Charged: Tesla, Rivian downgraded by Wall Street firm

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 (TSLA), Wall Street’s newest darling Rivian (RIVN), traditional-stalwarts turned EV-upstarts GM (GM) and Ford (F) 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.

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MOVING TO THE SIDELINES: Morgan Stanley analyst Andrew Percoco downgraded Tesla to Equal Weight from Overweight with a price target of $425, up from $410, after assuming coverage under a new analyst. The firm sees Tesla becoming a market leader across autonomous mobility, renewable energy, and robotics. However, with the shares at trading at 30-times estimated 2030 EBITDA and potential downside to consensus estimates in the near-term, Morgan Stanley prefers to await a better entry point. Morgan Stanley’s 2026 auto volume forecast for Tesla is now 13% below consensus due to a more cautious electric vehicle industry outlook. It also believes Tesla’s “non-auto catalyst path” is already priced into the shares.

LOWER-COST MODEL 3: Tesla launched a lower-priced version of its Model 3 car in Europe, Marie Mannes of Reuters reports. This comes as Tesla grapples with softening demand across Europe.

CAFE STANDARDS: President Donald Trump is resetting the Biden Administration’s Corporate Average Fuel Economy, or CAFE, standards. The White House said in its fact sheet, “President Trump is returning CAFE standards to levels that can actually be met with conventional gasoline and diesel vehicles. The Biden Administration standards imposed unrealistic fuel economy targets that effectively resulted in an electric vehicle mandate. The Trump Administration’s reset of the CAFE standards ensures the program’s fidelity to the legal restrictions set forth by Congress. The Biden standards broke the law by going far beyond the requirements that were mandated by Congress when it created the CAFE program. The Biden Administration created extraordinarily stringent fuel economy standards for passenger cars and trucks, set at such aggressive levels that they were impossible to meet with available technologies for gas cars. The Biden standards would have compelled widespread shifts to EVs that American consumers did not ask for, accompanied by significant cost-of-living increases. Since EVs are so expensive to build, automakers must sell them at a loss and make up the difference by significantly raising the sticker price of gas cars. If President Trump had done nothing, the Biden standards would have raised the average cost of a new car by nearly $1,000, relative to the cost under the standards announced today. President Trump’s actions will save American families $109 billion in total over the next five years. By helping more Americans buy newer, safer vehicles, this reset is projected to save more than 1,500 lives and prevent nearly a quarter-million serious injuries through 2050.” Publicly traded companies in the space include Ford, General Motors, Honda (HMC), Lucid Group (LCID), Mercedes-Benz (MBGYY), Nissan (NSANY), Rivian, Stellantis (STLA), Tesla, Toyota (TM) and Volkswagen (VWAGY).

ROAD RULES: The National Highway Traffic Safety Administration sent a letter to Tesla this week saying it has opened a Preliminary Evaluation to investigate allegations that vehicles, manufactured by Tesla and operating with Full Self-Driving engaged, executed driving maneuvers that may constitute traffic safety violations, and to request certain information. “This investigation will assess the capability of FSD to accurately detect and appropriately respond to traffic signals, signs and lane markings, as well as its capability to provide adequate indications and warnings to the driver,” the letter reads. “The adequacy of the indications and warnings of the system’s intended driving responses includes consideration of whether they are, among other things, accurate, conspicuous and sufficiently timely such that a driver may safely supervise the automated driving task and intervene as necessary. This office has received 62 complaints and has identified 4 media reports and 14 reports submitted under Standing General Order 2021-01 (the “SGO”) that may relate to the alleged defect. The complaints and reports allege or involve one or more of several types of traffic violations including: proceeding or attempting to proceed into intersections against red traffic signals; entering opposing lanes of travel or attempting to enter roads with wrong way signs; and improper lane use within intersections, including proceeding straight through intersections from marked turn-only lanes and executing turns from marked through-only lanes.”

SELL RIVIAN: Morgan Stanley analyst Andrew Percoco downgraded Rivian to Underweight from Equal Weight with an unchanged price target of $12, following a change in analysts. The firm adjusted ratings in the autos and shared mobility group as part of its 2026 outlook. Morgan Stanley is “leaning more cautious” into next year, saying the electric vehicle “winter” will sustain through 2026. This is counterbalanced by a “moderately more positive” outlook on internal combustion engines and hybrids, the analyst tells investors in a research note.

RECALL: Rivian will recall 34,824 U.S. vehicles due to a damaged seat belt pretension cable that may fail to properly restrain the driver’s seat belt, increasing crash injury risk, the NHTSA says. As part of the fix, Rivian has issued an over-the-air software update for certain 2022-2025 EDV models and will inspect and replace the driver’s seat belt pretension assembly if needed.

LEANING MORE CAUTIOUS: Morgan Stanley downgraded Lucid Group to Underweight from Equal Weight with a price target of $10, down from $30, following a change in analysts. The firm adjusted ratings in the autos and shared mobility group as part of its 2026 outlook. Morgan Stanley is “leaning more cautious” into next year, saying the electric vehicle “winter” will sustain through 2026. This is counterbalanced by a “moderately more positive” outlook on internal combustion engines and hybrids, the firm tells investors in a research note.

HSBC downgraded Li Auto (LI) to Hold from Buy with a price target of $18.60, down from $30.30. The firm says the company’s “major “recall, delivery problems and falling sales reflect its significant challenges. HSBC cut Li’s earnings estimates by 82% citing falling margins and an uncertain outlook for 2026.

BULLISH ON OKLO: Seaport Research upgraded Oklo (OKLO) to Buy from Neutral with a $150 price target following the company’s Q3 call, which provided “a wealth of information about its multivariate progress in executing its business plan.” The firm bases its price target on its 2032 EBITDA estimate of $1.59B.