Goldman downgrades Fisker, Lordstown as electric vehicle competition heats up

Published Thu, Apr 22 20215:40 AM EDTUpdated Thu, Apr 22 20219:31 AM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Goldman Sachs downgraded a pair of early-stage electric vehicle companies on Thursday, citing concerns about what an increasingly competitive space will look like once those start-ups are ready to fully enter the market. The firm moved its rating on Fisker to sell from neutral and dropped Lordstown Motors to neutral from buy and slashed its price target for both even as it said it remains "very constructive" on the electric vehicle space overall. Goldman's downgrades come as the momentum in the electric vehicle space seems to have shifted to legacy automakers that are shaking up their vehicle lineup. Shares of Fisker and Lordstown, along with Tesla , have underperformed the broader market year to date, while Ford and General Motors have surged more than 30%. "While we appreciate the steps that the company is taking to try to differentiate its upcoming products ... we are incrementally concerned about what we believe is the company's late time to market (the company is planning to enter the industry starting in 4Q22 with its Ocean SUV) as competition increases," Goldman said of Fisker in a note to clients. The firm cut its price target on Fisker to $10 from $15. Goldman also slashed its target on Lordstown to $10 from $21, which is slightly above where the stock closed on Wednesday. Shares of Fisker fell 8% at the opening bell following the Goldman call. Lordstown opened 2.5% lower. That valuation support is why Lordstown is now rated above Fisker, Goldman said, even though there are similar concerns about the former's fundamentals. "The company's recent issues with the Baja race on 4/17 (the vehicle ran out of battery after about 40 miles, albeit on challenging off-road terrain) suggests to us that there could be more development work to do on the powertrain than we had expected," the note said about Lordstown. "This factor, coupled with the global auto supply chain challenges that are making it difficult to obtain parts, could increase the probability that the company's market entry will be delayed and/or could occur at a more measured pace than we had expected."

The Lordstown Motors factory is where GM once operated, in Lordstown, Ohio, on October 16, 2020.

Megan Jelinger | AFP | Getty Images

The firm moved its rating on Fisker to sell from neutral and dropped Lordstown Motors to neutral from buy and slashed its price target for both even as it said it remains "very constructive" on the electric vehicle space overall.