What You Missed This Week in EVs and Clean Energy

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Plug Power and Amazon sign green hydrogen agreement

Institutional investors and professional traders rely on The Fly to keep up-to-the-second on breaking news in the electric vehicle and clean energy space, as well as which stocks in these sectors that the best analysts on Wall Street are saying to buy and sell.

From the hotly-debated high-flier Tesla, Wall Street’s newest darling Rivian, traditional-stalwarts turned EV-upstarts GM and Ford to the numerous SPAC-deal makers that have come public in this red-hot space, The Fly has you covered with “Charged,” a weekly recap of the top stories and expert calls in the sector.

AMAZON AGREEMENT: 

Plug Power (PLUG) signed a hydrogen supply deal with Amazon (AMZN) to provide liquid green hydrogen starting in 2025 to help decarbonize Amazon’s operations as part of its commitment to be net-zero carbon by 2040. This deal with Amazon marks a growth opportunity for Plug and is expected to help the company toward its 2025 $3B revenue goal. Specifically, Amazon and Plug have signed a deal for Plug to supply 10,950 tons per year of liquid green hydrogen to fuel Amazon operations. Using Plug’s electrolyzers, liquefaction capabilities and cryogenic tankers, Plug will deliver hydrogen to Amazon beginning Jan. 1, 2025.

Plug has granted Amazon a warrant to acquire up to 16,000,000 shares of Plug’s common stock, of which the exercise price for the first 9,000,000 Warrant Shares is $22.9841 per share, which is based on the volume weighted average closing price of Plug common stock for the thirty trading days ending August 23, 2022, and the exercise price for the remaining 7,000,000 Warrant Shares will be an amount per share equal to ninety percent of the 30-day volume weighted average share price of Plug common stock as of the final vesting event that results in full vesting of the first 9,000,000 Amazon Warrant Shares. Amazon would vest the warrant in full if it spends $2.1 billion over the seven-year term of the warrant across Plug products, including, but not limited to, electrolyzers, fuel cell solutions, and green hydrogen.

Commenting on the agreement, Truist analyst Bronson Fleig said he views it as “a positive step” supporting Plug Power’s “aggressive green H2 ecosystem strategy through further backstopping of significant internal green H2 production.” He also pointed out that the company noted the transaction as being supportive of its $3.0B revenue target for 2025. Fleig, who expects positive share support near-term on the notion of further affirmation of industry acceptance of green H2, kept a Hold rating on Plug Power shares.

UPDATE ON REVIEW OF SHORT REPORT: 

Nio (NIO) provided an update on the status of the previously announced independent internal review. As previously disclosed, shortly after the publication of a report issued by the short-seller firm Grizzly Research on June 28, an independent committee of the board of directors, consisting of independent directors, was formed to oversee an independent internal review regarding the key allegations made in the short seller report. The internal review was performed by the independent committee with the assistance of third-party professional advisors including an international law firm and forensic accounting experts from a forensic accounting firm that is not the company’s auditor. The internal review is now substantially complete. Based on findings of the internal review, the independent committee has concluded that these allegations were not substantiated.

KARNO ACQUISITION: 

Hyliion Holdings (HYLN) announced it has entered into a definitive agreement to acquire a new hydrogen and fuel agnostic capable generator, or KARNO, from GE Additive, part of GE (GE). The KARNO generator emerged out of GE’s long-running R&D investments in metal additive manufacturing across multiple industries and in areas such as generator thermal and performance design. Initial testing indicates the KARNO generator is expected to comply with all current and foreseeable emissions standards, specifically from CARB and EPA, even when utilizing conventional fuels. The transaction is subject to customary closing conditions and is expected to close by the end of the third quarter. With an acquisition value of $37M, GE will receive $15M in cash and approximately $22M in Hyliion stock. Hyliion will acquire the generator technology and integrate the Cincinnati-based engineering team that created the KARNO system into Hyliion.

EXECUTION RISKS: 

On August 24, Barclays analyst Jiong Shao downgraded XPeng (XPEV) to Equal Weight from Overweight. While the company’s second quarter results were “solid,” it provided “much weaker than expected” third quarter guidance on vehicle deliveries, Shao told investors in a research note. Success of G9 will be critical to XPeng in both near and longer term, and execution risks are “heightened,” the analyst said.

BUY BLOOM ENERGY, FIRST SOLAR: 

BofA analyst Julien Dumoulin-Smith resumed coverage of Bloom Energy (BE) with a Buy rating following the 15M share equity raise. The analyst continues to see momentum into year end at Bloom and argues that “many opportunities” are not reflected in the current share price.

Dumoulin-Smith also upgraded First Solar (FSLR) last week to Buy from Neutral. When he last refreshed his view on First Solar days after the initial Inflation Reduction Act, or IRA, announcement, he did not yet appreciate the magnitude of IRA credits that will accrue to the company, Dumoulin-Smith told investors. Recent talks with management and the IRA being signed into law lend him confidence in baking in a “significant valuation uplift” attributable to IRA credits, the analyst said.

Originally Posted August 29, 2022 – What You Missed This Week in EVs and Clean Energy

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