Market News

GM’s BrightDrop Secures Commercial EV Orders from Walmart & FedEx

General Motors Company’s (GM) electric vehicle (EV) manufacturing unit BrightDrop has secured orders for its commercial EV’s from Walmart Inc. (WMT), and extended its relationship with FedEx Corporation (FDX).

Shares of the global automaker fell 4.6% yesterday on the news that Toyota Motors (TM) has dethroned GM to become the top U.S. car seller in 2021. Shares closed rose 2.2% briefly before ending the day, down at $62.74 on January 5.

Commercial EVs for Last-Mile Delivery

At the Consumer Electronics Show (CES) 2022, GM announced that it has secured orders for 5,000 EV600 and smaller EV410 electric delivery vans from Walmart to facilitate the retailer’s growing last-mile delivery network. Walmart aims to adopt a zero-emissions logistics fleet by 2040.

Additionally, BrightDrop extended its partnership with FedEx by signing a deal for the priority production of 2,000 electric delivery vans in the coming years. FedEx’s initial deal with BrightDrop was for 500 electric delivery vans. The company delivered its first EV600 electric light commercial autos to FedEx in December 2021, and was the fastest vehicle to market in GM’s history.

Moreover, FedEx has shown its intent to increase the EV van orders to 20,000 in the coming years, depending on further negotiations and terms. FedEx also plans to expand its testing of EP1 electric containers to 10 markets in 2022. In 2021, FedEx pilot-tested BrightDrop’s EP1 in Toronto and New York. According to FedEx, the test showed that its package deliveries grew by 15% per hour and 25% per day.

Company Comments

BrightDrop President and CEO, Travis Katz, said, “We leverage the best of two worlds – the innovation, agility, and focus of a technology startup with the engineering and manufacturing might of General Motors… This combination, coupled with BrightDrop’s holistic solution set, gives us powerful advantages that uniquely position us to support the world’s largest delivery companies, like Walmart and FedEx, with their robust sustainability goals. Today’s commitments showcase our ability to power the electrification journey of some of the world’s biggest companies.”

Tom Ward, Senior Vice President of last mile, Walmart U.S., said, “BrightDrop’s proven ability to bring a sustainable electric van to market makes them a great partner to support our growing InHome delivery service, and we look forward to continue driving our goal of operating a 100 percent zero-emissions logistics fleet by 2040.”

Analysts’ Take

Yesterday, Citigroup analyst Itay Michaeli reiterated a Buy rating on the stock with a price target of $96, which implies 53% upside potential to current levels.

Michaeli said he has mixed opinions on GM’s Silverado electric vehicle, which was unveiled at the CES 2022.

Overall, the stock commands a Strong Buy consensus rating based on 11 Buys and 3 Holds. The average General Motors price target of $73.85 implies 17.7% upside potential to current levels. Shares have gained 44.8% over the past year.

Smart Score

According to TipRanks’ Smart Score rating system, General Motors scores a “Perfect 10” which indicates that the stock has strong potential to outperform market expectations. General Motors is one of the best EV stocks with high growth potential for 2022. Its upcoming earnings for the fourth quarter are scheduled for February 1, 2022.

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