By Michael Elkins
BTIG reiterated a Buy rating and cut the price target on Nikola Corp (NASDAQ:NKLA) to $5.00 (from $7) as ongoing challenges to battery manufacturing continue to be a concern. One of the biggest issues facing OEMs at the Consumer Electronics Show (CES) this month was related to current battery prices and the costs of battery metals.
NKLA brought battery production in-house last year through an acquisition, however, BTIG expects higher costs and the restructuring of that business to weigh on vehicle production and margins in the near term.
On Friday, NKLA announced the closing of the legacy battery facility in California, which will be moved to Coolidge by 3Q23. This restructuring comes on the heels of last week's announcement by Lightning eMotors (NYSE:ZEV) that the company was lowering their sales targets citing non-delivery with their battery supplier which is NKLA.
BTIG analysts wrote in a note, “while demand for NKLA's BEV Tre remains strong (received another purchase order from a transportation operator earlier this month), we expect NKLA to slow play production over the next few quarters as it continues to work to improve battery manufacturing margins.”
As a result of the concerns, BTIG cut 2023 delivery estimates to ~450 BEVs (~$158 million in revenue) down from ~960 BEVs (~$380M in revenue) with the bulk of BEV sales coming later this year after battery unit economics improve. BTIG also cut 2023 revenue estimates to ~$158M (~46% below consensus) which is based on ~450 deliveries with 2023 revenue heavily weighted towards 4Q23.
Shares of NKLA are up about 1% in pre-market trading on Tuesday.