The auto industry's electric vehicle revolution has only just begun, Morgan Stanley told investors in a note on Thursday, and the highly profitable pickup truck market is next.
"An electric pickup truck successfully launched by a new player (i.e. Rivian or Tesla TSLA ) could be a serious problem for the Detroit based [traditional automakers]," Morgan Stanley analyst Adam Jonas said in a note to investors. Jonas is widely known on Wall Street for being one of the first to recognize the significance of Tesla and electric vehicles to the auto industry.
Jonas called reports that General Motors GM and Amazon AMZN are in talks to invest in Rivian , if true, "the biggest news in US autos so far this year." He thinks GM and Ford F are losing the opportunity for a "first mover advantage" in producing all electric pickup trucks, he said. Additionally, Jonas believes Rivian has a competitive advantage from building its truck from the ground up, with little prior conception of a internal combustion engine truck to cloud Rivian's view.
"Both GM and Ford have the technical capability to develop and produce and all electric pickup... but we believe design, software, electrical architecture, and brand may be best coming from the 'outside,'" Jonas said.
Rivian showed off prototypes of both its R1T electric truck and its seven-passenger R1S sport utility vehicle (SUV) in November. Rivian CEO R.J. Scaringe said both the R1T and R1S will deliver 400 miles of range, with four individual motors allowing for all-wheel-drive. The R1T will be able to hit 60 miles per hour in 3 seconds and tow up to 11,000 pounds.
Morgan Stanley has featured Rivian twice already this week: Once as "the next serious competition for Tesla" and again when reports of Amazon and GM's investment surfaced. If GM does invest, Jonas said it would be "another sign of GM's prescient strategic vision."
"From an industrial strategy perspective, while many other [traditional automakers] are playing checkers, GM seems to be playing chess," Jonas said.
Finally, even without the possible investment, Morgan Stanley believes Rivian represents one of the top challengers to Tesla's dominance in the global electric vehicle market.
"The increased legitimacy and capitalization of new/startup EV firms, like Rivian, pose a compounding competitive threat to Tesla. All else equal, a potential GM-Amazon-Rivian tie up could be a clear negative for Tesla in our view," Jonas said.
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