The Tesla “cyberpunk model” pickup truck is coming. That a lot is clear to traders following the house. Tesla’s reveal occasion—occurring Thursday night in Los Angeles—is a big deal for automotive folks. What’s not apparent is what the truck will appear like or the way it will carry out.
“Citi knowledge suggests Ford has extra headline danger than GM,” Citigroup analyst Itay Michaeli wrote in a Thursday analysis report. “If Tesla’s pickup impresses, Ford is competitively extra uncovered to share-loss danger than GM, with materially greater [earnings] publicity.”
That is smart. Ford (ticker: F) is an even bigger truck maker than Common Motors (GM) and a big portion of its profits come from trucks. However Michaeli goes deeper in his analysis notice. Ford sells extra vehicles with promoting costs better than $60,000. The Tesla (TSLA) truck will doubtless be positioned for the upper finish of truck consumers primarily based on its current fashions and the excessive value of batteries powering electrical autos.
He additionally believes Ford has just a little extra regional danger than GM. Electrical car gross sales are concentrated in 9 states. These states account for about 41% of Ford pickup truck quantity and 38% of GM quantity, in response to the analyst.
Michaeli is a standard automotive analyst. He has an opinion on all three shares. His ranking on Ford aligns along with his views relating to Tesla danger. Michaeli charges Ford shares the equal of Maintain and has a $9 worth goal for the inventory. He charges GM shares the equal of Purchase with a $68 worth goal.
After all, GM and Ford gained’t go quietly into the evening. Each have electrical vehicles deliberate, anticipated to launch in 2021 or 2022. Ford has additionally invested in electrical pickup truck start-up Rivian which plans to launch its first mannequin in late 2020. Rivian will doubtless beat Tesla to the market primarily based on prior instances between launch occasions and business gross sales.
”Common Motors understands truck consumers. And we additionally perceive people who find themselves new coming into the truck market that view it as a way of life car,” GM CEO Mary Barra mentioned on the investor convention being held earlier than the L.A. Auto Present. “We perceive each prospects very, very effectively. It will likely be a really succesful truck.” She mentioned the GM electrical truck could be on sale within the Fall of 2021.
“As for Tesla, a optimistic [event] inventory response is, after all, attainable, however given the latest run-up within the shares and the pretty muted reactions to the final two unveilings…we don’t see a convincing setup into the occasion,” Michaeli writes. He charges Tesla shares the equal of Promote and has a $191 worth goal for the inventory.
The run-up to this unveiling has been substantial. Tesla shares are up about 60% over the previous three months due partly to better than expected third quarter earnings. Tesla shares are up about 6% year-to-date after spending many of the 12 months within the purple. The S&P 500, for comparability, is up about 26% 12 months up to now.
It isn’t all about GM and Ford. Buyers shouldn’t overlook about truck components suppliers. Electrical vehicles will likely be a small a part of the general marketplace for the foreseeable future and plenty of truck half suppliers have electrification products in addition to components unrelated to the drivetrain. Nonetheless, it’s attainable shares of firms akin to Allison Transmission (ALSN), Cummins ( CMI ) and American Axle & Manufacturing (AXL) may additionally transfer on the launch occasion.