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The Tesla “Cyberpunk”pickup truckis coming. That much is obvious to investors following the space. Tesla’s reveal event — happening Thursday evening in Los Angeles — is abig dealfor car people. What’s not obvious is what the truck will look like or how it will perform.
That isn’t all that’s opaque. The impact of Tesla’s truck ambitions on existing U.S. truck giants Ford Motor and General Motors is also difficult to call.
“Citi data suggests Ford has more headline risk than GM, ”Citigroup analyst Itay Michaeli wrote in a Thursday research report. “If Tesla’s pickup impresses, Ford is competitively more exposed to share-loss risk than GM, with materially higher [earnings] exposure.”
That makes sense. Ford (ticker: F) is a bigger truck maker than General Motors (GM) and a large portion of itsprofits come from trucks. But Michaeli goes deeper in his research note. Ford sells more trucks with selling prices greater than $ 60, 000. The Tesla (TSLA) truck will likely be positioned for the higher end of truck buyers based on its existing models and the high cost of batteries powering electric vehicles.
He also believes Ford has a little more regional risk than GM. Electric vehicle sales are concentrated in nine states. Those states account for about 41% of Ford pickup truck volume and 38% of GM volume, according to the analyst.
Michaeli is a traditional car analyst. He has an opinion on all three stocks. His rating on Ford aligns with his views regarding Tesla risk. Michaeli rates Ford shares the equivalent of Hold and has a $ 9 price target for the stock. He rates GM shares the equivalent of Buy with a $ 68 price target.
Of course, GM and Ford won’t go quietly into the night. Both have electric trucks planned, expected to launch in 2021 or 2022. Ford has also invested in electric pickup truck start-up Rivian which plans to launch its first model in late 2020. Rivian will likely beat Tesla to the market based on prior times between launch events and commercial sales.
”General Motors understands truck buyers. And we also understand people who are new coming into the truck market that view it as a lifestyle vehicle, ”GM CEO Mary Barra said at the investor conference being held before the L.A. Auto Show. “We understand both customers very, very well. It will be a very capable truck. ”She said the GM electric truck would be on sale in the Fall of 2021.
“As for Tesla, a positive [event] stock reaction is, of course, possible, but given the recent run-up in the shares and the fairly muted reactions to the last two unveilings .. .we don’t see a convincing setup into the event, ”Michaeli writes. He rates Tesla shares the equivalent of Sell and has a $ 191 price target for the stock.
The run-up to this unveiling has been substantial. Tesla shares are up about 60% over the past three months due in part tobetter than expectedthird quarter earnings. Tesla shares are up about 6% year-to-date after spending most of the year in the red. The S&P 500, for comparison, is up about 26% year to date.
It isn’t all about GM and Ford. Investors shouldn’t forget about truck parts suppliers. Electric trucks will be a small part of the overall market for the foreseeable future and many truck part suppliers haveelectrification productsas well as parts unrelated tothe drivetrain. Still, it’s possible shares of companies such as Allison Transmission (ALSN), Cummins ( CMI ) and American Axle & Manufacturing (AXL) could also move on the launch event.
Email:Al Root at[email protected]
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