It's been another week, and GM's billion-dollar decision has triggered mixed responses from analysts. Meanwhile, Tesla has been receiving praise from bulls, while Rivian is getting coverage from a new analyst. Here is some insight into the latest.
GM no longer [Cruise]-ing
Once upon a time, General Motors (GM) thought of itself as more than just a company that sells cars: it had high hopes to revolutionize transportation with Cruise and its fleet of futuristic robotaxis.
However, in late 2023, an accident in San Francisco derailed its plans when a pedestrian was dragged approximately 20 feet under one of its robotaxis. Things got even worse for Cruise when, according to the Department of Justice, the San Francisco-based company filed false documents to "impede, obstruct, or influence the investigation" of the 2023 crash.
Despite being on a comeback, General Motors decided to pull the plug on Cruise on December 10, combining Cruise staff with its own teams that are working on its proprietary autonomous driving technology called Supercruise.
In a statement, the automaker said that it would "no longer fund Cruise’s robotaxi development work given the considerable time and resources that would be needed to scale the business, along with an increasingly competitive robotaxi market," expecting costs to run more than $1 billion annually.
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Though the automaker's investment in Cruise seems null and void, news of GM's decision has rocked Street analysts.
In a note from Bank of America analyst John Murphy published on December 11, the Cruise decision was a demonstration of "the potential of AV technology for personal vehicles," noting that the absorption of Cruise employees to work on the automaker's own Super Cruise technology is a step in the right direction.
"SuperCruise is currently a sophisticated Level 2 system and the combined efforts of the Cruise and SuperCruise teams should help accelerate the development towards Level 3 and later Level 4," Murphy said. "We expect this will still require meaningful investments, but GM appears confident that this strategy makes more sense than using AV tech developed externally from companies such as Mobileye (MBLY)."
BofA maintains a "Buy" rating for GM stock, with a price target of $85.
In a separate note published the same day, Morgan Stanley analysts adjusted their outlook on General Motors stock, changing their rating from "underweight" to "equal weight " and increasing their price target from $46 to $54 per share.
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In its note, MS credits lower losses stemming from GM's Chinese operations and its divestment from Cruise and sustained strong profit margins on General Motors’ gas-powered portfolio.
Additionally, the investment bank noted that GM made some additional moves to distance itself from more expensive endeavors, including selling its stake in one of its three Ultium Cells plants to joint-venture partner LG Energy Solution.
“There have been several material developments on GM since our September downgrade that have demonstrated improved execution and capital discipline,” the bank noted.
However, one IB that doesn't feel the magic is HSBC. In its latest note published on December 10, it downgraded GM stock from a "buy" to a hold range and kept its $58 price target.
Fake news about BYD and NIO
The Chinese EV market is a hotbed for innovation and cool ideas. However, sometimes, the news surrounding companies like NIO (NIO) and BYD (BYDDY) is just too good to be true. In late November this year, news spread around Chinese social media that BYD bought a 51% stake in NIO for about $2.27 billion.
Of course, these rumors were held up to be what they are: just rumors. However, the NIO doesn't play around with any sort of slander or speculative information about them.
On December 14, NIO announced that it filed lawsuits against individuals accused of creating and spreading false rumors, noting that it caused valid, significant harm to its reputation in the capital market.
“In late November, multiple social media accounts on platforms such as Weibo, Douyin, and WeChat published, disseminated, and spread rumors that had a severely negative impact on our company’s reputation in the capital market,” Nio’s Legal Department said. “The company promptly reported the matter to the authorities.”
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Canoo, the sinking ship
Canoo (GOEV) has had a hell of a year. Layoffs have been rampant as executives are fleeing the company. The company also faces multiple lawsuits, including from suppliers that allege missed payments.
Meanwhile, in 2023, while Canoo made just $886,000 in revenue, it spent more than $1.7 million on expenses related to its CEO using a private jet.
Recently, Canno confirmed that it furloughed “10 additional employees,” bringing the total number of its furloughed “non-essential employees” to 50. Additionally, the company disclosed in a new SEC filing on December 13 that its independent director, James C. Chen, resigned on December 9.
“Mr. Chen stated that his decision to resign from the Board was not due to any disagreement with the Company’s operations, policies, or procedures, but in order to pursue other endeavors. The Company wishes Mr. Chen well in his future endeavors,” Canoo said.
At the same time, it warned that if it doesn’t secure funding over the next few days, it won’t be able to continue its operations through to the end of the month.
A new analyst enters the Rivian bullpen
California-based EV "adventure vehicle" manufacturer Rivian (RIVN) has gained a new analyst, whose positive note sent shares higher on December 9.
In his first note about Rivian, Benchmark analyst Mickey Legg initiated coverage on the stock with a "Buy" rating and a price target of $18.00, noting that the EV maker is "well positioned to gain a significant share of a massive market opportunity in the coming decade."
Benchmark analysts like Legg note that though 2024 has been a challenging year for EVs, he sees EV production rising over the next few years as more manufacturers enter the market.
”After a pause this year, domestic EV production is expected to improve in 2025 and further accelerate in 2026-27 as ASPs [average selling price] decline and the charging infrastructure is built out."
Legg sees Rivian as a sort of "golden boy" amongst a crowded field of EV manufacturers, including Tesla and other established names like General Motors and Ford.
“Of the EV newcomers, Rivian appears particularly well-positioned with contracts with Amazon and Volkswagen, highly rated vehicles, expected positive gross profit in the current quarter, and sufficient financial liquidity.”
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Who let the Tesla bulls out?
Not one, not two, but three Tesla (TSLA) bulls have become even more bullish on Tesla stock.
In a note published on December 10, Morgan Stanley analyst Adam Jonas raised Tesla’s price target from $310 to $400, reaffirming an Overweight rating and naming Tesla as the firm’s top pick.
The reason? Elon Musk is its CEO, and his 'bestie-in-chief' relationship with President-Elect Donald Trump has changed how shareholders view the company.
"Elon Musk’s entry into the political sphere has expanded investor thinking around Tesla’s fundamental outlook," Jonas said.
Despite policy changes creating "near-term headwinds to US EV sales," he believes that its leadership against its rivals in races like autonomous vehicles can give it an advantage going into 2025, which can present a cornucopia of new problems and ideas.
"With 2025 ushering in a new administration, we refresh our 2025 auto forecasts, review key themes, and provide a scenario analysis to help investors frame the most relevant industry debates, including EV policies, onshoring/tariffs, China export expansion, and the nascent emergence of autonomous vehicles."
Cantor Fitzgerald analyst Andres Sheppard shares the same sentiment, raising his firm's price target on TSLA stock from $255 to $365.
“We are Increasing our Price Target on Tesla to $365 (from prior $255) as we Become More Bullish on Robotaxi and Self Driving. However, We Remain Neutral on Valuation, and Await a Better Entry Point,” wrote Sheppard in his latest note.
“We are becoming more bullish on Tesla’s Robotaxi segment, following President-elect Trump’s plans to potentially develop a federal framework for self-driving vehicles in the United States and an update to the company’s FSD software.”
Wedbush's Dan Ives also increased its price target from $415 to $500 in a note published on December 15, citing the Trump White House as a "'total game changer' for the autonomous and AI story for Tesla and Musk over the coming years."
"We believe Tesla could reach a $2 trillion market cap by the end of 2025 as the company's autonomous vision starts to take shape along with very solid Tesla delivery demand we expect from the core China market," Ives said. "Importantly, our price target conservatively assumes no value today for Optimus which could be a major upside catalyst for the Tesla story over the coming years."
Conservatively, Ives does warn that elevated tariffs regarding China can present an issue for Tesla, as a potential trade war can "create geopolitical headwinds for Tesla within this key China market."
However, Ives thinks the greater tech industry and their willingness to cozy up to Trump will protect them in the long run.
"To this point, China is a key market for Tesla and we anticipate some carve outs for both Tesla and Apple on the China tariff front and also expect Musk to have a very big role (expanding by the day) in a Trump White House and be heavily involved in the China tariff discussions in early 2025."
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