Analysts weigh the investment Lucid, GM, Stellantis

It’s another week, and analysts are focusing on various major players in the auto sector, including General Motors (GM) Lucid (LCID) Rivian (Exactly) and Stellantis (STLA) .

Related: Your Local Car Dealer May Have This Shocking Opinion About Electric Vehicles

Different directions for General Motors

On July 23, General Motors reported positive second-quarter earnings, which it attributed to strong demand for its electric and internal combustion vehicles.

During the earnings call, GM CFO Paul Jacobson scoffed at reports that slowing electric vehicle sales are hampering the Detroit auto giant, noting that there is much more to the situation than meets the eye.

“When you start breaking down some of the detailed registration information, retail VEs (sales) don’t go down as much as a lot of people think,” he noted. “The retail customer is actually holding up quite strongly. We feel good about where we are going with production of 200,000 to 300,000 units (EV) this year.”

Despite the assurances from the CFO, analysts are mixed on the automaker’s direction.

Analysts at Nomura Securities downgraded General Motors from a “Reduce” rating to a “Neutral” rating in a note issued on August 5th. Analysts at the Japanese investment bank noted that despite reduced spending on its robot taxi company Cruise, its US emissions compliance strategy could be a huge liability going forward.

Analysts pointed out that despite its investments in EV technology, it is not doing much in the way of hybrids. GM currently has no hybrid vehicles in its portfolio, which could limit its flexibility as emissions regulations temper the automaker’s ability to sell gas-guzzling cars in the future.

A Lucid Air Sapphire and Pure, February 26, 2024 in Geneva, Switzerland.

John Keeble/Getty Images

More power for Lucid

Despite selling a record number of Air sedans, Newark, Calif.-based Lucid Motors continues to burn money. On August 5, it reported a net loss of $790 million in the second quarter of 2024, which was 3.4% higher than the same period last year.

Fortunately, its largest shareholder, Saudi Arabia’s Public Investment Fund, is injecting another $1.5 billion into the luxury electric car maker.

In a statement, Lucid interim CFO Gagan Dhingra said he expects the money to help keep the company afloat for a while.

“The additional $1.5 billion commitment announced today by a subsidiary of PIF is expected to provide sufficient liquidity through at least the fourth quarter of 2025,” Dhingra said.

Following the announcement of this funding, Cantor Fitzgerald analyst Andres Sheppard upgraded the stock from Underweight to Neutral. In his note, Sheppard sees the capital commitment as “significant” and says the gesture “helps solidify PIF’s long-term commitment” to Lucid.

On the other hand, cash consumption was a significant concern for Stifel analyst Stephen Gengaro. In his note published on August 6, he expressed concern about the brand’s cash burn, which he doesn’t see being fixed with more money to burn.

“While the additional cash infusion provides a bridge to the start of production for Lucid Gravity in late 2024, cash burn remains a concern and execution on cost reduction and volume growth continues to be key to achieving profitability,” Gengaro said.

Stifel maintained its Hold rating.

Despite this, Lucid CEO Peter Rawlinson is confident about his brand’s second model: the Lucid Gravity crossover SUV. Pre-production Gravity SUVs began rolling off the assembly line in Casa Grande, Arizona on July 31.

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Still not so stellar Stellantis

Since Stellantis’ July 25 earnings call, a lot has happened for analysts covering the multinational automaker with roots in Detroit.

Deutsche Bank analyst Tim Rokossa downgraded Stellantis shares from a “Buy” rating to a “Hold” rating on July 29. On July 30, Citi analyst Harald Hendrikse maintained his “Hold” rating following “weak” results in the first half of 2024. On July 31, Nomura analysts upgraded Stellantis shares from a Neutral rating to a “Buy”, citing their confidence in the car manufacturer’s leadership.

On August 7, Jefferies analyst Philippe Houchois joined the downgrade club, moving from a “buy” rating to a “neutral” rating, calling the automaker “more efficient than competitive” and noting that it needs to address its brands, capacity and capabilities its marketing to be attractive to investors.

Related: Stellantis threatens layoffs amid weak earnings

Rivian rolled down

Like Lucid, Rivian also posted some eye-popping losses during the second quarter of 2024. On Aug. 5, the Irvine, California-based automaker said during its earnings call that it lost a staggering 1.46 billion dollars, $300 million worse than in the same previous period. year.

Despite the losses, much of the conversation was about its newest landmark investor – Volkswagen. The Germans are set to pump up to $5 billion into the outward-facing automaker, which is set to expand its lineup with its much-anticipated R2, R3 and R3X models.

On August 6, analysts at UBS, Wells Fargo and Needham cut their price targets but maintained their “neutral” rating. Equal Weight and Buy ratings.

In his analyst note, Needham analyst Chris Pierce maintained his positive outlook on Rivian, noting that it will be a long-term winner in the transition from gas to electric cars. He cited high customer satisfaction with the R1 and its partnership with Volkswagen and Amazon with its delivery vans as factors in future demand, adding that the upcoming smaller R2 and R3 models are expected to do numbers for the brand.

In addition, Morgan Stanley analyst Adam Jonas noted, “Rivian has a better chance of success as an automotive/technology supplier than as a manufacturer.” The firm lowered its price target on Rivian to $16.00 and maintained an overweight rating on the stock.

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