Electric Vehicle Stocks Struggle As Tesla’s Earnings Report Looms

Electric vehicle stocks turned in a lackluster performance in the week that ended on Oct. 13, with the volatility in the broader market serving a a drag on a week during which inflation and the start of the earnings season took the spotlight. Market leader Tesla, Inc. (NASDAQ:TSLA) had a down week ahead of the release of its earnings report.

Here are the key events that happened in the EV space during the week:

Tesla Q3 Margin Worries, Shareholder Focus On Cybertruck And More: Ahead of Tesla’s third-quarter earnings, bullish analysts expressed concerns about the company undershooting margin expectations. Future Fund’s Gary Black said the most crucial metric this quarter is the auto gross margin, excluding regulatory credits. While the Street estimate pegs this figure at 18%, Black’s projection is 17.1%.

A key question this time is what Tesla’s management will communicate during the conference call regarding whether auto gross margins in the fourth quarter will drop below those of the previous quarter, Black said.

Gene Munster, a managing partner at Deepwater Asset Management, said the 11.5% price reduction, accounting for vehicle mix, resulted in a roughly 26% decrease in gross profit. He modeled auto gross margin, excluding regulatory credits, to come in at 17.5% to 17.8%. 

Meanwhile, Tesla sharehZenger News are all focused on the way forward. SharehZenger News owning approximate.y 3.1 million shares of the EV pioneer are keen to know the number of Cybertrucks the company hopes to deliver in 2024, according to a third-party website that compiles sharehZenger News’ questions on behalf of the company.

Tesla, meanwhile, lowered leasing prices of the Model 3 and Model Y EVs this week, taking down the lease payments by as much as $100 a month. This is in line with the company’s recent stance of making its EVs as affordable as possible.

Analysts Throw Their Weight Behind Rivian: After worries concerning the cost structure and the dilutive impact of a proposed $1.5 billion convertible senior green note offering exerted downward pressure on the shares of Rivian Automotive, Inc. (NASDAQ:RIVN), a number of analysts began to see the stock as undervalued.

UBS analyst Joseph Spak upgraded Rivian stock from “Neutral” to “Buy” while nudging down the price target from $26 to $24. The bullish call is based on the recent weakness in the stock, which rendered the valuation attractive. Additionally, the analyst said that, with the capital raise in the rearview, the market will focus on improving fundamentals.

Needham analyst Chris Pierce, who has a “Buy” rating and a $31 price target, said, “In our view, the stock’s risk/reward is at its most compelling level since we introduced coverage in March on the strength of consistent execution in 1H23, a projected strong 3Q23, and consensus out-year estimates not yet reflecting improved performance.”

Fisker Looks To Expand Into China: The highly competitive Chinese market will likely get a new entrant soon. U.S. EV startup Fisker, Inc. (NYSE:FSR) said it intends to open its first Fisker Lounge in Shanghai, marking the start of the company’s business in China. Fisker Lounges allow consumers to familiarize themselves with the company’s brand and get a closer look at its vehicles.

Lucid’s Delivery Delay Unnerves Investors: Premium EV manufacturer Lucid Group, Inc. (NASDAQ:LCID), which typically releases its quarterly deliveries within the middle of the month following the quarter, has yet to release its report. Chatter about the company reporting a dismal number began making the rounds. In the first half, the company produced 4,487 units and delivered 2,810 units, while targeting a production of over 10,000 for the year.

Ford Incentivizes F-150 Lightning: Legacy automaker Ford Motor Co. (NYSE:F) is offering a $7,500 discount to buy or lease its F-150 Lightning, according to CarsDirect.com. The Platinum variant includes a choice between $7,500 in Retail Customer Cash or the same amount in Red Carpet Lease Customer Cash, while the Lariat has a $7,500 purchase discount but only $5,000 for leasing. The XLT variant is eligible for $1,500 off for either, while the Pro version has none at all.

This is the largest discount that Ford has ever offered on the F-150 Lightning, the report said.

The KraneShares Electric Vehicles and Future Mobility Index ETF (NYSE:KARS) ended the week up 0.92% at $26.41, according to Zenger News Pro data.

EV Stock Performances for The Week:
 

Performances (+/-)

Tesla

-3.16%

Nio, Inc. (NYSE:NIO)

-2.87%

XPeng, Inc. (NYSE:XPEV)

-11.12%

Li Auto, Inc. (NASDAQ:LI)

-2.03%

Fisker

+0.65%

Workhorse Group, Inc. (NASDAQ:WKHS)

+7.79%

Hyzon Motors, Inc. (NASDAQ:HYZN)

+1.68%

Canoo, Inc. (NASDAQ:GOEV)

-19.83%

Rivian

+2.01%

Lucid

+0.59%

Faraday Future Intelligent Electric, Inc. (NASDAQ:FFIE)

-7.08%

Arrival (NASDAQ:ARVL)

+2.78%

Nikola Corp. (NASDAQ:NKLA)

-7.86%

VinFast Auto Ltd. (NASDAQ:VFS)

-0.62%

Produced in association with Benzinga

Edited by Maham Javaid and Newsdesk Manager