Mizuho Lowers Unit Estimates and Targets For Tesla, Rivian and NIO on China Disruption

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Mizuho analyst Vijay Rakesh told clients in a note Friday that they have conservatively lowered their June Quarter and second half electric vehicle unit delivery estimates and price targets for Tesla (NASDAQ:TSLA), Rivian Automotive Inc (NASDAQ:RIVN), and NIO (NYSE:NIO).

The unit estimates were reduced due to Shanghai shutdowns and supply chain constraints. However, they see strong EV demand despite higher prices, with longer lead times, as production and new models ramp up.

“Despite elevated macro risks, BEV could see strong 2H ramps as China re-opens and demand improves, with BEVs potentially up >55% 2H/1H,” said Rakesh.

The target for Tesla goes to $1,150 from $1300, Rivian goes to $48 from $55, and Nio goes to $70 from $80. All three are still rated ‘Buy’.

Regarding Tesla, the analyst said Shanghai is a major manufacturing hub for the electric vehicle market leader, with more than 50% of its production output.

“We believe Giga-Shanghai was close to a ~60k/mo run rate exiting MarQ, but with the April shut down it dropped significantly (~3k), while May recovered partially (~34k), and June better but still not 100%. We are estimating a >60K production shortfall in JunQ, lowering our JunQ deliveries from ~296k to 232k,” said Rakesh.

While Mizuho adjusted its targets for NIO and Rivian, they believe Rivian production should see inflection.

“For RIVN, we are looking for an inflection and better 2H22 as RIVN has noted: 1) plans for starting a second shift, and 2) new COO Frank Klein (started June 1). However, online R1 Shop launch for preorders allowing for limited order flexibility could point to continuing supply constraints. While RIVN has potentially ramped to >1,000/mo deliveries in June (versus ~400/mo average in Q1, and our estimates Apr/May at >500/mo), we are conservatively lowering our RIVN JunQ production/deliveries from 4.2k to 3.9k, F22E from 22.9k to 22k, (tweaking F23E from 73.6k to 72.3k, F24E.”

Rakesh added: “For NIO, we believe new launch ET7 is ramping well, with ET5 and ES7 launches in 3Q on track. China stimulus could also spur additional EV demand into 2H. We believe improving chip supply and capacity at the foundries in 2H (with handset-PC-consumer weakness) should be a driver for improving production, though offset by some consumer buying weakness. We conservatively lower JunQ from 24k to 23k, the lower end of guidance range, and C22E from 142k to 138k.”