz – a former executive of the “Big Three” said the EV push happened “too soon and too fast”.
Lutz shares view on the EV push
Lutz is somewhat dovish on the electric vehicle movement at least for the near term because it’s based mostly on a “colossal amount of hype”.
Both media and the government “made it sound like everybody’s next vehicle will be an EV … and it wasn’t going to happen”.
Still, Nikola is expected to materially narrow its loss on a year-over-year basis in Q1. Consensus is for it lose 10 cents a share versus 31 cents per share a year ago.
Note that Bob Lutz made the aforementioned remarks in an interview with Fox News Digital on Monday.
Is Nikola stock worth buying in 2024
During the same interview, Bob Nardelli – the former chairman and chief executive of Chrysler also agreed that it will be a “challenge” to establish an EV as a “reliable and affordable means of transportation” for the consumer in the near term.
Note that EVs accounted for just 1.8% of new light vehicle registration in the United States between January and November of 2023, as per data from S&P Global Mobility.
It is also worth mentioning here that $NKLA is currently seeking to reverse split its stock. Shareholders of the Nasdaq-listed firm will vote on the proposal at its upcoming annual meeting.
Nikola stock is down more than 35% versus its year-to-date high at writing.
Why Is Chinese EV Maker XPeng Stock Gaining Today?
Under the partnership, XPeng will be able to bring its latest smart EVs to local consumers in the Hong Kong market with branded showrooms and after-sales support.
Hong Kong will serve as an important springboard for XPeng’s global expansion due to its status as an international business hub.
The latest pure electric SUV model, G6, and the flagship pure electric seven-seater MPV X9 will be the first to be introduced in mid-May, with an expected delivery starting from the third quarter.
“With our brand’s advanced smart electric vehicle and leading technology, we are committed to providing car owners with smarter travel solutions, as well as an environmentally friendly driving experience,” said Vice Chairman and President Brian Gu.
XPeng is also set to enter Macau with partner XIN KANG HENG HOLDING LTD, and will offer models G9, X9, G6, and P7i.
As of 2023 end, XPeng’s cumulative historical delivery volume exceeded 400,000, and it delivered more than 140,000 new vehicles in 2023 alone.
Nikola Corporation is an American company that focuses on the development and production of zero-emission electric and hydrogen-powered vehicles. They aim to revolutionize the transportation industry by offering sustainable and innovative solutions for both commercial and consumer markets.
Stock Market Media
In terms of technical analysis, the stock of Nikola Corporation has been in an aggressive downtrend. This indicates a consistent and significant downward movement in the stock price over a period of time. The aggressive downtrend suggests a bearish sentiment and a period of underperformance for the stock.
Investors and traders should exercise caution when considering investment or trading opportunities in a stock that is in an aggressive downtrend. It is important to closely monitor the stock's price action, key technical indicators, and any relevant news or events that may impact the stock's performance.
Intel, XPeng And Other Big Stocks Moving Lower In Wednesday's Pre-Market Session
U.S. stock futures were lower this morning, with the Nasdaq futures falling by around 0.2% on Wednesday.
Shares of Intel Corporation INTC fell sharply in today’s pre-market trading after the company outlined a new financial framework for its foundry business.
After the market close on Tuesday, Intel announced a new financial reporting structure designed to drive increased cost discipline and higher returns by providing greater transparency, accountability and incentives across the business.
Intel shares dipped 4.8% to $41.85 in pre-market trading.
Here are some big stocks recording losses in today’s pre-market trading session.
Mesoblast Limited MESO shares tumbled 13.1% to $5.73 in pre-market trading after gaining 8% on Tuesday.
Fractyl Health, Inc. GUTS fell 9.1% to $6.13 in pre-market trading after declining around 10% on Tuesday. The company recently announced FDA IDE approval for the Revita Remain-1 pivotal study and then rebounded after reporting Q4 financial results.
Nikola CorporationNKLA shares declined 7.3% to $0.9027 in pre-market trading after falling more than 5% on Tuesday.
Nuvation Bio Inc.NUVB shares fell 5.8% to $3.25 in pre-market trading after declining over 6% on Tuesday. Nuvation Bio, last week, announced appointment of Colleen Sjogren as Chief Commercial Officer.
Shinhan Financial Group Co., Ltd.SHG shares declined 5.6% to $31.47 in pre-market trading.
XPeng Inc.XPEV shares fell 3.2% to $7.35 in pre-market trading. XPeng recently said it delivered 9,026 Smart EVs in March, representing a 99% increase over the prior month and a 29% increase year-over-year.
Li Auto Inc.LI shares fell 3% to $ 30.11 in pre-market trading. Li Auto recently reported March vehicle deliveries of 28,984, an increase of 39.2% year over year.
The era of electric vertical take-off and landing vehicles (eVTOLs) is upon us, with the latest CNBC Tech podcast episode shedding light on the industry’s rapid advancement and the challenges it faces.
What Happened: A recent episode of CNBC Tech’s “Beyond the Valley” podcast delves into the burgeoning market of eVTOLs, often dubbed flying cars. The podcast, hosted by Arjun Kharpal and Tom Chitty, explores the potential and challenges of this innovative mode of transportation that could revolutionize urban and intercity travel.
As reported by CNBC on Sunday, eVTOLs are all-electric aircraft capable of vertical takeoffs and landings, offering a compact and efficient alternative to traditional airplanes and helicopters. These vehicles are seen as a solution to urban congestion and could serve as a new form of short-distance travel.
Companies worldwide, from the U.S. to Europe and China, are actively developing eVTOLs. The eVTOL market is projected to be worth a staggering $1 trillion by 2040, according to JPMorgan, with numerous firms vying for leadership in this high-stakes industry.
Urban integration of eVTOLs raises questions about landing zones and compatibility with existing cityscapes and transport systems. Regulatory support from organizations like the Civil Aviation Administration of China and the U.S. Federal Aviation Administration, through certification programs, is vital for the industry’s growth.
Despite the excitement, there is skepticism about the practicality and safety of flying cars. The industry must overcome significant challenges, including infrastructure needs, safety concerns, and earning public trust, to make eVTOLs a ubiquitous feature of urban life.
Why It Matters: Recent developments in the eVTOL sector have captured the attention of both the public and investors. eVTOL startups like Archer Aviation and Joby Aviation, are pioneering the modern-day ‘Jetsons’ future.
Furthermore, 96% of professional investors are keeping a close eye on this transport of the future, as companies like New Horizon Aircraft and Hyundai Motor advance eVTOL technology.
Earlier in the year, XPeng Aeroht, a subsidiary of XPeng Inc., wowed attendees at CES with its flying supercar concept. This event underscored the industry’s progress and the growing interest in eVTOLs as a viable form of transportation.
Read Next: Biden Cracks Joke About Boeing-Made Air Force One: ‘I Don’t Sit By The Door’
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Electric-vehicle stocks underperformed the broader market this week, not really benefiting from a dovish Federal Reserve. Tesla, Inc. TSLA, though ending higher for the week, came under pressure in the back-end.
Here are the key events that happened in the EV space during the week:
Tesla Cuts China Production, Lawmaker Renews Call For SEC Probe And More: Shares of Tesla, which saw a modest recovery early in the week, reversed course as fears concerning a first-quarter deliveries miss intensified. A Bloomberg report said the Elon Musk-led company asked its factory workers at Giga Shanghai to reduce a typical 6.5-day workweek to a five-day schedule. This raised concerns about a demand slowdown in one of its key markets.
Sen. Elizabeth Warren (D-Mass.) this week renewed her call to the SEC to investigate Musk and the company's board of directors, citing, “possible misappropriation of Tesla resources and conflicts of interest arising from Mr. Musk's dual role at Tesla and X,” formerly Twitter. The allegations assume importance as a Delaware court earlier this year nullified Musk’s $55.8 billion compensation plan from 2018.
Tesla was slammed by fund managers for luring buyers by the threat of a price hike once the quarter ends. Ross Gerber of Gerber Kawasaki Wealth and Investment Management said it was an “old trick,” while Deepwater Asset Management’s Gene Munster said “it’s hard to read between the lines what a $1k end-of-month discount followed by a $1k price increase means for demand and margins.”
Ford Looks To Capitalize On India’s New EV Policy: Two-and-a-half years after quitting the Indian market, Ford Motor Co. F is plotting a reentry, taking advantage of the country’s changed EV policy, Auto Car India reported.
Ford’s President of the International Markets Group, Kay Hart, reportedly visited the country to assess the next steps regarding restarting of operations at its facility in Southern India. Blue Oval is contemplating making EVs at Chennai, the capital city of the southernmost state of Tamil Nadu, meant for the Indian and overseas markets, with the EVs likely based on its new affordable platform, the report said.
Fisker’s Lifeline, Production Pause: Even as Fisker, Inc. FFSR is negotiating with a large automaker to avoid a potential bankruptcy filing amid a cash crunch, the company announced this week a financing commitment from an existing investor providing up to $150 million of gross proceeds.
The financing is contingent on certain conditions, including the filing of the Form 10-K. The company also said it will pause production for six weeks starting the week of March 18, to align inventory levels and advance strategic and financing plans.
BYD Eyes Greek Market:Warren Buffett-back BYD Co. Ltd. BYDDYBYDDF has been quick with its international expansion. This week, the Chinese EV maker said it is entering the Greek passenger car market with the launch of its Yuan Plus crossover, known as Atto 3 in overseas markets, and the Seal sedan. The company also said it would introduce more models in the European country in the future.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
Canoo’s Facility Designated As FTZ: Lifestyle EV maker Canoo, Inc.GGOEV announced that the U.S. Commerce Department has approved its Oklahoma City facility as a Foreign Trade Zone, which marked a significant milestone that will accelerate its “Made in America” electric vehicle manufacturing strategy, improve unit profitability and enable a faster path to breakeven.
The company said it now sources more than 90% of its parts from the U.S. and allied nations. Approximately 70% of parts come from North America, and the remaining from the rest of the world.
For international sales, the FTZ will significantly enhance profitability by lowering the vehicle cost by up to 5% on parts imported from the rest of the world. “This cost reduction will occur when these Made-in-America vehicles are exported to international markets, which we plan to announce in the near future,” the company said.
The KraneShares Electric Vehicles and Future Mobility Index ETF KARS ended Friday’s session down 2.01% at $22.44, according to Benzinga Pro data. For the week, the ETF fell 0.36%.
Read Next:Forget California, Tesla Goes National: Electric Domination Spreads Across 7 States In One Year
Tesla, Rivian stocks head for third-straight loss, Nio's stock bounces off four-year low
Tesla Inc. lost another bullish backer - one who said Monday that slowing demand, rising inventories and tightening liquidity should hurt the electric vehicle giant's results over the next year.
In addition to Tesla (TSLA), Mizuho analyst Vijay Rakesh, also downgraded the shares of Nio Inc. (NIO) and Rivian Automotive Inc. (RIVN), all to neutral ratings from buy.
"[E]V sales growth is decelerating and much-needed lower-cost models are now expected late 2025-2026," Rakesh wrote in a note to clients. "We believe EV [original equipment manufacturers] face a 'Catch-22,' juggling profitability and production ramps, while undergoing elevated capital risks, and the EV market in China cools."
Rakesh lowered his 2024 growth outlook for sales of battery-electric vehicles to 15%, from his previous forecast of 25% just two months ago. He said government subsidy cuts for EVs, and higher interest rates and insurance costs are keeping affordability low and hurting demand.
Tesla's stock fell as much as 1.2% soon after the open, before bouncing to be up 0.1% morning trading. The stock, which gained 4.4% last week, has still tumbled 15.3% in March.
Rakesh cut Tesla's stock price target to $195, which implies about 14% upside from Friday's close.
He said that while Tesla remains the global EV leader, with unmatched scale and profitability, "moderating growth, China competition, higher inventory" are challenges that could hurt results for the next year.
Tesla, which generated nearly 23% of its 2023 revenue from China, has been facing price cuts of 10% to up to 15% by rival China-based EV makers, including BYD Co. Ltd. (BYDDY), Li Auto Inc. (LI) and Xpeng Inc. (XPEV), Rakesh noted. That has pushed Tesla to lower prices by up to $3,000 on certain models, but also cut production, he said.
Tesla has lost no less than two bulls in March, and one analyst turned bearish. Of the 51 analysts surveyed by FactSet who cover Tesla, just 33% are now bullish, while 47% are neutral and 20% are bearish.
Meanwhile, Nio's stock rose 1.3% in morning trading Monday, to put it on track for the first gain in nine sessions. The stock had tumbled 21% over the past eight sessions, which were all losses as it closed unchanged on March 15.
Rakesh believes Nio will have trouble maintaining prices, given the price wars and the fact that its cheapest model starts at about $41,000.
He lowered his stock price target to $5.50 and cut his 2024 deliveries estimate by 20% to 183,000 vehicles, which is below the Wall Street consensus of about 204,000 vehicles.
Rivian shares slumped 1.6% in morning, after losing 4.9% over the past two sessions.
Rakesh said that while Rivian has "strong branding" and "solid" consumer and commercial sport-utility and truck EV models, the high prices of the R1 model, with prices in the $70,000 to $95,000 range, are "challenging" in the current environment.
Deliveries of the low-price R2 and R3 models are "still distant," as they are slated for the first half of 2026.
Rakesh cut his stock price target to $12, and his 2024 shipments estimate by 11% to 74,500 EVs, below the consensus of about 83,000 EVs.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
XPeng's Margins Turned Positive As A Result Of Cost Cuts
XPeng Inc XPEV delivered a less-than-feared fourth quarter loss due to cost cuts that brought margin improvements. However, the China-based EV maker provided a muted EV delivery guidance amid the economic and demand slowdown, joining the EV king Tesla Inc TSLA who also warned of a slowdown by stating this year’s vehicle volume growth could be “notably lower” compared to last year. Both Tesla and XPeng confirmed the launch dates of their affordable EVs in response to the rising competition amid a weakening macroeconomic backdrop.
Fourth Quarter Highlights
During the quarter that ended on December 31st, XPeng reported its net loss lowered from last year’s comparable quarter when it amounted to $330 million to $190 million.
XPeng delivered 60,158 vehicles, which translates to an impressive YoY growth of 170.9%. Total revenue expanded 153.9% YoY to $1.84 billion, surpassing $1.76 billion that analysts expected. Non-GAAP net loss that includes share-based compensation and fair value adjustments on derivative liabilities, along with other items, amounted to $250 million, also improving from last year’s comparable quarter when it amounted to $310 million.
The ongoing EV price war that Tesla ignited took a toll on vehicle margins. Gross margin improved from Q3’a -2.7% to 6.2% but contracted 8.7% on a YoY basis. Vehicle margin improved from Q3’s -6.1% as it amounted to 4.1% but also dropped 5.7% on a YoY basis.
Q1 Guidance
Production-wise, XPeng is expecting the output to be between 21,000 and 22,500 vehicles, which translates to an annual growth between 15.2% and 23.4%. XPeng guided for revenue growth between 43.8% and 53.7% with the outlook range between $800 million and $860 million.
Both XPeng and Tesla are expanding their EV lineups with an affordable model
On Saturday, XPeng also confirmed the launch of its affordable EV that will be equipped with artificial intelligence features. The new brand’s concept revolves around making the first AI-assisted driving car for young people and it will be priced between 100,000 yuan and 150,000 yuan, which equates to a range between $14,000 and $21,000. XPeng confirmed that the new brand will be launched as early as next month. But, Tesla is also bringing its affordable EV to life but production is planned for mid-2025. Tesla has confirmed the compact EV model will cost around $25,000.
The China Passenger Car Association reported that EV sales in China slowed to 18.2% during the first two months of the year, after increasing 20.8% in 2023. In response, XPeng is speeding up its EV lineup and entering new markets as it narrowed losses and boosted revenue. But even the XPEng CEO is aware that 2024 will be the first year of intense competition on the China’s EV front, one that will even threaten Tesla.
DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.
Here are the key events that happened in the EV space during the week:
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. FSR 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. NSANY 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. RIVN 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.”
Ex-Ford Executive Says EV Transition Will Take Longer: Former Ford CEO Mark Fields said in an interview with CNBC that an EV transition will happen but will also take time. Even when EVs become mainstream, there will be a niche market for internal combustion engines that caters to collectors and enthusiasts, he said. Fields also said early EV adopters will be motivated by its innovation and environmental impact while the average consumer will prioritize cost and convenience.
The auto industry veteran flagged EVs' premium pricing, insufficient charging infrastructure and the time required for charging as major deterrents for EV adoption. He sees the current landscape favoring hybrid vehicles, which are a compromise between traditional ICE vehicles and fully electric vehicles.https://www.linkedin.com/shareArticle?title=Former%20Ford%20CEO%20Mark%20Fields%20Warns%20of%20Potential%20Slowdown%20in%20EV%20Adoption,%20Citing%20Cost%20and%20Convenience%20Concerns&url=https://www.webpronews.com/former-ford-ceo-mark-fields-warns-of-potential-slowdown-in-ev-adoption-citing-cost-and-convenience-concerns/
https://ientry.nui.media/pipeline/1457274/0/cc?z=ientryCheck out more of Benzinga’s Future Of Mobility coverage by following this link.
Polestar Cuts Yet-To-Be Launched SUV Prices: Swedish EV maker Polestar Automotive Holding UK PLC PSNY, which is now supervised by China’s Geely Automobile Holdings Limited GELYF, said its third EV, the Polestar 3, an SUV due to be launched in the U.S. later this year, will have a starting price of $73,400, down from the $84,000 price point it had signaled when it announced the vehicle in October 2022. The company said all Polestar 3 variants will come standard with its Pilot pack, which includes driver-assistance features like adaptive cruise control, lane-keep assist, automated lane changes and a heads-up display.
The KraneShares Electric Vehicles and Future Mobility Index ETF KARS ended Friday’s session up 0.27% at $22.52, according to Benzinga Pro data. For the week, the ETF rose 1.08%.
Read Next: Cracks In Tesla’s Armor? Bearish Analyst Shares Value Investor’s Take On Why Wall Street’s ‘More-Than-A-Car-Company’ Thesis Is Flawed
BYD unveiled an updated version of its cheapest electric car model, Seagull, and further slashed its starting price, deepening a price war amid rising competition in China, the world's largest car market.
The Chinese electric-vehicle company lowered the starting price of its updated version of Seagull by around 5% to 69,800 yuan ($9,698) on Wednesday.
The price cut came two days after BYD set the starting price for its new Yuan Plus crossover at CNY119,800, around 12% lower than the previous version.
Similarly, rival Tesla rolled out more incentives in China last week, including insurance subsidies, after the U.S. carmaker cut the starting price of its entry-level Model 3 by 5.9% and the price of its Model Y by 2.8% in January.
EV makers have faced greater pressure amid slowing vehicle sales and overcapacity in the world's second-largest economy.
BYD's shipments tumbled to 121,748 vehicles in February from 201,493 a month earlier, while Tesla shipped 60,365 China-made vehicles during February, its lowest monthly reading since late 2022, preliminary data from the China Passenger Car Association showed Monday.
Write to Sherry Qin at sherry.qin@wsj.com
Nikola Stock 2025 Forecast: Will NKLA Go Bankrupt, or Become a Multibagger?
However, many others see the company as headed towards bankruptcy. To be sure, several startup green energy companies have gone bankrupt over the last two years. The list includes names like Arrival ARVLF, Bird Global BRDSQ, Lordstown Motors RIDEQ, Electric Last Mile Solutions ELMSQ, and Proterra PTRAQ.
The common thread between these companies is that they went public through a special purpose acquisition company (SPAC) merger – a group that also counted Nikola among its early adopters in 2020. At its peak that year, Nikola’s market cap surpassed that of Ford Motor F – which was possibly the first warning about an impending bubble in the EV industry, as Nikola hadn’t even started delivering its vehicles by then.
Barchart
The EV Bubble Has Definitively Burst
The bubble in EV stocks eventually burst in 2022, but not until after we saw Rivian’s market cap surpass $150 billion while Tesla’s TSLA market cap peaked above $1.2 trillion – ahead of the combined market cap of all other leading automakers.
However, the sector’s joyride ended in 2022, when the Fed embarked on its most aggressive rate-hike campaign in decades. This effectively pulled the plug on the supply of easy money which was the lifeline for almost all of the companies in the startup green energy ecosystem, given their massive cash burn and the need for frequent cash infusions.
Nikola’s Troubles Stretch Beyond Macro Woes
While startup EV companies have blamed poor macros, which include higher interest rates and a macroeconomic slowdown, for their woes - Nikola’s troubles stretch well beyond this unsupportive environment.
The company has a troubled past, and a few months after its listing, Hindenburg Research accused it of fraud and misrepresenting the ability of its vehicles. The company’s founder, Trevor Milton, resigned shortly after the allegations and was subsequently found guilty of fraud.
Incidentally, in 2021, Hindenburg Research also accused Lordstown Motors of fraud, and the company has since gone bankrupt as it could not raise cash to fund its perennially cash-guzzling operations.
NKLA Is a Much Different Company Now
To be sure, Nikola has now distanced itself from Milton, and is a much different company. It has sold the Badger pickup truck program, exited Europe, and is now focusing on hydrogen fuel cell electric trucks and HYLA infrastructure solutions, primarily in the California and Canadian markets.
The company held $464.7M of unrestricted cash on its balance sheet at the end of 2023, which is the highest in two years. But while that cash pile helps increase the loss-making company’s runway, it has come at a steep cost, in terms of a bloated outstanding share count.
Specifically, Nikola's outstanding shares total almost 1.16 billion now – three times the amount at the time of its SPAC merger. Notably, along with selling shares to raise cash, Nikola has also been using stock-based compensation generously. The company’s stock-based compensation was $75.4 million in 2023 - which, for context, is just about 10% of its current market cap. While Nikola expects stock-based compensation to fall to around $30 million in 2024, that figure is still high, based on the company's size.
Even with the fat stock-based compensation, we've seen quite a churn in Nikola’s C-suite. The company has had four CEOs in as many years, while CFO Anastasia Pasterick quit the position last year after a brief span of only 6 months.
Nikola Stock 2025 Forecast
During Nikola’s Q4 2023 earnings call, the company’s CEO Steve Girsky tried to sound upbeat regarding the company’s 2025 outlook. He said that if the company can increase vehicle selling prices and reduce production costs, “we believe we can be in a position to produce a positive cash contribution margin on every truck as we transition into 2025.”
Barchart
He also said, “We're starting the year in a strong position as demand is not a constraint, and we believe we can sell every truck we can build.” The company is hopeful of turning positive on the EBITDA level in 2025. During the earnings call, Girsky also ruled out any further capital raise in the near term.
Nikola might not go bankrupt for at least a few quarters, thanks to the massive capital raise and the lower expected cash burn, but it is too risky a name to bet on as a potential multibagger, as well.
While the company is a lot more focused now, and only targeting a few markets to lower its cash burn and maximize the return on capital, I would still give NKLA stock a miss, and would rather stick with some of the more credible names in the startup green energy ecosystem.
On the date of publication, Mohit Oberoi had a position in: F , TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
** Lotus Technology's 75Q shares down 3.6% at $13.31 premarket, a day after luxury electric car maker's Nasdaq debut
** U.S.-listed LOT shares on Fri closed up ~2% at $13.80 co completed merger with special-purpose acquisition company backed by PE firm L Catterton
** Lotus Tech, headquartered in central Chinese city of Wuhan, is part of British sports car maker Lotus Group, which is owned jointly by Chinese automaker Geely (GEELY.UL) and Malaysia's Etika Automotive
** In a statement late Fri, Lotus Tech said Nasdaq listing will support development of its next-generation automobility technologies and expected expansion of its global distribution network from around 200 to over 300 stores globally by 2025
** Lotus Tech has launched two EVs, including the Eletre hyper-SUV and Emeya hyper-GT, and plans to launch two additional luxury EVs over the next two years
** Prior to the merger, over 90% of the L Catterton-backed SPAC redeemed their holdings. A thin public float of shares typically exposes a stock to volatility
** As of Fri, LOT had market valuation of ~$9.6 bln, per LSEG data. That compares to other U.S.-listed China-based EV makers Xpeng XPEV at $8.1 bln, Nio NIO at $11.2 bln and Li Auto 2015 at $37.9 bln
Eikon search string for individual stock moves:STXBZ
Wall Street's main indexes were mixed on Tuesday as investors awaited a crucial inflation report and other economic data that would offer further clues on the timing of rate cuts from the Federal Reserve and guide investor expectations.
At 13:33 ET, the Dow Jones Industrial Average DJI was down 0.41% at 38,910.21. The S&P 500 SPX was down 0.13% at 5,062.97 and the Nasdaq Composite IXIC was down 0.03% at 15,971.679.
The top three S&P 500 (.PG.INX) percentage gainers:
The number of trucks produced dropped, but the number shipped rose
Shares of Nikola Corp. fell Thursday, after the battery- and hydrogen-powered trucks maker beat fourth-quarter bottom-line expectations, while revenue more than doubled but fell short of forecasts.
The company said it delivered its first hydrogen fuel cell electric truck during the quarter, and delivered a total of 35 trucks during the period, to leave "no finished goods" in inventory.
"There are more requests [in California] for our fuel cell truck alone than all other truck [original equipment manufacturers] combined on both battery and hydrogen fuel cell electric trucks in the same period," said Chief Executive Steve Girsky.
The stock (NKLA) dropped 1.1% in morning trading. It has closed below the $1 level every session since Dec. 5.
The selloff followed the losses seen in the shares of other electric vehicle makers that reported results after Wednesday's close, as Rivian Automotive Inc.'s stock (RIVN) plunged 23.5% and Lucid Group Inc. shares (LCID) shed 9.3%. Meanwhile, EV leader Tesla Inc.'s stock (TSLA) lost 0.9%.
Also read: EV maker Nikola rejects convicted founder Trevor Milton's plan to add 5 board members.
For the quarter to Dec. 31, net losses narrowed to $153.6 million, or 14 cents a share, from $222.1 million, or 46 cents a share, in the same period a year ago.
Excluding nonrecurring items, the adjusted per-share loss of 11 cents beat the FactSet loss consensus of 13 cents.
Total revenue jumped 111.1% to $11.53 million, but missed the FactSet consensus of $13.2 million.
The number of trucks produced fell to 42 from 133, while the number shipped hiked up to 35 from 20.
Regarding the recall of trucks announced in August 2023 for a battery issue, the company said it remains on track to deliver the first "re-worked" battery-electric trucks with new battery packs back to users by the end of the first quarter. And CEO Girsky said he believes all trucks will be returned to end-user fleets by the end of the second quarter or early in the third quarter.
The stock has tumbled 26.1% over the past three months, while the Global X Autonomous & Electric Vehicles ETF DRIV has gained 3.6% and the S&P 500 index SPX has advanced 10.7%.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
EV sector grapples with layoffs, production cuts and altered plans
A global slowdown in electric-vehicle demand is rippling through the industry, costing jobs and leading to changes in strategic plans, layoffs and production cuts, suggesting pain in the near term could slow the transition away from gasoline-powered combustion engines.
On Thursday, German luxury carmaker Mercedes MBG toned down expectations on EV demand and said it will update its gasoline-powered engine vehicle lineup well into the next decade.
Mercedes delayed its goal to go all-electric by 2030. Instead, it now says it will retain combustion engines in at least half of its vehicles until then. Previously, it had hedged by saying consumer demand would dictate how soon it went all-electric.
"High interest rates, moderate oil prices, and range anxiety all have conspired against EV demand. The enthusiasm of early adopters of EVs wasn’t representative of the longer-term and broader demand for these vehicles," said Brian Jacobsen, chief economist at Annex Wealth Management, which does not own shares in any EV makers.
"We expected a reduction in demand and enthusiasm for the vehicles so we didn't find the valuations compelling," he added.
Thomson ReutersElectric vehicle sales growth to slow in 2024
The pivot by Mercedes comes a day after EV startups Rivian RIVN and Lucid LCID forecast 2024 production well below analysts' expectations and Rivian cut its workforce by 10%. That news caused shares of Rivian and Lucid to tumble on Thursday by 27.5% and 19.5%, respectively.
The pain follows last year's price war that drained margins and pressured many companies' already money-losing EV operations.
"There is a host of macro-level challenges," Rivian CEO RJ Scaringe told Reuters on Wednesday, adding that high interest rates and geopolitical risks were making consumers price-sensitive.
The situation was previously flagged by Ford F, General Motors GM and market leader Tesla TSLA, where CEO Elon Musk's warning in January of the market leader's slowing pace of growth slashed $80 billion in market value in one day.
Prices for used EVs collapsed by 16.4% in January compared with a year ago, according to Manheim Used Vehicle Value index data. Even in China, the world's largest auto market where demand for EVs has been strong, new-energy vehicle sales fell 38% in January, the first monthly drop since August 2023.
Thomson ReutersUsed EV prices drop following a year of EV makers slashing prices
That drumbeat of bad news even has the administration of U.S. President Joe Biden set to propose a softening of limits on tailpipe emissions designed to get more Americans into EVs, sources said.
Earlier this month, Volvo Cars VOLCAR_B decided to halt investments in Polestar PSNY after the money-losing luxury EV offshoot brand missed a 2023 delivery target.
Some industry observers argue that the long-term picture of a transition to EVs remains in place despite any short-term road bumps.
"A slowdown in the growth rate from 45% to something more sustainable is not the disaster the press has been pushing. And interest rates affect all car sales, not just EVs," said Vitaly Golomb, a Rivian investor and investment banker who focuses on mobility.
"The effect is more pronounced on more expensive vehicles of course and EVs still average higher price," he added. "Perhaps (automakers) need to emphasize the stark difference in total cost of ownership."
BYD EVs Are Coming to the U.S. How Long Do Tesla, and Ford Have to Prepare? — Barrons.com
Chinese electric-vehicle giant BYD is thinking about building a car assembly plant in Mexico. That's one way to crack the U.S. market. The possibility of a BYD plant in this region is a big deal and while Tesla, General Motors, and Ford Motor have time to prepare they should start getting ready right now.
Wednesday, Nikkei Asia reported that BYD was considering building a car plant in Mexico. Ultimately, that would be the avenue for BYD cars to enter the North American market. BYD didn't immediately respond to a request for comment about its expansion plans.
"The company's spokesperson did not mention where exactly the company is looking but indicated Nuevo Leon and Bajio are likely candidates," wrote Deutsche Bank analyst Edison Yu in a Thursday report. Nuevo Leon is the same region where Tesla is building a new car plant.
"After leading as one of the top EV share takers in China, BYD is expanding overseas and last year delivered 243,000 units across 70 countries," he added. Exports accounted for about 8% of the 3 million-plus cars BYD sold in 2023.
None of BYD's exports entered the U.S., though. Local production is a must for a Chinese auto maker, because the U.S. tariff on Chinese car imports is 25%. That makes exporting from China a nonstarter. If BYD cut prices to offset the tariff in the U.S., the implied loss per car — based on recent financial performance — would be in the range of $4,000 to $5,000 — excluding any cost of shipping.
So if production is a must, how long does Tesla and the rest of its U.S. peers have to prepare? A plant takes a year or two to build. BYD would also need to organize distribution in the U.S.
Toyota Motor offers some context on how a new entrant can gain a foothold in the U.S. Toyota started selling cars in the U.S. in 1958, and sold 258 vehicles that year. By 1963 Toyota had 125 dealerships.
Dealerships selling imports weren't a significant threat to the domestic industry. Toyota's U.S. market share entering the 1970s was about 1%, according to automotive data provider Wards. Toyota made its first manufacturing investments in the U.S. in 1972 and 1974. Toyota and GM formed a joint venture in 1984 that would become the Fremont, Calif., plant eventually sold to Tesla.
Toyota picked up about 6 percentage points of market share through the manufacturing expansions of the 1970s and 1980s. Today Toyota has 13 plants in North America including eight vehicle assembly operations. In 2023, Toytoa sold 2.2 million cars in North America and owned about 14% of the U.S. market.
After Toyota established U.S. manufacturing capacity, it took about 20 years for the company's market-share gains started to significantly affect the results of domestic auto makers.
Things seem to happen faster these days, so U.S. auto makers have, perhaps, a decade to get ready. How to prepare is a good question. BYD makes low-cost battery EVs and plug-in hybrid vehicles profitably. They make their own batteries, which helps keep costs down. All the U.S. auto makers have or are building battery capacity, which should nullify that advantage. Labor rates in Mexico are lower than in the U.S., but all U.S. manufacturers have or will have Mexican capacity.
Given all that, competitive success will boil down to product. Domestic auto makers need lower-priced, attractive, electric vehicles. The 2024 Chevy Equinox EV starts at $35,000. That car will be available in mid-2024.
Ford is working on what it calls gen-two EVs now. Gen-two comes after gen-one which includes the Mustang Mach-E and F-150 Lightning. Those vehicles are essentially modified gasoline-powered platforms and aren't optimized for electric technology.
One of Ford's gen-two vehicles will be a smaller, lower-priced EV. And Tesla is working on its next vehicle platform which will be the basis of a battery electric vehicle that might start below $30,000. That vehicle might be on the roads in 2025.
The sooner the better.
BYD's U.S.-listed American depositary receipts were up 3.2% in midday trading at $48.58. The S&P 500 and Nasdaq Composite were up 0.4% and 0.7%, respectively.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
It is a truth only recently acknowledged by Tesla TSLA CEO Elon Musk and his rivals that Chinese carmakers are eating their lunch. But a pinch of salt might unsettle the auto industry’s new world order all over again. Brands from BYD 002594, 002594 to French-Italian Stellantis STLAB are betting on sodium for electric batteries. The tech could accelerate electrification – and might loosen China’s grip on the industry, too.
Sodium can be used as the key ingredient in electric-vehicle batteries, replacing lithium, used in most of today’s EVs. The process is roughly the same. Ions, which are electrically charged atoms, move through a liquid electrolyte, allowing the unit to store or release energy. However, using sodium makes the process faster than most lithium - or nickel-based models. Sodium battery packs can reach 80% of capacity in just 15 minutes, the time a Tesla Supercharger takes to charge a car for a 275 km trip. Sodium batteries hold up better in colder temperatures, too.
Most enticingly, sodium is a cheaper alternative to lithium. That’s because it is easily found in salt and soda ash, making it the sixth most abundant element on earth. While there are just over 100 million metric tons of known lithium resources in the world, there are tens of billions of tons of soda ash, according to the U.S. Geological Survey. In 2022, the cost of a sodium-ion battery pack was as low as $90 per kilowatt of energy stored, while cells using lithium were 30% to 40% more expensive, Wood Mackenzie noted.
On the downside, sodium-based batteries hold only about half as much energy per kilogram as their lithium counterparts. That means that larger power packs are needed to carry the weight of a Tesla Model Y or a BYD Seal over long distances. However, beyond a certain point, it is not possible to fit an oversized battery into a conventional chassis without disturbing the delicate balance of mass, proportion and aerodynamics. Consequently, unless there is a major tech breakthrough, cars using this material will have a shorter range than many models available on the market today.
Thomson ReutersBattery material prices charged up, then hit the brakes
Those qualities meant sodium was largely neglected in the early days of electric vehicles, despite decades of research into its potential. But companies became less concerned about its shortcomings when the price of lithium and other key battery metals soared in 2021. The rally acted as a catalyst for the first wave of commercialisation. Industry leader CATL 300750 announced plans for cheaper sodium-ion packs that same year, and started to deliver the new products to Chinese auto giant Chery in April 2023.
POWER STRUGGLE
Western players will see advantages beyond affordability. China’s grip over crucial battery metals allows it to dominate the entire electric-car supply chain. The country could secure access to around a third of the world’s lithium mine production by 2025, while Chinese companies already accounted for 72% of the metal’s global refining capacity in 2022.
Replacing lithium with sodium offers a chance to rebalance. The United States holds over 90% of the world’s known reserves of soda ash, the most cost-efficient source, says the U.S. Geological Survey. China has started using the synthetic alternatives, but extracting sodium from natural sources can halve the cost, emit 70% less carbon dioxide, and consume nearly 80% less water, according to Turkish producer WE Soda.
Supply chains are not the only factor that could see this tech tilt the centre of gravity away from China. Sodium-based batteries are suited to smaller, cheaper four-wheelers, scooters and energy storage solutions. Demand for such products is growing in India and Southeast Asia. That may favour local champions like Mumbai’s Reliance Industries RELIANCE1!, which bought a British startup focused on sodium in 2021.
Salt is still in its salad days. Battery manufacturers had announced a grand total of 158 gigawatt hours of annual production capacity as of August, according to Wood Mackenzie: that’s only a little more than Musk’s Nevada gigafactories can make each year. Even so, sodium ion’s geopolitical advantages are too tempting to ignore.
Follow @KatrinaHamlin on X
CONTEXT NEWS
French-Italian carmaker Stellantis announced on Jan. 12 that it is investing in European startup Tiamat, which produces batteries based on sodium, commonly found in salt and soda ash. The exact amount of the investment, which is part of an initial 150 million euro fundraising, was not disclosed.
China’s electric auto manufacturer BYD has started construction on a plant in Jiangsu to build batteries based on sodium ions, electrically charged atoms. The factory, with total investment of 10 billion yuan ($1.4 billion), has a planned annual capacity of 30 gigawatt hours, Reuters reported on Jan. 5.
Indian conglomerate Reliance Industries agreed to buy British startup Faradion, which specialises in sodium-ion batteries, for 100 million pounds in December 2021.
The world’s largest battery maker, China’s CATL, first unveiled its sodium batteries in 2021, and has since started to deliver sodium-ion products to customers.
Volvo's Polestar troubles signal 'shakeout time' for EV industry
The shakeout in the global electric-vehicle industry is picking up speed.
Chinese automaker Geely's (GEELY.UL) move on Thursday to take over funding of struggling EV maker Polestar PSNY from Volvo Cars VOLCAR_B is the latest consolidation among EV brands since Tesla Inc's TSLA historic financial surge in the early 2020s.
Tesla rode cheap capital, technological breakthroughs and Elon Musk's outsized persona to a $1-trillion valuation - but only after years of heavy spending before turning a profit. Now legacy automakers, startups and investors that bet more than $1.2 trillion on EVs face increasingly tough decisions to cut losses.
Geely owns a majority stake in Volvo, which has operated Polestar as an offshoot luxury EV brand with similar styling.
The struggles of Polestar and other smaller players underscore the massive expense of developing EVs, which favor deep-pocketed companies willing and able withstand sustained financial bleeding. A global EV-demand slowdown could now weed out weaker players or force a consolidation wave.
"It's certainly shakeout time," said Andy Leyland, co-founder of supply chain specialist SC Insights. "EV startups need to start showing both how they will move to profitability, and how they will compete ... with larger players and the Chinese."
Volvo's decision to halt Polestar investments came after the money-losing luxury EV offshoot brand missed a 2023 delivery target that had already been repeatedly revised downward.
Polestar needs another $1.3 billion in funding before it reaches the break-even point in 2025. Its stock has dropped 87% since it debuted in June 2022, limiting its ability to raise fresh capital.
Geely, among China's largest automakers, sold nearly 2.8 million vehicles in 2023 - roughly four times the number of vehicles as Volvo.
Geely Chair Li Shufu aims to expand exports from China and gain economies of scale across brands including Western nameplates Volvo, Smart and Lotus. With full control of Polestar, Geely could streamline investment and technology sharing, analysts said.
Polestar welcomed Geely's financial backing in a statement Tuesday. Geely said Thursday it will "continue to provide full operational and financial support" to Polestar going forward. That will not require a reduction of Geely Holding shareholding in Volvo Cars.
Other EV startups including Rivian, Fisker, Arrival, Xpeng and Lucid have all struggled with the cost of scaling up. Fisker, for example, last month renegotiated terms of a debt deal to allow it to take on a strategic partner.
Tesla also struggled with what Musk called "production hell" - but did so in 2018 when money was cheap, investors were more patient and future demand for EVs seemed limitless.
Capital-market enthusiasm for EVs has cooled as the growth of EV sales slowed and financial losses have piled up. That shortened runways for money-losing startups and pushed legacy automakers to seek more public subsidies.
EV PRICE WAR ESCALATES
Musk's warning last week Tesla's growth pace will slow this year led investors to slash $80 billion from the company's market value in one day. Tesla has lost more than 40% of its value since it hit the $1 trillion market cap milestone in 2021.
The price war that Tesla and EV sales leader BYD escalated last year has forced weaker EV industry rivals to choose between wider losses or lower sales volumes.
Ford last summer ramped up production of its Ford cut F-150 Lightning in anticipation on strong demand only to cut later cut 2024 production forecast by half in January.
In Europe, Stellantis has said it needs more Italian-government subsidies to increase production of electric vehicles at Fiat factories. A senior Italian official said Thursday the government would consider taking a stake in Fiat to support more jobs.
As the EV industry has become more Darwinian, investors are rewarding companies that pull back on spending.
Volvo shares soared more than 30% Thursday after the company said it would no longer fund Polestar. Investors cheered when Renault said it would not go forward with a planned share offering for its Ampere EV unit.
General Motors GM shares have risen nearly 50% since November as CEO Mary Barra has slowed spending on EVs and autonomous vehicles and launched a $10 billion share buyback.
GM has realized "spending $36mm per day trying to be the ‘next Tesla’ isn’t working," Morgan Stanley analyst Adam Jonas said in a note Thursday.
Consolidation waves are not new for the capital-intensive auto industry.
In the early 20th century, scores of U.S. and European entrepreneurs tried to cash in on the promise of then-new combustion-engine technology. For every Henry Ford, dozens of other car-company founders failed or were swallowed by bigger, better-funded rivals. General Motors, Stellantis and Volkswagen are built on the skeletons of once-independent automakers.
Geely's move to consolidate Polestar represents one pathway for struggling EV startups.
"Putting Polestar in the direct Geely orbit may help distribute the weight over a larger group’s balance sheet, giving them more time to scale up," said Bill Russo, CEO of Shanghai-based advisory firm Automobility.
Industry pain abounds as electric car demand hits slowdown
While automakers and suppliers are betting big on future demand for electric vehicles, a near-term global slowdown is causing pain, including bankruptcies, scrapped initial public offerings and production cuts.
Investment in capacity and technology development has outrun actual EV demand, boosting pressure on companies to cut costs.
"It's true, the pace of EV growth has slowed, which has created some uncertainty. We will build to demand," General Motors GM CEO Mary Barra said on an earnings call Tuesday.
GM previously cut EV production targets due to the slowing demand, but Barra told analysts GM was "encouraged" by industry forecasts that EV sales in the United States are forecast to rise at least 10% this year from about 7% in 2023.
Ford F also previously cut EV production due to a growth rate that is rising more slowly than previously expected.
Tesla CEO Elon Musk underscored the near-term struggles, warning last week of a sharp slowdown in sales growth this year. With margins falling amid price cuts, shareholders erased $80 billion from Tesla's stock valuation the following day.
"There's no doubt that the limitations - EV charging and the lack of battery resiliency at low temperatures - are causing consumer anxiety," said Tim Piechowski, portfolio manager with ACR Alpine Capital Research, which owns GM shares.
"The reality is that the adoption curve will be slower and there will be pushback to regulators about fuel economy," he added. "It'll just be a longer ramp than perhaps was initially anticipated."
That slower pace was underscored this month as companies pull back on prior plans.
On Monday, France's Renault RNO ditched plans to list its EV business Ampere because of sluggish stock market conditions. The company had said the IPO could be worth up to 10 billion euros.
MUDDY WATERS FOR THE ECONOMY
Suppliers are affected, too.
China's CATL 300750 on Tuesday forecast 2023 profit growth sharply lower than the previous year as it grappled with slowing demand and stiff competition.
CATL, the world's largest EV battery maker, faces challenges from smaller rivals and slowing demand in China, the largest EV market.
China's second-ranked EV battery maker BYD 002594 on Monday forecast its 2023 net profit rose at a far slower pace than 2022, while last week Korean battery maker LG Energy Solution 373220 predicted slowing growth in the global EV market this year.
"Global EV momentum is stalling. The market is over-supplied vs demand," Morgan Stanley analyst Adam Jonas said in a recent research note.
Albemarle, the world's largest producer of key EV battery material lithium, said this month it was cutting jobs and capital spending in response to slipping prices. A report put the job cuts at 4% of its workforce.
Meanwhile, German EV sales, including plug-in hybrid models, fell 16% last year and are forecast to drop another 9% in 2024, including a 14% decline for pure battery EVs, according to German auto association VDA.
"Subsidies have run out and at the same time, we are in muddy waters across the economy. Consumers' propensity to buy is not particularly pronounced," VDA chief economist Manuel Kallweit said.
Still, German production of EVs is forecast to increase by 19% this year to 1.45 million, with much of the output destined for export, VDA said.
EV demand in Europe has weakened and the region's carmakers face competition from Chinese rivals. Those feeling the pain hardest in the sector seem to be the EV startups.
Britain's Arrival on Monday said it received a delisting and stock trading suspension notice from the Nasdaq. Lordstown Motors, Proterra and Sweden's Volta Trucks have gone bankrupt as a tough economy weighs on demand and hinders access to capital.
Polestar PSNY last week said it planned to cut about 15% of its workforce, or 450 people, due to the challenging market.
The long-term is where automakers are placing their bets with EVs, even as they still benefit from strong demand for internal-combustion engine (ICE)-powered vehicles.
"We know the EV market is not going to grow linearly," GM CFO Paul Jacobson said Tuesday. "We are prepared to flex between ICE and EV production."
XPEV stock is trading lower on Monday after China’s car sales dropped in June.
F revealed it had its second-best quarter despite challenges as its U.S. EV sales improved both during the quarter and in June. General Motors 
GM also posted its best quarterly sales figures in more than three years and it owes it to notable increases in pickup truck and EV sales. Moreover, its second quarter EV deliveries reached a record, while its full-size pickup truck deliveries were the highest since 2021.
WKSP. Worksport is scheduled to release an innovative power duo as the SOLIS tonneau cover is to be accompanied by COR, a portable battery system. With this revolutionary power duo, Worksport promises to ease range anxiety of EV drivers while providing off-grid power on the go. The Alpha release of this groundbreaking product is expected this summer and is announced to be available for major brands, including GM and Ford. 
AWC, South32 
S32, Sandfire Resources 
SFR, and Nickel Industries 
NIC among many more.
AIS
AMI
BHP
CTM
CSC
ILU
LYC
RIO
RXM
NKLA stock hit record lows last week after the maker of hydrogen fuel cell trucks announced a 1-for-30 reverse stock split, which was the maximum ratio it could have gone for. The reverse stock split, which will go into effect after today's closing bell, will correct Nikola’s violation of Nasdaq listing rules, as its share price was consistently trading below the exchange's minimum threshold of $1.
TSLA market cap surpassed $1 trillion, while newly listed Rivian 
RIVN was valued at over $150 billion. 
AMZN and General Motors 
2015 drop 8.5% to HK$105, their lowest since late-Jan
HSCEI and Hang Seng Index (.HIS), which are down between 1%-2.4%
NIO, BYD 
002594, Geely 
175, Xpeng 
INTC fell sharply in today’s pre-market trading after the company outlined a new financial framework for its foundry business.
MESO shares tumbled 13.1% to $5.73 in pre-market trading after gaining 8% on Tuesday.
GUTS fell 9.1% to $6.13 in pre-market trading after declining around 10% on Tuesday. The company recently announced FDA IDE approval for the Revita Remain-1 pivotal study and then rebounded after reporting Q4 financial results.
NUVB shares fell 5.8% to $3.25 in pre-market trading after declining over 6% on Tuesday. Nuvation Bio, last week, announced appointment of Colleen Sjogren as Chief Commercial Officer.
SHG shares declined 5.6% to $31.47 in pre-market trading.
KARS ended Friday’s session down 2.01% at $22.44, according to Benzinga Pro data. For the week, the ETF fell 0.36%.
WKHS
HYZN
LCID
FFIE
VFS
FSR 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.”
NSANY was in talks to invest in the beleaguered EV startup.
PSNY, which is now supervised by China’s Geely Automobile Holdings Limited 
ARVLF, Bird Global 
BRDSQ, Lordstown Motors 
RIDEQ, Electric Last Mile Solutions 
ELMSQ, and Proterra 
PTRAQ.
75Q shares down 3.6% at $13.31 premarket, a day after luxury electric car maker's Nasdaq debut
DJI was down 0.41% at 38,910.21. The S&P 500 
SPX was down 0.13% at 5,062.97 and the Nasdaq Composite 
IXIC was down 0.03% at 15,971.679.
NCLH, up 16.8%
CEG, up 13.2%
CCL, up 7.4%
SBAC, down 4.6%
IFF, down 3.4%
HSIC, down 3.2%
GOTU, up 34.3%
BBAI, up 31.9%
HIMS, up 31.3%
CLVT, down 22.3%
OGEN, down 19.8%
AAN, down 18.8%
JANX, up 209.7%
VKTX, up 112.8%
CXAI, up 74.9%
NERV, down 58.5%
ARIZ, down 39.6%
TWKS, down 32.4%
MCD: down 0.9%
DPZ: down 2.8%
U: down 8.4%
LUNR: down 11.3%
LOW: up 1.9%
IRBT: down 1.8%
TMDX: up 13.3%
HBAN: up 1.6%
M: up 4.4%
MSTR: up 9.9%
HES: down 3.2%
FOUR: up 3.8%
DK: down 7.6%
AEP: up 2.5%
AZO: up 5.1%
KR: up 2.6%
ROKU: down 1.4%
SEZL: up 18.0%
KNX: down 1.9%
APO: down 0.2%
EVER: up 0.6%
CAVA: up 11.5%
JPM: down 0.3%
AMGN: down 2.0%
BAC: up 1.9%
VTS: up 4.8%
MBG toned down expectations on EV demand and said it will update its gasoline-powered engine vehicle lineup well into the next decade.
VOLCAR_B decided to halt investments in Polestar 
STLAB are betting on sodium for electric batteries. The tech could accelerate electrification – and might loosen China’s grip on the industry, too.
300750 announced plans for cheaper sodium-ion packs that same year, and started to deliver the new products to Chinese auto giant Chery in April 2023.
RELIANCE1!, which bought a British startup focused on sodium in 2021.
RNO ditched plans to list its EV business Ampere because of sluggish stock market conditions. The company had said the IPO could be worth up to 10 billion euros.
373220 predicted slowing growth in the global EV market this year.
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