Stock Analysis & Ideas

Can Newcomer Rivian Dethrone Ford As the Pickup King?

To curb climate change, the world will need to reduce greenhouse gas emissions. For the transport sector, it means shifting from gas-powered vehicles to electric models. Governments around the world are offering subsidies or pushing mandates to try to accelerate the transition to electric vehicles, expanding the opportunities for automakers in the EV segment. In the lucrative pickup truck category, a fierce competition is brewing.

In the U.S., pickup trucks have been the best-selling vehicles for years. Ford (F) has long had a firm grip on this market but is now bracing itself for a different competitive landscape amid the shift to electric vehicles.

Besides Ford, Rivian (RIVN), Tesla (TSLA), and General Motors (GM) are also vying for control of the pickup market with electric models. Rivian brought the first electric pickup to U.S. roads in the fall of 2021, selling it under the R1T brand. GM soon followed with its GMC Hummer EV Pickup and is preparing to release another electric truck under its Chevrolet brand. Ford’s F-150 Lightning truck and Tesla’s Cybertruck are expected to hit the market in 2022.

What does Rivian’s R1T Electric Truck offer?

Rivian beat industry veterans Ford and GM to market with the electric pickup in the U.S. The R1T truck commands a starting price of $67,500. It offers an EPA-estimated range of 314 miles and can carry 1,760 pounds and tow 11,000 pounds.

GM’s Hummer EV & Silverado EV

GM will rely on several models to capture the electric pickup market. It has begun delivering the limited edition Hummer EV pickup to customers. Other variations of the truck are on their way and the first one will arrive in the fall of 2022. The Hummer EV pickup line will offer a range of up to 350 miles, carry 1,300 pounds, and tow 7,500 pounds. The first model to hit the market costs more than $110,000.

GM is preparing another electric pickup through its Chevrolet unit. The Silverado EV is expected to hit the road in 2023. With a starting price of $39,900, it promises at least 400 miles of range and the ability to carry 1,300 pounds and tow 10,000 pounds.

Ford’s F-150 Lightning

Ford is currently the category leader Ford and is gearing up to defend its turf. The F-150 Lightning electric pickup is expected to enter production in the spring of 2022. It will have a starting price of just under $40,000 and offer an EPA-rated range of 300 miles. The pickup will be able to carry 2,000 pounds and tow 10,000 pounds.

Tesla’s Cybertruck

Tesla has dominated the electric car market. Now it wants to try its luck in the pickup market. The Cybertruck may arrive later than Rivian’s R1T, GM’s Hummer EV and Chevrolet Silverado EV, and Ford’s F-150 Lightning, but Tesla believes its Cybertruck will be worth the wait. The truck will offer a 500-mile range, be able to carry 3,500 pounds and tow 14,000 pounds. Tesla has not yet revealed the pricing details of its Cybertruck.

Rivian Increasing Production Capacity

In addition to the R1T, Rivian has developed an SUV named the R1S. The company has received more than 70,000 reservations for the vehicle from customers in the U.S. and Canada. In addition, it has an order to supply Amazon (AMZN) with 100,000 electric delivery vans.

To meet the growing demand for its vehicles, Rivian is expanding its manufacturing capacity. It is currently manufacturing at its Illinois factory, which can produce 200,000 vehicles annually. It is setting up another manufacturing site in Georgia that will be able to produce 400,000 vehicles per year.

Analysts’ Take

Morgan Stanley analyst Adam Jonas recently reiterated a Buy rating on Rivian Automotive stock with a price target of $147, which suggests 80.50% upside potential.

Consensus among analysts is a Moderate Buy based on 10 Buys and 4 Holds. The average Rivian Automotive price target of $134.64 implies 65.32% upside potential to current levels.

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