Tesla Vs. Fisker Vs. Rivian Vs. Lucid: Analyst Weighs In On EV Makers As Adoption Shifts To Top Gear

Zinger Key Points
  • There isn't any catalyst for Tesla to underperform in the near term, Needham says, but remains wary of valuation.
  • The firm is least-favorably disposed towards Lucid.

The adoption of electric vehicles is progressing at a faster-than-expected rate, given automakers’ thrust to EV transitioning, governments’ mandates to ban ICE vehicles, and huge capital infusion into the space sector, an analyst at Needham said in a note.

What Happened: Needham’s Vikram Bagri upgraded Tesla Inc. TSLA shares from Underperform to Hold as part of transitioning primary coverage from analyst Rajvindra Gill.

The analyst initiated coverage of Fisker Inc. FSR with a Buy rating and price target of $12.

Bargi initiated Rivian Automotive Inc. RIVN with a Hold rating and Lucid Group Inc. LCID with an Underperform rating.

Upside Catalysts For Tesla: Renewed federal tax credit eligibility under the “Inflation Reduction Act,” the potential credit-rating upgrade to investment grade by year-end, the first deliveries of Cybertruck in 2023, expansion of the charging network, and an increase in gross margin due to the 4680 cells are all likely to act as upside catalysts for the stock, according to Bagri.

“We do not see a catalyst for underperformance in the near-tern,” he added.

A wider full-self-driving technology rollout in the fourth quarter could also be a catalyst, although perfecting the technology will take more time, the analyst said.

The pushback, according to the analyst, is valuation, which he feels is fair.

See also: Tesla Has A 'Competitive Moat' In This Area — Ford, GM Now Have A Chance Of Breaking It, Thanks To Biden: Analyst

Fisker’s Manufacturing Model A Positive: Fisker’s SUVs that come with “cutting-edge technology” for an affordable price open a vast opportunity set for the company, Bagri said in the note.

The company’s asset-light manufacturing model leverages contract manufacturers, potentially helping it to achieve a dominant position without significant capital outlays, he added.

“FSR's business model and skateboard design should allow it to launch more models sooner and gain market share,” Bagri said.

Notwithstanding the positives, the stock is trading at a discount, the analyst noted.

Rivian Solidly Positioned But Manufacturing Challenges Remain: Rivian is the closest competitor to Tesla, given its strong balance sheet, early mover advantage, cutting-edge proprietary technology and fresh designs that excite early EV adopters, Bagri said.

The company has a large order for commercial vehicles and a smaller SUV model on the horizon, potentially driving continued market share gains, the analyst said. The valuation, however, appears full, he added.

“While RIVN is in a solid position, we believe the competition will get intense, profitability is still far out, manufacturing challenges remain, and the company will require additional capital in 2024 and beyond,” Bagri said.

Lucid: Lucid’s vertically integrated business model and talented team have allowed it to set industry standards on several counts, the analyst said. “The Lucid Air is the epitome of luxury in EV sedans and is attractively priced relative to its competition,” he said.
The analyst, however, sees a slow ramp-up in production, profitability, which is still far out, several recent executive departures, software enhancements required, and the need for additional capital by the first quarter of 2023 as pushbacks.

Price Action: At Wednesday’s close, Tesla was up 3.59% at $302.61, Fisker shares rallied 3.94% to $9.23, Rivian added 3.46% to $40.10 and Lucid shares advanced 3.29% to $16.63.

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