Electric vehicle stocks have had a rough year, according to Evercore ISI, but don’t count them out just yet. Analyst Chris McNally said the past year has been a much-needed expectation reset for nascent EV players like Fisker, Rivian Automotive and Lucid Group. Their shares have declined by more than 65% in the past 12 months. “We believe that some of the formerly ‘high-flying’ EV stocks are selectively primed for a measured return path to increase consumer and investor momentum as they move to mass production,” McNally wrote in an extensive note introducing the coverage. on three EV makers. He said the companies will be reborn like a phoenix rising from the ashes, with Fisher, Rivian and Lucid each having unique positions in the industry and the potential to become “major players in the next decade”. Each has a distinct, premium “go-to market” within the growing EV market, he said. “Especially encouraging is the fact that each company is initially focusing on a realistic premium segment of the market, where EV cost parity will come sooner than with mass-market EVs because of the rising cost of battery packs that GM and Ford are facing.” The massive market for choice eats up the margin,” McNealy said. “While this is only a temporary benefit, it will help Fisker, Rivian and Lucid conserve (some) cash and scale to reasonable levels before the commercial outlook of mass-market EVs becomes truly viable from 2025 onwards.” will start.” Added. Fischer is most bullish on Evercore ISI, Fischer. It initiated coverage of the stock with an outperform rating and a price target of $15, which is about 107% upside from Tuesday’s close. In the near term, Fisker could leverage its partnership with contract manufacturer Magna Steyr. Fisker develops and designs its vehicles in-house but outsources to Magna Steyr to manufacture them. McNally said that would help the EV maker avoid Rivian and Lucid’s $5 billion to $8 billion in venture capital funding by 2026. He said Fisker would need $400 million to $800 million in funding over the next year. The company also targets share gains in the currently neglected EV space: well-styled, small SUVs with tech-forward features, he added. “We see a path to 40-50% ’23 revenue consensus and ~40k delivery, reducing negative sentiment surrounding the former SPAC and unlocking a higher valuation,” McNally wrote. There’s also a lot of excitement about its new EV, the Ocean, which started rolling off the production line in November. “This could help turn the stock from speculation to a real rave/exec story,” McNally said. Fisker’s stock is down about 53% year to date. McNally said Rivian is the largest and most well-funded of the three EV makers, and reviews of its R1T pickup have been great. He rates the stock as In-Line with a positive bias and has a price target of $35, a 21% upside from Tuesday’s close. He sees a catalytic path once the revenue consensus for 2025 is fully reset. Right now he believes the expectations are too high. “Then we’ll start to see the benefits of vertical integration and branding,” McNealy wrote. If the year-end 2022 run rate at the Illinois facility means higher-than-expected production, investor confidence should increase in the near term as well as the mid-term with its second plant expected to open in Georgia in 2025. / 2026, he said. Other positive catalysts include securing near-term funding through a capital raise in 2023 or 2024, and ensuring a timely launch of its latest, more affordable R2 model in 2026. The stock is down 71% year to date. The Lucid is the epitome of an aspirational EV, McNally said. “Lucid has both comprehensive vertical integration and leading e-powertrains for the ultra-premium EV segment with the debut Air sedan ($80-150k) and the even more premium Gravity SUV as well as a low-cost CUV (TBD;) 27/28?),” he wrote. However, he initiated coverage with an in-line rating and a slight negative bias, noting that “Lucid has a long way to go on both TAMs.” [total addressable market] Needs expansion and higher funding.” His $12 price target represents about 23% upside from Tuesday’s close. “Lucid’s technology is best in class, but the path to capitalize on it is not yet clear,” he said. A key positive catalyst for the stock could be a new, low-cost model being introduced before 2027. Plus, a clear understanding of Saudi Arabia’s $3.4 billion investment and the company’s offer to raise $8 billion add optimism. That could help propel the U.S., he said. The stock is down more than 73% year to date. – CNBC’s Michael Bloom contributed reporting.