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General Motors Is Still Not Confident That LG Can Make Defect-Free Batteries For The Bolt EV

Remarkably, General Motors Company (NYSE: GM) has not yet started making the necessary repairs on 140,000+ Chevrolet Bolt electric vehicles
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This article was originally published by The Deep Dive

Remarkably, General Motors Company (NYSE: GM) has not yet started making the necessary repairs on 140,000+ Chevrolet Bolt electric vehicles (EVs) it has recalled and for which it has set aside US$1.8 billion to cover the cost of battery repairs/replacement. Furthermore, GM has ceased all Bolt EV production.

The reason for this: GM does not believe its battery suppler, South Korea-headquartered LG, can, at this time, make a defect-free battery for the Bolt that does not pose a fire risk, according to an interview with GM spokesman Dan Flores in the Detroit Free Press.

To illustrate this, on September 3, Insideevs.com posted a story that a Bolt which received a recall notice exploded in a parking lot while it was neither running nor charging. The article quoted the owner as saying, “I called Chevy and they told me to wait for someone to call me …” The below picture was posted on Reddit.

Since peaking at around US$64 in early June, GM shares have lost about a quarter of their value over the last three months. The principal culprits for the decline: a disappointing 2Q 2021 earnings release and two separate Bolt recall announcements which, as noted above, carry an aggregate price tag of US$1.8 billion.

Until GM determines the source of the defect that causes some Bolt EVs to catch fire without impact, it is possible that GM shares may continue to underperform. Mr. Flores indicated GM is not yet able to estimate a time frame for this determination.

LG makes the Bolt batteries at its facilities in Holland, Michigan. GM engineers are looking into LG’s manufacturing processes and methods and tearing down battery packs to better understand why many battery modules have a torn anode tab and a folded separator. The presence of these two defects in the same battery cell increases the risk of fire.

GM hopes to develop software which allows a technician to determine whether a specific module is defective, and if so, prompts him or her to replace just that battery module. There are five modules in a Bolt battery.  If such decision-making software can’t be perfected, GM/LG will have to replace all five modules.

Mr. Flores acknowledged that GM continues to push for LG to reimburse it for some or all of the US$1.8 billion cost of the recall, but he would not comment on the status of these talks.

GM’s earnings per share declined sequentially in 2Q 2021 to US$1.90 (US$1.97 adjusted) from US$2.03 (US$2.25 adjusted) in 1Q 2021. The company’s balance sheet is very strong with US$29.1 billion of cash and cash equivalents, offset by US$17.3 billion of Automotive Debt.

(in millions of US $, except for shares outstanding)2Q 20211Q 20214Q 20203Q 20202Q 2020
Operating Income$2,882$3,277$2,767$4,424($1,214)
Diluted EPS$1.90$2.03$1.93$2.78($0.56)
Operating Cash Flow$7,162$1,266$6,693$11,231($2,815)
Cash – Period End$29,131$29,380$29,038$36,901$37,482
Automotive Debt – Period End$17,318$17,552$17,469$28,744$34,921
Shares Outstanding (billions)1.51.51.41.41.4

GM’s shares could continue to underperform until it resolves the cause of the Bolt EV battery defects. Unfortunately, it is difficult to predict the timing of this breakthrough.

General Motors Company last traded at US$50.68 on the NYSE.


The post General Motors Is Still Not Confident That LG Can Make Defect-Free Batteries For The Bolt EV appeared first on the deep dive.

Energy & Critical Metals

Wait for ChargePoint Stock to Bottom Out Before Taking a Position

Down 42% year-to-date, ChargePoint (NYSE:CHPT) stock does not look worthy of investor’s money.
Source: JL IMAGES / Shutterstock.com
The largest manufacturer…

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Down 42% year-to-date, ChargePoint (NYSE:CHPT) stock does not look worthy of investor’s money.

Source: JL IMAGES / Shutterstock.com

The largest manufacturer of electric vehicle charging stations in the world looks good on paper, but so far its potential has not translated into success for shareholders.

ChargePoint went public earlier this year at the height of the frenzy over special purpose acquisition companies (SPACs).

However, like many SPAC deals, CHPT stock has collapsed in the months since it made its market debut. Given the share price’s persistent weakness, shareholders might be best advised to cut their losses.

CHPT stock does seem to have gotten pulled down with the broader SPAC sector. After threats of greater regulation over the deals led Wall Street to cool on so-called “blank check” companies or “reverse mergers,” underlying fundamentals have also dragged down the company’s share price.

The company’s revenue for its fiscal 2021 year ended on Jan. 31 amounted to $146.5 million, only 1% higher than the $144.5 million in revenue it generated in the previous 2020 fiscal year.

Coming just months before it went public, the fiscal 2021 financial results led investors to sour on ChargePoint and its prospects, prompting a swift and deep sell-off.

While ChargePoint says it wants to sell its electric vehicle charging units to both commercial and retail customers, the reality is that the vast majority of its current revenue (75%) comes from commercial sales to businesses and office parks.

The general public remains slow to adopt electric vehicles with only about 2% of the vehicles on U.S. roads today being plug-in electric.

Electric vehicles are clearly the future of the automotive industry, but they have a long way to go to achieve mass adoption. Consumers continue to raise concerns ranging from slow charging times to limited driving range when it comes to electric cars, trucks and SUVs.

Lofty Goals and CHPT Stock

Despite its middling financial results and a slowing growing market, ChargePoint continues to have lofty goals and sets itself ambitious targets. Maybe too ambitious.

The company has set a target of achieving $1 billion in sales by 2025, a nearly 10 fold increase from its current sales in a little more than four years.

ChargePoint has also raised its full-year guidance for its current fiscal 2022 year to a range of $225 million to $235 million, which would represent 57% revenue growth over its previous fiscal year.

The second half of this year will need to be exceptionally strong for ChargePoint to reach its targets given that the company generated revenue of $97 million in the first six months of its current fiscal 2022 year.

The company did note in its most recent quarterly financial results that its residential segment saw sales grow by 79% on an annualized basis. This growth was powered by the increasing use of its charging stations at housing complexes across the U.S.

Hopefully, that growth will be sustained in the final months of this year, but it isn’t worth betting on.

Recent Acquisition

In August this year, ChargePoint announced that it is acquiring ViriCiti, a commercial fleet management provider. Acquiring ViriCiti will enable ChargePoint to sell its electric vehicle charging stations and related infrastructure to companies with major commercial fleets such as United Parcel Service (NYSE:UPS) and Waste Management (NYSE:WM).

It will also enable ChargePoint to go after lucrative government contracts as the shift to electric vehicles accelerates nationwide.

ChargePoint’s fleet segment is an area of strength for the company. In this year’s second quarter, the segment grew its sales by 187% year over year. The fleet segment has a lot of potential, but ChargePoint will have to demonstrate that it can grow that area of its business by winning competitive contracts and aligning itself with strategic partners.

ViriCiti is a step in the right direction as it will allow ChargePoint’s customers to monitor their operations data and gain valuable insights into their fleet’s performance.

Wait and See Where CHPT Goes

The electric vehicle market as a whole has cooled off this year with once high flying stocks such as Tesla (NASDAQ:TSLA) slumping. While electric vehicle companies and their stocks have a bright future, that future remains off in the distance.

ChargePoint’s time is coming but it is not here quite yet. As such, investors should wait to see where the company’s stock bottoms before taking a position.

In the current environment, and with electric vehicle adoption slow to catch on, CHPT stock is not a buy.

Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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Energy & Critical Metals

QuantumScape Partners with ‘Large Automaker’ to Evaluate Battery Prototypes — Report

California-based battery maker QuantumScape (QS) has teamed up with a large automaker to evaluate prototypes of its solid-state battery cells, according…

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California-based battery maker QuantumScape (QS) has teamed up with a large automaker to evaluate prototypes of its solid-state battery cells, according to a report published by Reuters. Shares of the company climbed over 16% to close at $24.12 on Tuesday.

Backed by Volkswagen AG (VWAGY), QuantumScape develops next-generation solid-state lithium-metal batteries for electric vehicles. As per the terms of the deal, the automaker has an option to buy battery capacity worth 10-megawatt hours from QuantumScape's pre-pilot production line facility.

When asked to identify the automaker, the company said it was a “second top ten” automaker by global revenue. (See QuantumScape stock chart on TipRanks)

Two months ago, Robert W. Baird analyst Ben Kallo reiterated a Hold rating on the stock with a price target of $26 (7.8% upside potential). The analyst expects the company to report a loss of $0.20 per share in the third quarter.

Overall, the stock has a Moderate Buy consensus rating based on 1 Buy and 2 Holds. The average QuantumScape price target of $34 implies 41% upside potential. Shares of the company have lost 62.5% over the past six months.

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The post QuantumScape Partners with 'Large Automaker' to Evaluate Battery Prototypes — Report appeared first on TipRanks Financial Blog.

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Energy & Critical Metals

Airbus reveals the next generation of electric CityAirbus UAM solution; first flight in 2023

Airbus announced plans for a new CityAirbus at the company’s first Airbus Summit on “Pioneering Sustainable Aerospace” as the emerging Urban Air…

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Airbus announced plans for a new CityAirbus at the company’s first Airbus Summit on “Pioneering Sustainable Aerospace” as the emerging Urban Air Mobility (UAM) market begins to firm up.


The fully electric vehicle is equipped with fixed wings, a V-shaped tail, and eight electrically powered propellers as part of its distributed propulsion system. It is designed to carry up to four passengers in a zero-emissions flight in multiple applications.

CityAirbuNextGen 01 AirbusHelicopters_

We are on a quest to co-create an entirely new market that sustainably integrates urban air mobility into the cities while addressing environmental and social concerns. Airbus is convinced that the real challenges are as much about urban integration, public acceptance, and automated air traffic management, as about vehicle technology and business models. We build on all of the capabilities to deliver a safe, sustainable, and fully integrated service to society.

—Bruno Even, Airbus Helicopters CEO

CityAirbus is being developed to fly with a 80 km range and to reach a cruise speed of 120 km/h, making it suited for operations in major cities for a variety of missions.

Sound levels are a key factor for an urban mission; Airbus’ extensive expertise in noise-friendly designs is driving CityAirbus’ sound levels below 65 dB(A) during fly-over and below 70 dB(A) during landing.

It is optimized for hover and cruise efficiency, while not requiring moving surfaces or tilting parts during transition. The CityAirbus NextGen meets the highest certification standards (EASA SC-VTOL Enhanced Category). Designed with simplicity in mind, CityAirbus NextGen will offer best-in-class economic performance in operations and support.

Airbus is benefitting from years of dedicated research, innovation, two electric Vertical Takeoff and Landing (eVTOL) demonstrators, and development on sound technology across its portfolio of products, as well as decades of experience in certifying aircraft.

The Vahana (earlier post) and CityAirbus (earlier post) demonstrators have jointly conducted 242 flight and ground tests and have flown around 1,000 km in total. Furthermore, Airbus has used extensive subscale flight testing and wind tunnel campaigns and has leveraged its computing and modelling power. CityAirbus NextGen is in a detailed design phase right now and the prototype’s first flight is planned for 2023.

We have learned a lot from the test campaigns with our two demonstrators, CityAirbus and Vahana. The CityAirbus NextGen combines the best from both worlds with the new architecture striking the right balance between hover and forward flight. The prototype is paving the way for certification expected around 2025.

—Bruno Even

Beyond the vehicle, Airbus is working with partners, cities, and city inhabitants in order to create the ecosystem that is essential to enabling this new operating environment to emerge.

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