When it comes to electric vehicles (EVs), smaller models such as sedans have dominated markets. However, the future of Tesla’s [TSLA] share price and the success of Rivian’s stock post-IPO could come down to who offers the best electric pickup trucks.
Rivian is targeting the higher end of the market and is in the enviable position of having had the first electric pickup truck to have rolled off the production line. Tesla is looking to launch a more affordable model, but that’s some way off. Then there’s established automobile manufacturers who are also developing their own electric trucks.
Who should investors and traders back? Tesla’s share price is dividing Wall Street opinion over whether it is overvalued or not, while Rivian’s stock will soon be publicly tradable after the company recently submitted the paperwork needed to list on the stock exchange.
Tesla’s share price outpaces Motor City rivals
Tesla’s share price has had a decent run over the past three months, gaining more than 16% in that time frame and handily beating Detroit royalty General Motors’ [GM] 10% decline and Chinese competitor Nio’s [NIO] 30% decline.
Factors helping Tesla have been a proactive approach to the semiconductor crisis, which has seen it change the configuration of its firmware to ensure deliveries, while competitors have had to revise production figures. Tesla’s third-quarter delivery numbers saw a record-breaking 241,300 EVs out the door, while its competitors experienced a drop in sales owing to the semiconductor crisis.
Still, Tesla’s share price carries a hefty forward price to earnings ratio of 108.88. And while revenues are set to increase 59% this year and by 34.4% in 2022, investors will need to decide if Tesla’s share price justifies that valuation.
Number of EVs Tesla sold in Q3
EV pickup trucks hit the road
Amazon-backed electric vehicle maker Rivian has beat competitors, including Ford [F], Tesla and Hummer, to launch the first electric pickup truck on 14 September.
“After months of building pre-production vehicles, this morning, our first customer vehicle drove off our production line,” founder and CEO RJ Scaringe tweeted.
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 Tesla and General Motors’ share prices. Ford’s F-150 is likely to hit the market next spring, reports MarketWatch. General Motors has two in the pipeline – GMC Hummer and Chevy Silverado – but the more affordable one seems some time away from launch.
Rivian’s 2022 Rivian R1T doesn’t come cheap, though, with prices starting at $69,000. Tesla’s Cybertruck is the most competitively priced but has been delayed to 2022. The Cybertruck carries a $39,900 price tag and is being built out of its new Austin plant. That’s a significant price difference and – together with brand recognition and experience producing and selling EVs – might help Tesla overtake Rivian in the longer term.
Rivian, which is backed by Ford and Amazon [AMZN], is looking to go public and is eyeing up an $80bn valuation. According to CNBC in August, the electric pickup manufacturer is looking to raise between $5bn and $8bn. In its IPO filing to the SEC, Rivian disclosed that it had lost almost $1bn in the first half of 2021, underlining how dependent it is on backers Ford and Amazon, which have put more than $10bn behind the company.
Proposed valuation that Rivian is seeking
Tesla share price targets divide analysts
In August, Goldman Sachs reiterated its buy rating on Tesla’s stock. The investment bank has an $875 price target on Tesla – one of the most bullish targets on Wall Street. The following month, Tudor Pickering analyst Matthew Portillo launched coverage on the stock with a sell rating and a $537 price target. Pickering said that while the company “has done an amazing job of building a world-class business”, it is “fundamentally overvalued”.
Goldman Sachs and Tudor Pickering’s different takes underscore the division on Wall Street when it comes to weighing up Tesla. If the top and bottom price targets are removed, the spread between analyst price targets on Tesla is $930. Barron’s Allen Root points out that “the top target price, at more than $1,000 a share, makes Tesla worth more than $1trn”. “The bottom target prices, at about $200 a share, make Tesla the second most valuable car company in the world, behind Toyota,” he wrote.
Tesla’s share price carries a $755 average price target based on analysts polled by Refiniv, which would see a 3% downside from its 5 October closing price.
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