Tesla and well-funded newcomer Rivian are positioned to make significant inroads into the U.S. pickup truck market. These all-electric vehicles are well-funded and have many features prized by their target markets.
Pickup trucks are a huge part of the U.S. automotive market, with more than three million sold last year. Ford and GM are by far the leaders in the category, while Ram (part of Fiat Chrysler) is gaining ground today. It’s been a healthy horse race for a long time.
But out of the shadows are coming a host of competitors who are shunning the century-old internal combustion engine in favor of all-electric power, led by Tesla and well-funded newcomer Rivian. Most of these trucks should have excellent acceleration and torque, as well as the ability to power tools from both 120v and 240v outlets, and many will add features prized by their target markets, like off-road ability, camping ability, deep-water ability and more.
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The lesser-known names in the race include Bollinger Motors and Hercules Electric Vehicles, both based in the Detroit area; Atlis Motor Vehicles in Mesa, Arizona; and Lordstown Motors, which has a deal to use GM’s former assembly plant in Lordstown, Ohio. Projected prices for these trucks range from $45,000 to $125,000.
But today I want to focus on Tesla and Rivian, the two companies that are the best funded of the group and thus have the best chance to truly put a dent in—even revolutionize—the current pickup truck market.
Rivian is a private company that was started by RJ Scaringe way back in 2009 (six years after Tesla). Scaringe, who still serves as the company’s CEO and guiding force, earned his MS and PhD in Mechanical Engineering from the Massachusetts Institute of Technology where he was a member of the research team in the Sloan Automotive Laboratory. I think of him as a lower-profile Elon Musk.
The company is based in Michigan, the traditional home of U.S. truck-makers, but its more-than-1000 employees are spread out among development centers in Plymouth, Michigan; San Jose, California; Irvine, California; and Surrey, England; along with the manufacturing plant in Normal, Illinois that was previously used by Mitsubishi.
After 10 years of development, 2019 has proven to be a breakout year for Rivian.
In February, there was a $700 million investment round led by Amazon.
April brought a $500 million investment from Ford.
September brought a $350 million investment from Cox Automotive (which owns properties like Autotrader, Kelley Blue Book and Manheim and has 34,000 employees).
And just last week an investment group led by T.Rowe Price kicked in $1.3 billion!
So Rivian has the funds to succeed, if they’re used wisely. And it has a very nice truck design (as well as an SUV which I’m not talking about today because I’m focusing on trucks).
Rivian R1T Truck
The Rivian R1T is slated to go into production in late 2020 and will be priced from $69,000. Target production for the first full year is 25,000 pickups, but the long-term goal is 260,000 vehicles per year—as well 100,000 electric delivery vans for Amazon (which this year delivered more packages than either FedEx or UPS), and eventually “skateboard” assemblies that Ford can build its own designs on.
But note that despite Rivian’s ties to the traditional U.S. auto industry, you won’t be able to buy a Rivian at your local dealer. Instead, taking a page from Tesla’s book, you can reserve one today on the company’s web site with a $1,000 deposit (refundable).
Here’s a photo of RJ Scaringe in front of his Rivian truck.
Tesla is currently bringing in $25 billion a year (and rising) from its other vehicles. And it’s now running at a profit, though there’s no guarantee that it will stay that way.
In addition to building vehicles, both in California and China (and next Germany), Tesla operates its Supercharger network of more than 15,000 stalls in more than 1,700 locations globally, makes solar panels and builds battery storage systems that have the potential to someday dwarf the automotive business.
Tesla’s recently unveiled Cybertruck has brought in about 250,000 reservations with $100 deposits (refundable). Production is expected to begin in late 2021, with selling prices for a low-end model around $40,000.
Technically, the Cybertruck brought few surprises, as Tesla’s technology is now established and proven. But it’s in the styling that Tesla has broken new ground.
The Cybertruck has a stainless steel “exoskeleton” instead of traditional stamped body panels (sort of Delorean-esque). This not only makes the exterior of the truck tougher, since there’s less worry about scratches, it also enables production at lower cost, since the exoskeleton requires neither a stamping press nor a paint shop.
And the choice of a wedge at the front instead of a big box (because there’s no big engine in there) not only improves fuel efficiency and therefore range, it also raises the question of what’s under Rivian’s big front box.
Here’s a photo of Elon Musk in front of his Cybertruck.
Clearly, Tesla is pushing the envelope here, but the market is clearly ripe for change, and I fully expect that the old guard of truck-makers are considering how to compete as the world changes.
Tesla (TSLA) Stock Chart
The long-term trend is up and TSLA recently broke out to an all-time high. Compare this to the long-term charts of Ford and GM.
Eventually—getting off topic slightly—I see huge potential for all-electric powertrains in municipal vehicles that start and stop all day—like garbage trucks and city buses. Not only would these vehicles recapture (through regenerative braking) much of the energy they waste every day, they would also be far quieter, and how nice would that be?!
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