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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Ford jumps to a 6-year high after it reports a 184% surge in electric vehicle sales in May

Mustang Mach E GT Performance Edition 03
  • Shares of Ford hit a six-year high on Thursday, jumping as much as 7% following its May sales report.
  • The company said it saw a 184% surge in electric vehicle sales, in part driven by the Mustang Mach-E.
  • Ford is up as much as 80% year-to-date as investors reward its jump into electric vehicles.
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Ford surged as much as 7% to a six-year high on Thursday after it reported May sales that showed a massive jump in electric vehicle sales.

The company’s EV strategy appears to be paying off following the release of its Mustang Mach-E and unveiling of the F-150 Lightning pickup truck. May sales for the 117 year-old automaker jumped 4% year-over-year to 161,725 vehicles.

Ford’s EV sales saw a 184% spike to 10,364 units in May, and signs are building that the company could be slowly taking market share away from Tesla. The electric version of Ford’s Mustang topped car sales for the small but influential EV market in Norway in May. Ford’s EV sales in Norway edged out EVs from both Toyota and Tesla.

Total Mustang Mach-E sales were 1,945 for the month of May. Hybrid versions of Ford’s F-150, Escape, and Explorer vehicles also helped boost sales for the company.

EV sales weren’t the only bright spot for Ford. The company said its SUV sales in May jumped 29% and recorded its best May retail sales since 2003.

The strong sales growth for Ford in the EV space could be in the early innings, as it is still working to ramp up production of its Mustang Mach-E and begin selling its F-150 Lightning truck. And new polling data suggests that the electrified F-150 will be a hit with consumers.

A poll conducted by Piplsay showed that 32% of Americans are most impressed with the F-150 Lightning in the electric pick-up space. Tesla’s Cybertruck rounded out second place, with 24% of Americans most impressed by the futuristic-looking pickup truck.

Still, Ford has a lot of catching up to do with Tesla in terms of EV sales, as the California-based auto manufacturer remains the undisputed leaded in EV sales. Tesla sold nearly 500,000 EVs in 2020, and future projections suggest the company could hit 1 million EV sales by 2022.

But so far this year, Ford’s share outperformance of Tesla continues. Shares of Ford are up about 80% year-to-date, while Tesla is down about 15% year-to-date.

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Ford revealed its first-ever all-electric pickup truck, the F-150 Lightning

  • Ford has revealed its first-ever all-electric pickup truck, the F-150 Lightning.
  • The truck debuted at Ford’s headquarters in Dearborn, Michigan.
  • The 573-horsepower EV can tow up to 10,000 pounds and has a maximum driving range of 300 miles.
  • See more stories on Insider’s business page.

Ford has debuted its first all-electric pickup truck, the F-150 Lightning. The Lightning has two electric motors that make 573 horsepower. Its extended range battery has a driving range of 300 miles, and can accelerate 0 to 60 mph in about 4.5 seconds.

With a fast charger, it can get up to 54 miles of range in 10 minutes, and charge from 15 to 80 percent in about 41 minutes. The charge station it comes with adds 30 miles of range per hour. The Ford Lightning can fully power the average home for at least 3 days.

The truck has a towing capacity of 10,000 pounds. And it has a maximum payload capacity of 2,000 pounds.

Ford’s Onboard Scales app tells you how many pounds you’re carrying. Ford’s new Blue Cruise system allows for hands-free highway driving. Pro Trailer Hitch Assist automatically controls hitching trailers. The interior has a 15.5-inch touchscreen infotainment system. The Lightning’s waterproof front trunk has 14 cubic feet of space.

The Lightning features four selectable drive modes. They include Normal, Sport, Off Road and Tow/Haul. The Lightning has been “torture tested” by Ford’s engineering team. This makes sure it can handle all surfaces and driving conditions.

The Ford F-150 Lightning goes on sale in spring 2022. The truck starts at $39,974. Interested buyers can reserve theirs with a $100 deposit.

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Fisker soars 17% after reaching deal with Foxconn for development of an electric vehicle

Fisker Ocean
Production on Fisker’s Ocean SUV is slated to start in 2022.

  • Fisker shares revved up 17% on Friday after the company and Foxconn finalized agreements to develop a “breakthrough” electric vehicle.
  • Production of the vehicle is expected to begin in 2023 in the US.
  • Fisker is aiming to begin production on its Ocean SUV in Europe in 2022.
  • See more stories on Insider’s business page.

Shares of Fisker sharply jumped Friday after the company finalized a deal to jointly develop and manufacture electric vehicles with Foxconn, the manufacturer of Apple iPhones.

Financial terms of the agreements were not disclosed. The companies will invest in a program named Project PEAR, or Personal Electric Automotive Revolution, that’s aimed at creating a “new breakthrough electric vehicle,” they said in a statement issued late Thursday. The vehicle will have a starting price of less than $30,000 before incentives and be sold under the Fisker brand.

Shares of Fisker popped up 17% to $11.65. The stock this year had turned lower for a loss of about 32%.

The vehicle will be sold in markets including North America, Europe, China, and India, and manufacturing is slated to begin in the US in 2023. Fisker is preparing to begin production on its first vehicle, the Ocean SUV, in Europe in the fourth quarter of 2022.

Fisker and Taiwan-based Foxconn, also known as Hon Hai Precision Industry Co, said they are considering “several” manufacturing locations and are studying other factory sites for future manufacturing. Each company will take proceeds upon the program’s successful delivery.

“At under $30,000 with stunning design and innovation, we are rethinking the car, both in terms of proportions, design, interior functionality and connected user experience,” said Henrik Fisker, Fisker’s CEO, in the joint statement.

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Nikola jumps 24% as board member Jeffrey Ubben defends the EV maker following scandal-induced 90% collapse

FILE PHOTO: Jeffrey Ubben, Founder & CEO at ValueAct Capital, speaks on the Reuters Newsmaker event "The Future of Shareholder Activism" in Manhattan, New York, U.S., February 22, 2017.  REUTERS/Andrew Kelly
Jeffrey Ubben, Founder & CEO at ValueAct Capital, speaks on the Reuters Newsmaker event “The Future of Shareholder Activism” in Manhattan, New York, U.S.

  • Nikola surged as much as 24% on Thursday after board member Jeff Ubben defended the company on CNBC.
  • Scandals at Nikola over the past year have led to a 90% decline in the stock price since its peak at about $94.
  • Ubben said Nikola has its head down and is working towards its goals of launching an electric semi-truck.
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Nikola soared as much as 24% on Thursday after its board member Jeffrey Ubben defended the electric vehicle company in an interview with CNBC’s David Faber.

Ubben told CNBC’s David Faber that despite the controversy over its founder and former chairman and ceo Trevor Milton, the company had its head down and is working towards achieving its goals.

That scandal includes the company rolling a prototype truck down a hill in a promotional video, which led to General Motors pulling the plug on its planned $2 billion equity investment in the company.

Shares of Nikola have fallen as much as 90% since its peak at $93.99 last June. But Ubben said the company is on target with its timeline of launching its electric semi-truck sometime between 2022 and 2023.

Ubben is managing partner of Inclusive Capital Partners. Ubben owns 4.8% of Nikola, according to SEC filings.

Nikola did seem to make some progress on Thursday, as it announced a collaboration with TravelCenters of America to install hydrogen fueling stations at two locations in California. The hydrogen fueling stations are expected by be commercially operational by the first quarter of 2023, and will serve as a potential roadmap for developing nationwide hydrogen fueling infrastructure with TravelCenters in the future.

Comments from Ubben, who has sold Nikola shares in the past, come about one week before a sizable lock-up period expires for company insiders. In November, Nikola’s board members, executive officers, and their affiliates voluntarily agreed to extend their original lock-up provisions through April 30, 2021.

The lock-up expiration will allow 136.7 million Nikola shares to be sold, roughly doubling its current share float of 144 million shares.

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General Motors has unveiled a new all-electric Hummer SUV to accompany the EV pickup due in the fall

gmc hummer
2024 GMC Hummer EV SUV.

General Motors has doubled up on its electric vehicle (EV) offering with an announcement on Saturday of its second all-electric Hummers.

GM already announced its upcoming EV Hummer pickup, which is scheduled to go on sale this fall – its first model of the American classic in 11 years.

Hummer is the latest brand to jump on the electrification bandwagon, with Volkswagen also gearing up to take on Tesla with its Mission T project.

Herbert Diess, Volkswagen’s CEO, has committed to offering a fully electric vehicle for each of its stable of brands, including Audi, Bentley, and Porsche, by 2025.

Duncan Aldred, global vice president of GMC, said in a statement: “The GMC Hummer EVs were envisioned to be the most capable and compelling electric supertrucks ever.”

Following a similar pricing structure to that of the pickup, the base model SUV comes in at about $80,000. A special Edition 1 launch model – with its “extreme off-road package”- costs $110,595.

Pricing varies based on the range and battery size of the vehicle.

GM said it will produce the highest-priced models in early 2023, with the less expensive versions coming in spring 2024.

Hummer’s EV Edition 1 pickup coming this falls has already sold out. It starts at $112,595.

2020 hummer ev reveal infinityroof 013 GMC Hummer BT1XX FN RoofOFF v1 1
Hummer EV Pickup.

The base model SUV’s range is estimated to be around 250 miles to 300-plus miles, depending on the model.

The Hummer EV SUV debuted during an ad narrated by NBA star LeBron James during the NCAA’s Final Four game between the Baylor Bears and Houston Cougars on CBS.

FILE PHOTO: Tesla CEO Elon Musk unveils the Cybertruck at the TeslaDesign Studio in Hawthorne, Calif. The cracked window glass occurred during a demonstration on the strength of the glass.Mandatory Credit: Robert Hanashiro-USA TODAY/File Photo
Elon Musk with his Tesla Cybertruck.

These latest Hummer models will be competing against several other vehicles, including Tesla’s ‘Cybertruck‘, a futuristic-looking EV pickup that joins the roster of the company’s sports cars. The Cybertruck made headlines at its launch after its “armour glass” windows shattered twice during CEO Elon Musk’s presentation.

CEO Elon Musk unveiled the $39,900 truck in Los Angeles in November 2019.

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Volkswagen rallies as much as 8.8% as investors buy into its plans to rival Tesla for electric vehicle dominance

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A Volkswagen worker works on the ID 3, one of Volkswagen’s electric cars.

German car manufacturer Volkswagen rose by as much as 8.8% on Wednesday, extending the gains made the day before when it unveiled its plans for expansion in the electric vehicle market that could make it the world’s leading producer.

Shares were up as much as 8.8% at one point, at 291 euros ($346), their highest since November 2008 and set for a 25% gain so far this week. Volkswagen’s US-listed shares closed 10% higher on Tuesday.

At its “Power Day” on Monday, Volkswagen said it would build six electric vehicle battery factories across Europe and produce predominantly electric cars by 2030. This has triggered a surge in the value of its shares.

Volkswagen also stated it could significantly reduce battery production costs, which in turn would drive down electric vehicle retail prices, and invest into building an electric vehicle software infrastructure to be used across all of its brands.

Disruption in supply chains through factory closures, manufacturing interruptions and delivery delays have put pressure on the car manufacturing industry throughout the pandemic.

By shifting its focus towards electric vehicles over the past year and effectively emulating Tesla’s strategy, Europe’s largest carmaker has gained back a significant amount of ground. Volkswagen shares have risen by 180% since the market crash in March last year.

The company is aiming to dethrone Tesla as the global leading manufacturer of electric vehicles: “Our goal is to secure a pole position,” said Herbert Diess, CEO of Volkswagen, on “Power Day”.

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EVs and clean tech are bubbles that will deflate as economic recovery prompts rethinking of ‘aspirational’ sectors, says JPMorgan

elon musk journalists crowd no mask tesla construction
Elon Musk talks to journalists at the construction site of the Tesla Giga-Factory in Grünheide near Berlin, Germany, September 3, 2020.

  • Bubbles in EV and clean-tech technology portions of the market began forming when the COVID-19 pandemic was growing in early 2020, says JPMorgan 
  • Investors are reassessing a “reset” agenda as economic recovery takes hold and bidding up oil and travel stocks. 
  • Tesla shares continued to selloff during Tuesday’s session. 
  • Visit the Business section of Insider for more stories.

Bubbles in electric-vehicle and clean-technology stocks will deflate as investors look for exposure to a recovery in the world’s largest economy, with oil and hospitality stocks emerging among such plays, said JPMorgan on Tuesday.

The bubbles trace back to February and early March 2020 when the coronavirus crisis began tightening its grip on US markets. Rallies were tied to the outlook for certain technologies, ideologies and policies and “only to a smaller extent to retail paycheck and popularity and momentum chasing,” said Marko Kolanovic, head of macro quantitative and derivatives strategy at JPMorgan, during a Tuesday conference call held by the investment bank.

“Really they took off with COVID. There was this premise that we’re going to close and reinvent and redesign the world and reimagine,” he said.

He noted that the bubbles were not directly related to classical economic cycles and rather driven “by a reset agenda.”

But with economic activity accelerating, “what you’re seeing is oil moving up, copper moving up, retail names,” and gains in shares of cruise lines and airlines, said Kolanovic. He pointed out that the energy sector is still down by 50% over the year.

“As the real economy is recovering some of these, call it, aspirational market segments are probably going to deflate,” he said.

Oil prices and hospitality stocks were hit hard as the pandemic forced businesses worldwide to temporarily close, and in some cases multiple times, to curb the spread of the virus.

Retail investors “may get disillusioned a little bit with some of these names” in the bubbles. “You obviously had a lot of short-squeezing along the way last year. [Treasury Secretary] Janet Yellen had some comments about crypto yesterday so I think you may see some ‘pouring the cold water’ on the whole innovation angle,” rather than a “pop that takes out everything,” said Kolanovic.

JPMorgan during the conference call did not specify any particular stocks at risk of a correction.

But broader EV-sector weakness was seen in Tuesday’s session, with Tesla, Nio and Nikola all down. Tesla in particular has seen an eye-popping rally.  Shares climbed by more than 450% since early March through last Friday. The stock on Monday was hammered down 8.6% and continued to sell off on Tuesday.

Tesla’s slide also comes alongside a drop in bitcoin this week following a massive February rally, during which the car maker announced it had made a $1.5 billion investment in the cryptocurrency. Yellen on Monday told CNBC that bitcoin is “an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

 

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Nio’s 2-day plunge stretches to 24% as electric-vehicle stock momentum slows

Nio
  • Nio shares fell as much as 18% Tuesday, extending their two-day loss to 24%.
  • The company is one of several electric-vehicle makers to see sharp two-day declines.
  • Tesla specifically has led a broader sell-off in tech stocks.
  • Visit the Business section of Insider for more stories.

Nio stock slid as much as 18% on Tuesday, extending the electric-vehicle maker’s two-day skid to 24%. The company has been swept up in a broader industry sell-off led by larger rival Tesla.

Shares of both company are being pulled back alongside other technology stocks as investors evaluate rising borrowing costs in the face of rising bond yields. Bond yields have stepped higher as investors price in a potential pickup in inflation on the back of economic recovery from the COVID-19 pandemic.

“Given their aggressive discounting to present of long-term cash flows, they’re suffering from the same effects as investment grade corporate bonds and anything else that pushes cash flow far into the future,” Bespoke Investment Group said of tech stocks in a Monday note.

For evidence, the firm highlighted the Nasdaq 100‘s more than 4% underperformance versus the Russell 2000 index of small-cap stocks over the past two days.

Tesla shares fell 5% as much as 9% on Tuesday following a similarly-sized drop the prior day. The stock has been under pressure since the company stopped orders for the lowest-priced version of its Model Y SUV over the weekend.

Prior to the two-day dip, Nio’s stock price had been climbing in recent months on growing interest among investors in electric vehicles and green-energy products, factors that have also contributed to the surge in shares of EV maker Tesla.

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Elon Musk says Tesla has held ‘preliminary discussions’ to license its Autopilot software to other manufacturers

Elon Musk
  • Elon Musk said Tesla has held early talks to license its software with other car manufacturers.
  • The CEO has said in the past he is not looking to edge out other competitors, but rather simply advance the technology.
  • Musk said the “full self-driving” software may be functional without an operator within the year, reaching Level 5 autonomy.
  • Visit Business Insider’s homepage for more stories.

Tesla CEO Elon Musk said the company has been in early talks to share its self-driving software with other manufacturers during an earnings call Wednesday.

“We’ve had some preliminary discussions about licensing Autopilot to other OEMs,” Musk said during the call.

Musk emphasized the company is not looking to keep the software to itself, but is waiting for the service to become more reliable before sharing it with outside companies.

“We need to probably do a little more work to prove that Autopilot is capable of full self driving,” Musk said. “Then we’re more than happy to license that to other car companies.”

The CEO has said in the past that he is not looking to edge out other competitors, but rather simply advance the technology.

The software was released as a public beta to a select group of consumers – Musk said it was around 1,000 – in October. The software still requires a licensed human operator, though Musk said he’s hopeful it could be capable of Level 5 autonomy within the year.

“The software is improving dramatically,” Musk said.

When the feature entered public beta, users quickly reported multiple errors, with YouTube videos showing the software missing intersections and boulevards. 

Musk says Tesla is focusing on improving Tesla’s neural network through 3-D labeling, gathering videos, and labeling elements so that the program can learn.

“We believe we have the best neural-net-training software in the world by an order of magnitude,” Musk said.

Tesla’s plan is to create a car that will drive better and be more reliable than the average human.

Tesla is not the only company pursuing full automation. In October, Waymo, a Google subsidiary, launched an entirely driverless ride service in Phoenix. General Motors, Volkswagen, and Ford have also been pushing for autonomous vehicles, with Volkswagen and Ford joining together to support Argo Ai, an autonomous driving technology company.

The company has gone head to head in the past with other automakers pursuing fully automated vehicles. Recently, Waymo CEO John Krafcik said Tesla was “no competition at all” when it came to making autonomous vehicles.

However, Musk said he believes the company could deliver on his promise of a fully-automated system sooner rather than later.

“From my standpoint, it looks like a very clear and obvious path towards a vehicle that will drive safer than a person,” Musk said. “I don’t really see any obstacles here.”

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