GM could soar 50% as the auto maker trades more like a tech company in coming years, Wedbush says

A red Chevrolet Volt hybrid car is charging in a parking garage.
GM’s Chevrolet Volt hybrid car charges at a parking garage.

  • GM shares could pop up by about 50% over the next 12 months, Wedbush analysts say.
  • Investors may start seeing GM more as a play on disruptive technology and less of a traditional auto maker.
  • Analyst Dan Ives set a 12-month price target of $85 per share.
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General Motors shares could jump by nearly 50% over the next year as the automaker’s plans for producing more electric vehicles sets the stock on course to trade as disruptive tech play, according to Wedbush.

The assessment comes as the company behind the Chevrolet, Buick and AMC brands in June pledged to increase investment to $35 billion toward research and development for electric vehicles through 2025.

“With [GM CEO Mary] Barra & Co. developing game-changing battery technology under the Ultium Platform, GM is in a great position to take advantage of a $5 trillion market emerging over the next decade. By leveraging this technology, the legacy auto will be able to eat up market share against pure-play EVs in all aspects of the industry,” said Wedbush analyst Dan Ives in a note published Thursday initiating coverage of GM with an outperform rating.

He set a 12-month price target of $85 from Tuesday’s close at $57.46, representing a possible climb of 48% in the stock. Shares during Friday’s session bounced up by more than 4% to trade above $58 each.

“We believe as GM proves out its EV vision over the coming years the stock will be re-rated more as a disruptive technology and EV play, rather than its traditional auto valuation,” said Ives.

2021 is setting up as an inflection point for GM as it works on delivering at least 20 new EV models within the next two years and 30 in the next three, that analyst said.

Meanwhile, the “software and services business attached to the EV shift, as autonomous/assisted driving capabilities and battery technology improves, represents a potential gold mine for the company bringing in $20 billion to $30 billion of incremental services and software we see over the next 5-7 years,” he said.

US consumers have nearly 20 electric vehicles to choose from for purchase and more than 10 new models will go on sale by the end of 2021.

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Tesla’s recall of 285,000 cars in China is a ‘black-eye moment’ for the EV maker – but that won’t derail its strong prospects, Wedbush says

FILE PHOTO: Tesla Inc CEO Elon Musk speaks at an opening ceremony for Tesla China-made Model Y program in Shanghai, China January 7, 2020. REUTERS/Aly Song
Tesla Inc CEO Elon Musk speaks at an opening ceremony for Tesla China-made Model Y program in Shanghai.

  • Tesla’s recall of most of its cars delivered in China won’t derail its growth prospects, according to Wedbush.
  • Analyst Dan Ives said the incident is a clear “black-eye moment” for Tesla, already having reputational issues in China.
  • China is one of Tesla’s key markets, and is expected to represent 40% of deliveries for the company by 2022.
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Tesla’s China recall is a temporary blip for investors and doesn’t indicate long-term damage to the electric-vehicle maker’s growth story, Wedbush analyst Dan Ives said, .

The EV maker will implement a voluntary “recall” by remotely updating software in around 285,000 Model 3 and Model Y cars to fix safety issues, China’s vehicle safety authority said over the weekend.

The recall numbers add up to a majority of the vehicles Tesla has delivered to Chinese customers in recent years, Ives. said Sunday.

The Wedbush analyst described the incident as a clear “black-eye moment” for Tesla, and not news its stock bulls want to read. He said it’s another hit to the EV maker’s reputation in China, following a slip in orders, a fatal crash and CEO Elon Musk being forced to reject reports the country’s military had banned its cars.

China is one of Tesla’s most important markets, expected to represent around 40% of global deliveries for the company by next year.

“China demand is a key driver for the long term Tesla growth story, and the company must play nice in the sandbox with Beijing around safety issues, otherwise it will be an impediment towards achieving its goals/targets in country,” Ives said.

The autopilot systems in the affected cars can be activated accidentally, leading to a risk of crashes from sudden acceleration, China’s State Administration for Market Regulation said. Under a recall plan filed with the regulator, Tesla will update software on about 211,000 Model 3 vehicles made in China and 36,000 imported from the US. Another 38,599 Model Y vehicles will also get the software patch, which will begin to roll out Saturday.

“We believe this situation overall is a bump in the road and does not derail the near-term or long-term bull thesis for Tesla China, however going forward it needs to be a smoother road on autopilot safety otherwise the PR black cloud will continue,” Ives said.

The analyst reiterated an “outperform” rating for Tesla with a 12-month price target of $1,000. Tesla’s shares were trading 2.5% higher at $688 per share on Monday.

Read More: Edward Jones’ industrials analyst names 3 stocks to buy as prime beneficiaries of Biden’s proposed $1.2 trillion infrastructure bill – and explains how each one could benefit

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Nio rises as Citi upgrades the car maker and says the stock could soar 50% on demand for electric vehicles in China

GettyImages 1232435708
A Nio EVE EP9 All-Electric Supercar is on displayed during the 19th Shanghai International Automobile Industry Exhibition at National Exhibition and Convention Center on April 21, 2021 in China.

  • Nio rose Tuesday after Citi upgraded the Chinese EV maker to “buy” from “neutral.”
  • Citi raised its price target to $58.30 from $57.60, implying potential upside of 50%.
  • In May, Nio’s vehicle delivery was adversely impacted for several days due to a semiconductor supply shortage.
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Shares of Nio rose 4% on Tuesday after Citi upgraded the Chinese car maker to “buy” from “neutral,” citing a surge in demand for electric vehicles in China.

Citi lifted its 2021 sales estimate for electric vehicles in the country to an estimated 2.52 million units from 1.79 million units. For 2025, the firm also boosted sales estimates to 7.84 million units from 6.86 million units.

Citi said it expects that the uptick in the second quarter order backlogs will increase Nio’s revenue and market share in the second half of 2021.

Citi’s new price target of $58.30, raised from $57.60, represents a potential 50% upside from Friday’s closing price of $38.62. The bullish new target comes despite a rough year so far in 2021 for the electric vehicle maker, and the industry broadly, as supply chain and manufacturing constraints weigh on car makers’ delivery guidance.

“Based on the current production and delivery plan, the company will be able to accelerate the delivery in June to make up for the delays from May,” Nio said in a statement Tuesday. “The company maintains and reiterates the delivery guidance of 21,000 to 22,000 vehicles in the second quarter of 2021.”

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3 reasons why the recent electric vehicle stock-price correction isn’t the end of the road for the EV trend, according to the world’s largest wealth manager

2022 GMC Hummer EV 1
2022 GMC Hummer EV.

Electric-vehicle stocks have taken a hit the past few weeks amid a rotation away from highly valued tech and growth names, but that doesn’t mean it’s the end of the road for the EV boom, according to Mark Haefele, chief investment officer of UBS Global Wealth Management.

Long-term technological and environmental shifts suggest the boom should continue, while acknowledging that volatility in the share prices of individual companies argues for investors to diversify their exposure. Still, Haefele’s team said investors should consider the underlying data.

Elon Musk’s Tesla has led an incredible boom for electric vehicles over the past few years, and in 2020 alone, sales of electric cars rose 43% while overall car sales slumped 20%, according to data published on Tuesday by The market has grown so much that these days, Tesla is just one of dozens of competitors in the rapidly-expanding industry.

In fact, Tesla’s share of the US EV market fell to 69% in February, down from 81% in the prior year, a Morgan Stanley report found.

It’s getting more crowded, too, as every major car company in the US has said they will be entering the EV market.

General Motors recently pledged to invest $27 billion to launch 30 EV models by 2025, and it has showed off new cars like an electric Hummer, which is set to be released in 2022. Ford released the Mustang Mach-E, which has taken market share from Tesla, and VW recently unveiled its plans to build six “gigafactories” in Europe by 2030 to aid with its EV business.

In China, EV players like SAIC Motor Corporation are targeting the lower-end market with cars starting at just $4,465. The company sold over 25,000 Hong Guang Minis in January alone.

Public transit is also getting a revamp from EV companies. Proterra, a company that makes electric public and school buses, inked a deal to go public via billionaire investor Chamath Palihapitiya’s SPAC Arc Light Clean Transition Corp. in January.

Read more: Buy these 30 stocks that are best-placed to benefit from the pandemic’s ‘seismic shifts’ and continue surging in its aftermath, BTIG says

Many analysts argue the EV boom is set to continue. Wedbush’s Dan Ives said in a recent note to clients that he believes the “EV party and transformation is just beginning as this industry is on the cusp of a $5 trillion market opportunity over the next decade.”

Haefele and his team agree with Ives, detailed below are three reasons why they see a long way to run for the EV boom.

  1. “Electric vehicles continue to rapidly gain market share. Electric vehicle sales have been rapidly gaining market share. The diverging paths of automakers have been confirmed during the pandemic. While the overall auto market contracted by 15% in 2020, global electric vehicle sales rose by 43%, reaching a 4.2% market share. This trend looks set to continue and will benefit pure EV makers, as well as traditional automakers that are adapting fastest to the growing consumer preference for electric vehicles,” Haefele and co. wrote.
  2. “Electrification of vehicles is still ‘The Next Big Thing’ in the automotive industry. Tighter emission regulations mean there is no alternative to the switchover from combustion to electric engines – be they battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV), or fuel cell vehicles (FCV). This move toward electric has also been embraced by traditional automakers such as Volkswagen, which has pledged investment of over EUR 50bn in its EV strategy as it aims to catch up with Tesla,” Haefele and co. wrote.
  3. “The transformation underway in the auto sector goes beyond drive trains. We see parallel technological advances in the sector, along with a shift in consumer preferences away from ownership. On technology, progress is being made in areas such as autonomous driving, helped by the rollout of 5G networks. On the issue of ownership, increasing mobile connectivity and changing preferences among younger age groups are leading to the rise of car-sharing models. In the future, using a car will not automatically mean owning one. Overall, we foresee potential sales of some USD 400bn connected to our Smart Mobility theme by 2025, of which electrification represents more than half, an eight- to nine-fold increase on today’s figure,” Haefele and co. wrote.

Read more: An innovation ETF is crushing competitors with 40% returns this year even as tech stocks flounder. The provider breaks down its 2-part playbook for selecting moonshots – and knowing the perfect time to sell

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Tesla has ‘significant first-mover advantage’ in the electric vehicle space – but 3 smaller names are also poised to succeed as EV sales climb in 2021, CFRA says

Fisker Ocean
The Fisker Ocean.

Tesla has established a “significant first mover advantage” over new entrants in the ever-expanding electric vehicle market, but a few other smaller names stand out, according to CFRA’s Garrett Nelson.

In a note published Wednesday the senior equity analyst said Amazon-backed Rivian, Lucid Motors, and Fisker will emerge as “success stories,” as EV sales climb in 2021.

Nelson uses four categories to analyze emerging electric-vehicle manufacturers: 1) the specs (price, range, etc.) and overall attractiveness of their initial vehicle models; (2) financial considerations such as their funding sources, balance sheets, and liquidity; (3) the growth opportunity of their sub-industry; and (4) the experience and credibility of management. 

He said all three names fare well in each category. Additionally, all three automakers will be among the first to bring electric vehicles to the road, with Rivian and Lucid expected to put models on the road this year and Fisker in late 2022. 

Fisker debuted in public markets in October, while Lucid Motors announced a merger with SPAC Churchill Capital Corp. IV on Monday. Rivian is looking to go public as soon as September at a valuation of $50 billion, Bloomberg reported earlier this month. 

Nelson added that Tesla has an advantage over new entrants; citing how the company increased its US EV sales volume by over 50% last year.  

“With all the talk of increased competition from new EV models in 2020, Tesla grew its market share from an estimated ~58% share in 2019, as models like the Audi e-Tron, Jaguar I-PACE, and Nissan LEAF largely disappointed from a sales perspective,” Nelson added. 

CFRA forecasts that US EV sales will grow by over 50% to exceed 500,000 units in 2021, especially if the Biden administration passes legislation that could benefit EVs. The research firm has a “strong buy” rating on Fisker, and a “hold” rating for Tesla. 

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