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Tesla can't avoid EU probe; Nio cries fake news: This week in EVs

Published Oct 01, 2023 13:46
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Please name your holdings portfolio -- Here is your weekly Pro Recap of the past week's biggest headlines in the electric vehicle space: Nio denies reports of fundraising effort; and Tesla finds itself subject to EU probe.

As always, InvestingPro users got these headlines at lightning speed. Never miss another opportunity to secure an edge for your portfolio.

Nio denies fundraising efforts

Chinese EV builder NIO (HK:9866) (NYSE:NIO) saw its shares dented amid reports of a potential $3 billion fundraising effort.

Bloomberg reported that Nio was contemplating raising an additional $3B from investors, with a particular focus on Middle Eastern backers. These reports, attributed to unnamed sources, suggested that the fundraising might occur as early as next year, although they also said talks remained in progress and were subject to change.

Nio quickly issued a statement countering these claims, asserting that they currently had no reportable capital raising activity, except for a recent convertible notes offering completed that same day.

Nio's stock price has been on a rollercoaster ride recently, with substantial fluctuations due to its ongoing financial struggles. The company reported a loss exceeding $800 million in the last quarter, and has experienced a significant decline in market capitalization - down by more than 50% year over year.

Despite these challenges, Nio remains a prominent player in the EV industry and continues to expand its product offerings, for example in recently introducing its own branded smartphone capable of synchronizing with its vehicles.

Despite that initial stumble, US-traded shares of NIO gained 12.2% for the week to $9.04 from Monday's open. Hong Kong shares were up 5.1%.


Tesla cant avoid EU’s anti-subsidy probe

The EU has launched an investigation into Tesla (NASDAQ:TSLA) and other European carmakers exporting EVs from China.

Roughly 20% of all electric vehicles sold in Europe originate from China.

The probe comes amid concerns of potential unfair subsidies in China's EV industry, which could adversely affect the EU's own car manufacturing sector. Valdis Dombrovskis, the EU's executive vice-president, cited "sufficient prima facie evidence" for the investigation.

Tesla, which exports vehicles from its Shanghai gigafactory to Europe, may face consequences from the investigation. However, the recent opening of its Berlin facility could help offset potential reductions in exports.

China's Ministry of Commerce has criticized the investigation, labeling it "blatantly protectionist."

In a separate legal development, Tesla is currently involved in a trial in California involving its FSD autopilot technology. The trial stems from a fatal 2019 accident involving a Model 3 and alleges that Tesla's Autopilot system was defective and contributed to the crash.

Tesla has denied responsibility, arguing that the driver was intoxicated, and that the role of Autopilot remains uncertain.

Meanwhile, expectations for lower delivery numbers this quarter have analysts adjusting estimates ahead of reports.

Citi analysts have adjusted their delivery and earnings estimates for Tesla's Q3, reducing them to 450,000 units and an earnings per share estimate of $0.75, down from the prior $0.81. Piper Sandler also lowered their Q3 delivery estimates, attributing this to downtime in Shanghai and Austin.

Despite these adjustments, both firms maintain their respective ratings on Tesla, with Piper Sandler reiterating its Overweight rating and $300 price target, believing that intentional shutdowns should not negatively impact the company's stock.

Barclays made similar adjustments and maintains an Equalweight rating on Tesla with a 12-month price target of $278.

Tesla's Q3 delivery results are eagerly awaited and are expected to be reported on Monday.

Shares of TSLA gained 2.8% this week from Monday's open to close at $250.22.

InvestingPro | Anticipate Market Trends With Breaking News

Tesla can't avoid EU probe; Nio cries fake news: This week in EVs

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