What Rivian’s electric truck means for Tesla stock

The Tesla [TSLA] stock price has accelerated to a 21% gain over the past three months (as of 17 September’s close). Meanwhile, the General Motors [GM] share price hasn’t been as fortunate, declining 12.6% over the same period. The Ford [F] share price has seen a similar fall, dropping more than 6%.

Tesla, it appears, has managed to swerve fears over the global semiconductor shortage, while Detroit-based rivals General Motors [GM] and Ford [F] have seen the shortage impact production. Earlier in September, General Motors said it expects to withhold or stop production of 200,000 vehicles in North America – double its earlier guidance.

Yet, the Tesla, General Motors and Ford share prices could also come under pressure after losing the race to produce the first consumer electric pickup truck to California start-up Rivian.

Another headwind for Tesla and General Motors share prices

Rivian is the first automaker to bring an electric pickup to the consumer market. The EV start-up has beat Tesla, General Motors, and others in what will become one of the major segments as the automobile manufacturers transition from petrol to electric vehicles.

The news was heralded by a tweet from founder and CEO RJ Scaringe announcing that the first R1T pickup had driven off the assembly line on 14 September. There’s no word on how many trucks were produced or on how Rivian is going to ramp up production.

Delivering the first saleable electric truck is undoubtedly a major coup for the startup automobile company, and investors will naturally be concerned over what this means for the Tesla and General Motors share prices. 

In emails to both Bloomberg and TechCrunch, Rivian confirmed that it had received the necessary approvals to deliver the RT1 to customers across the US, with the light-duty pickup truck being fully certified by the National Highway Traffic Safety Administration, the Environmental Protection Agency, and the California Air Resources Board.

“Rivian vehicles are fully certified by NHTSA, EPA and CARB, and are ready for sale in all 50 states,” a Rivian spokesperson wrote in an email to Bloomberg.

Rivian has a deal to produce the first electric Lincoln for Ford, with the Detroit automobile major contributing $500m towards the project. It has also agreed to a deal with Amazon [AMZN] to supply 100,000 electric delivery vans by 2030.

What is the impact on Tesla and General Motors share prices?

Tesla and General Motors share prices have gained since Rivian’s announcements on 14 September and were up 2.3% and 1%, respectively, as investors appear to be relatively relaxed about the announcement.

After all, not being first to market isn’t necessarily a bad thing. For example, Apple’s [AAPL] brand is based on releasing high-quality products like the iPhone rather than releasing the first version. Tesla has pushed back the delivery of its cybertruck until late next year. Meanwhile, General Motors is slated to deliver an electric pickup by next autumn. And while Rivian has produced a salable electric pickup truck, it won’t go on sale until early next year, leaving room for production headaches.

“Electric trucks are a hot thing right now. They’re going to have the advantage of being the first,” Brian Moody, executive editor of Autotrader, told CNN. “But as time goes on, being seen as the best will be more important.”

“Electric trucks are a hot thing right now. They’re going to have the advantage of being the first. But as time goes on, being seen as the best will be more important” - Brian Moody, executive editor of Autotrader

Tesla, General Motors, and other US automobile manufacturers have brand recognition and sizable production facilities. While Rivian might be first to market, investors shouldn’t discount Tesla, General Motors and other automobile manufacturers' experience in delivering electric vehicles at scale. Rivian also doesn’t have any showrooms to sell the truck from, something that will need to change if it’s going to compete against more established competition.

Two days after Rivian’s announcement, Ford released photos of its F-150 Lightning pickup truck entering pre-production. Ford has ramped up production of the vehicle and is aiming for 15,000 deliveries in 2022, followed by 55,000 in 2023 and 80,000 in 2024, according to Electrek, an industry website dedicated to covering electric transportation.

Rivian’s upcoming IPO

Rivian, which is backed by Ford and Amazon, recently filed documents with securities regulators to raise funds for an IPO with a potential $80bn valuation. According to CNBC, the electric pickup manufacturer is looking to raise between $5bn and $8bn in what would be one of the biggest listings in the past few years. Money raised from a listing would allow the startup to increase production, something it’ll need to do if it’s to be a serious competitor to the likes of General Motors. 

Investors will have a chance to back the company before the end of the year, with expectations of an October or November listing. In the meantime, among other electric vehicle stocks entering the electric truck market, Tesla has an average $704.38 analyst price target, representing a 7% downside on 17 September closing price of $759.49, General Motors has a $69.70 price target, which would see a 35% upside, while Ford has a $15.41 price target, a 15% upside.