Ford, GM Adopt Tesla Charging Standard; Plus More ESG News This Week

FactSet StreetAccount publishes regular company-level and summary-style ESG news. Below is our recap of key ESG developments and insights over the past week.

Chart of the Week: Thematic Stocks Gain as Fed Pauses Rate Hikes

As we have discussed in prior weeks, stocks have tended to perform well when the Fed stops raising rates in a hiking cycle. Small caps and thematic stocks had largely underperformed broader markets through May 30 this year (Figure 1) with the S&P (red line) up approximately 10% and the Russell 2000 (gray line) nearly unchanged. June has brought better performance for small caps and thematic names, likely due in part to the Fed telegraphing and then pausing its rate hiking cycle. Figure 2 shows that lithium, EV, and hydrogen ETFs (brown, blue, green lines respectively) have outperformed both the Russell 2000 and the S&P 500 this month. Meanwhile, solar names have lagged.

Figure 1: Price Indices for S&P 500, Russell 2000, and Select Thematic ETFs, YTD Through May 30

Source: FactSet

Figure 2: Price Indices for S&P 500, Russell 2000, and Select Thematic ETFs, May 30 to June 15

Source: FactSet

Thematic performance

Thematic sectors higher on the week with EV makers and charging operators leading gains. Tesla's share price rose for a record 13 days on news of Ford and General Motors adopting NACS charging ports, allowing their customers to make use of Tesla's 12K superchargers. After initially falling sharply Friday on the announcement, charge point operators recovered this week following a raft of announcements of NACS charger adoption. Chinese EV makers gaining on the week; Xpeng revealed its Model G6 received over 25,000 pre-orders in three days. Nio posted narrower-than-expected Q1 losses and cut model prices by $4,200 (despite already depressed margins). Elsewhere, Toyota gained on shareholder support for its board and the introduction of its new EV strategy. Electric aviation names (Joby, Archer, EVe Mobility, Lilium) higher following positive initiation on the space at Canaccord Genuity.

Chinese PV makers leading solar sector gains; comes as country's non-fossil fuel energy sources surpassed 50% of total electricity generation. In the US, solar mostly lower though Maxeon up on Roth upgrade noting potential for margin expansion. European clean energy pureplays mixed as push for EU-wide renewables targets continues to face hurdles with France pushing for nuclear to play a greater role. Diversified names broadly firmer led by Opdenergy following acquisition offer by Antin.

North American hydrogen higher this week with Plug Power rising after it provided an ambitious outlook at its analyst day and announced a new refueler product. Ballard Power higher WTD after announcing plans to increase bipolar plate production and cut costs; stock now falling after BMO downgrade citing recent outperformance. Elsewhere, ThyssenKrupp launched the long-awaited IPO of its hydrogen division, Nucera. European hydrogen pureplays lower with sharp losses from Hydrogen Pro and Green Hydrogen following rights issuances.

Environment

In the US, President Biden was endorsed by Sierra Club and other conservation groups for his 2024 presidential campaign. Yesterday, Biden vetoed a Congressional effort to overturn rules on pollution from heavy-duty vehicles while the administration has a packed environmental agenda over the next year, targeting natural gas emissions and stoves, energy transmission, heat pumps, and protections for Alaskan lands. Europe's renewables targets were delayed further by France's push to include nuclear power for ammonia production.

In global news, the COP28 chief gave his strongest statement on energy transition to date. Research found hundreds of World Bank climate projects have no obvious link to climate action. NOAA declared El Nino conditions are present and likely to strengthen; says pattern could lead to global disruptions and new heat records. China's boom in offshore wind buildout has driven costs down to match coal. Meanwhile, multiple hydropower plants ceased operation in Vietnam amidst drought and heatwave. Australia and New Zealand to work together on climate efforts.

Social & Governance

Big tech faced substantial regulatory action this week, as a US judge granted the FTC's request to temporarily block Microsoft's acquisition of Activision Blizzard, and the EU charged Google with breach of antitrust rules that could lead to the breakup of parts of its ad-tech business. JPMorgan reached a $290M settlement with victims who alleged the bank ignored warnings about Jefferey Epstein. American Airlines and JetBlue sought to rework their Northeast Alliance amid an antitrust action; a US judge delayed the effective date they must end the agreement.

In governance issues, Toyota shareholders re-elected chairman Toyoda, endorsing the company's governance and newly announced EV strategy, while rejecting a proposal for greater disclosure on climate lobbying. UBS to impose restrictions on Credit Suisse bankers after closing of the emergency takeover.

The EU Council solidified its position on a law to aid gig workers in gaining employment rights; it will now begin negotiations with the European Parliament. NYC to implement a minimum wage for app-based workers in national first. FedEx pilots tentatively approved a 30% pay raise and will vote on the package in July. In other news, Tesla autopilot has been involved in more crashes than previously reported.

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