Charged: Nio Unveils New Sedan, Plug Partners With Renault

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LEADERSHIP BALANCED BY COMPETITION

Edward Jones analyst Jeff Windau initiated coverage of Tesla (TSLA) with a Hold rating this week. The analyst sees the company being the "market leader" in electric vehicles with future opportunities in software for autonomous driving, battery energy storage, and car insurance, but sees this position being balanced by rising competition in EVs, its high capital needs, and its "elevated valuation."

On Monday, Bank of America analyst John Murphy raised the firm's price target on Tesla to a Street-high $900 from $500. The analyst, who kept a Neutral rating on Tesla shares, said the stock is "driven by growth afforded by valuation."

Building automotive industry capacity is expensive and often generates low returns, but "the higher the upward spiral of Tesla's stock goes, the cheaper capital becomes to fund growth, which is then rewarded by investors with a higher stock price," Murphy argued.

NEW SEDAN, NVIDIA PARTNERSHIP

Nio Inc. (NIO) was in the spotlight earlier this week after unveiling a new luxury sedan called ET7 and a big volume battery pack. The company also announced a partnership with Nvidia (NVDA) to develop its new generation of automated driving EV.

Following the announcements, JPMorgan (JPM) and Bank of America (BAC) raised their price targets on the shares to $75 and $70, respectively, with the former saying that NIO should continue to trade more like a "fast-growth" technology/EV stock than a carmaker.

Meanwhile, Citi analyst Jeff Chung downgraded NIO Inc. to Neutral from Buy with a price target of $68.30, up from $46.40. The ET7 is "good but not enough to make any critical changes from Tesla's challenge," said Chung, who estimates that ET7 will only register limited incremental sales of 3,000 to 4,000 units per month from the first quarter of 2022, when it is planned to be available.

The ET7 may also be challenged by a future facelift of Tesla's Model S, while a Model Y price cut should create head-to-head competition with NIO's EC6, the analyst added.

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