EV Roundup: WKHS’ Quarterly Results, NIO-CATL Alliance Draw Attention

The commercial electric vehicle (EV) developer Workhorse Group Inc. WKHS reported mixed fourth-quarter 2023 results and is implementing a reduction in force, impacting 20% of its total workforce, excluding direct labor positions.

The EV behemoth Tesla TSLA plans to manufacture its electric semi-truck at Gigafactory Berlin. It also decided to raise the prices of Model Y cars in the United States and Europe.

Japanese auto biggies Nissan NSANY and Honda HMC have partnered to develop economical EVs and compete with China-based auto giants.

Lastly, the Chinese EV maker NIO Inc. NIO also made it to the top stories as it collaborates with CATL to develop batteries lasting up to 15 years, doubling the current national warranty standard.

While WKHS carries a Zacks Rank #2 (Buy), NIO currently holds a Zacks Rank #4 (Sell). Meanwhile, TSLA and HMC each currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Last Week’s Top Stories

Workhorse reported an adjusted loss of 18 cents per share for the fourth quarter of 2023, wider than the Zacks Consensus Estimate of a loss of 11 cents. The company had incurred an adjusted loss of 24 cents in the year-ago quarter. It generated net revenues of $4.41 million, which surpassed the Zacks Consensus Estimate of $3 million. Revenues rose 29.4% year over year due to increased sales volume and revenue contributions from Stables by Workhorse and DaaS. As of Dec 31, 2023, Workhorse had $25.8 million in cash and cash equivalents, down from $99.3 million as of Dec 31, 2022.

As part of its cost-saving initiative, the company has decided to shift its Aero business to a Drones-as-a-Service model, which needs less capital investment. It has also decided to significantly reduce its headcount. WKHS is currently implementing a reduction in force, impacting 20% of its total workforce, excluding direct labor positions. The company will also be reducing headcounts in its Aero division. As part of Workhorse’s cost-containment efforts, its executive officers have consented to defer 20% of their cash compensation for at least three months.

Tesla plans to produce Tesla Semi, its electric semi-truck, at Gigafactory Berlin. The automaker’s announcement to produce Tesla Semi at Gigafactory Berlin reflects Elon Musk’s commitment to expanding the European factory despite facing massive resistance from Grünheide locals. Per the expansion plan, Gigafactory Berlin aims to build another plant to increase the annual production capacity of the factory to one million units from the current capacity of 500,000 units. Currently, Tesla Semi is in low-volume production in a plant outside Gigafactory Nevada.

In another update, Tesla will raise the prices of all Model Y vehicles in the United States by $1,000 on Apr 1, 2024. All the trims qualify for a $7,500 federal tax credit in the United States. The automaker will raise the prices of Model Y cars in many European countries. TSLA announced that it is set to raise the prices by nearly 2,000 euros or equivalent in local currencies on Mar 22, 2024.

Nissan and Honda have joined forces to develop economical EVs and compete with their China-based rivals. The companies have signed a non-binding memorandum of understanding, with the final scope of the arrangement yet to be determined. The agreement, as reported by Japan’s Nikkei newspaper, may involve a common powertrain introduction, joint procurement and platform development. While collaborating on core technologies, their products will maintain distinct identities. The rising trend of collaboration among automakers will become common as they try to remain on par with EV giants like BYD Company Limited.

Honda president Toshihiro Mibe highlighted shared values and potential synergies in facing rivals. Nissan CEO Makoto Uchida expressed openness to collaboration with Honda in both domestic and international markets. He clarified that any partnership with Honda wouldn’t impact existing alliances with Renault and Mitsubishi.

NIO has partnered with the battery manufacturer CATL to develop EV batteries capable of powering cars for up to 15 years, nearly double the current national warranty standard. While a production schedule for these longer-life batteries is pending, the current national standard (announced in 2016) stipulates an eight-year warranty or 120,000 kilometers. With an estimated 20 million new energy vehicles expected to face warranty expiration between 2025 and 2032, battery replacement becomes a significant concern as it constitutes half of an EV’s total cost.

NIO’s founder and CEO, William Li, acknowledged this issue, reflected in the company’s battery-swap approach, allowing customers to rent batteries. Nio has more than 2,300 battery-swap stations, which are set to expand to 3,310 this year. Along with its partnership with CATL, NIO unveiled its second Onvo marque, targeting family cars. The first Onvo model, akin to Tesla’s Model Y, is slated for deliveries in the fourth quarter of this year. Nio delivered 160,038 vehicles in 2023. It expects first-quarter 2024 sales volumes to increase 6.3% at the high end of the guided range.

Price Performance

The following table shows the price movement of some of the major EV players over the last week and six-month period.

Image Source: Zacks Investment Research

What’s Next in the EV Space?

This week, the U.S. EPA will finalize emissions rules, potentially requiring two-thirds of new cars to be all-electric by 2032. These standards may initially ease EV requirements between 2027 and 2030 before imposing aggressive sales targets from 2031 onward, marking a significant shift in tackling vehicle emissions and promoting electric vehicles. Stay tuned for the announcements of upcoming EV models and any important updates from the red-hot industry.

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