Analyst Discusses Why GM & Amazon Are Interested In Rivian

FEB 14 2019 BY STEVEN LOVEDAY 45

Morgan Stanley tries to help explain the situation.

Interestingly, but unsurprisingly, Morgan Stanley calls Rivian the “next Tesla.” As we pointed out in last evening’s article, these clickbait titles against Tesla have been coming for years and years, with no such luck for OEMs. However, despite similar mainstream coverage, Rivian may finally be the real deal.

Morgan Stanley shares:

The highly lucrative and US-dominated pickup truck market [is] an important area of investor focus.

If you haven’t already heard, Reuters reported that GM and Amazon have plans to invest in all-electric pickup truck maker Rivian automotive. Rivian also has a three-row all-electric SUV in the works, along with a pure-electric rally car. According to Morgan Stanley analyst Adam Jonas via CNBC:

The highly lucrative and US-dominated pickup truck market “is a key focus for investors due to the” culmination of battery cost reduction, architecture, duty cycle, and price point.

We have focused considerable research effort on the theme of electric pickup trucks in recent days [And] access to talent & capital focused on the fastest growing segments of pickup trucks & SUV.

Amazon has spent the last few years building out and expanding its logistics network and recently invested in autonomous driving startup Aurora.

EV powertrains have yet to be applied to the most profitable segments where established US automakers generate profit and cash flow. We estimate the full sized pickup truck segment accounts for well over 100% of global auto profit for GM and Ford and the majority of [Fiat Chrysler]’s global profit.

Clearly, despite his previous Tesla push, Jonas knows full well that electric pickup trucks are the way to the future of EVs in the U.S.

Source: CNBC

Categories: Chevrolet, Rivian, Trucks

Tags: , , , ,

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45 Comments on "Analyst Discusses Why GM & Amazon Are Interested In Rivian"

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Well there’s 100 million ICE sold a year and 2 billion on the road today.
So there’s plenty of room for everyone to sell EV’S.
Good luck to all the aim should be eliminating fossil fuels. With EV’s renewable energy, recycling.

Three of the top seven best selling pickup models last year were models that weren’t even sold in the US. They tallied more than a million sales.

Unlike what most people think, despite being a big deal in N/A, pickups are sold all over the globe.

Thank you. It gets a bit tiresome seeing all the claims — I think mostly from Europeans — that Americans are the only people who buy pickups.

I find it rather amusing that Europeans — who frequently accuse Americans of being parochial and insular — so often display their own parochialism in social media comments. 😉

I just upvoted you, as a non European, non American, non Asiapac Brit. Do I fit in anywhere, bo ho.

In fact, with the 2018 CO2 emissions, America’s passenger vehicle/SUV/ non-commercial truck emissions WENT DOWN, not up. Note that our overall emissions went up 3% due to commercial truck/airplanes responding to the economy. Oddly, the other main source of American CO2 increase was our switching from coal to wind/nat gas , but also adding more of these to deal with EVs and the economy.

So, even with passenger trucks coming, the CO2 from them is actually DOWN due to replacing old 25 MPG small vehicles.
Then you have China. It will be interesting when they finally bring forth their numbers. 2019 will be the last year that China can lie about their numbers. Later this year, are multiple sats in the sky measuring CO2 and GHG.

Buying a truck is a rip-off. Legacy auto makes a ton of money on them. So who buys these trucks, apparently not very bright people. Or perhaps people that are easily distracted by shiny objects. Marketing may have a bit to do with it, and social pressures too, as most truck purchases make little sense, most are not working trucks, which is what people who really need a truck use it for. Most of the others just for vanity, or urban cowboys, red-necks.
If you live on farm or ranch or do construction, then yes, you need a pick-up.

“I guess I owe it all Pamela Brown all my good times, all my running around,
I guess the guy she married was the best part of my luck, she dug him ’cause he drove a
pick-up truck.” Tom T. Hall
https://www.youtube.com/watch?v=tpdGvlVGZmk

(⌐■_■) Trollnonymous

“In this brand new Chevy with a lift kit
Would look a hell of a lot better with you up in it
So baby you a song
You make me wanna roll my windows down and cruise”

😛

Trucks generally are more durable than cars. If your family can only afford one vehicle, a multi-purpose and flexible-use pickup is a good buy.

Obviously, not in your wheelhouse.

Mulch or “fertilizer “ is not a good load for a sedan or a sports car.

Lately – Mary Barra and the rest of GM execs treat their US customers as stupid.

They provide a superior Colorado in other countries, and with more choices, than they finally do in the USA.

They sell most of their vehicles in China (in partnership with Chinese Majority companies), yet make most of their profit in the US.

In that respect – an electric truck maker – whomever it is would serve GM and their overpaid execs right.

As long as people stupidly purchase their overpriced, somewhat unreliable trucks they will continue to offer little variety in the USA, including I’m quite sure the discontinuance of ALL EV’s in the USA.

The problem for GM is – people don’t FOREVER remain stupid.

Alas it’s not just GM, every automaker does that.

Unreliable,
you must be driving Frod or Fiat
my 08 Silverado only problem in all these years was one Airbag sensor cost 150$ .
My 2000 GMC truck run 350.000 k and my Astro van 650.000 k

That was then, this is now. You must have not been driving the new ones. If your message is to pick up a 2000-2008 , then that is fine.

Have you driven a nice modern pickup on a regular basis? Go rent one for a week before you pass judgement (A nice model, not a work truck).

Yeah, go buy a new Silverado and see how much trouble you have with the speed sensors causing ABS alarms. Then we’ll watch as you buy a reliable Toyota truck next time.

Is that because the sensors are mounted incorrectly or because the metal dust collects at the sensor to cause it to have false reading?

I had a 1996 car with false ABS warning for a while and dealer wanted $1500 to shot gun the repairs. Then I figured out it was just a pile of dirt (metals dust from my metallic brakes) that collected at the speed sensor (just a magnet reading the metal ring) that causes the error. A little cleaning saved me $1500. That was back in 2002 on a 6 years old car.

Is that something happening on the brand new Silverado?

GM seems to be taking the money out of things on some products. Seems suicidal to do it on a high-profit-margin vehicle. That’s why I agree with others that Barra and Reuss should retire. Anyone who has been around the block just has jaw-dropping reactions to this. People do not have to buy Silverados. There are other fine products around. To showcase how dumb GM is lately – they discontinue the best selling plug-in at the drop of a hat -yet invest $billions in Fuel-Cell Technology and have very little to show for that. Surely they are not losing that much money on the VOLT, and they could have easily continued the ELR – even if they continued the old-fashioned GEN 1 technology since it was in production. Its interesting to see how the Japanese view a problem – they run their models for years and years, and slowly come out with enhancements – as I’m sure star trek John will detail. Better gas mileage, and better batteries for the prius plug-in. And they keep selling more and more and more. Ditto for the Clarity. Initially not a perfect car – but they are running with it.

Mary Barra has been the best thing that has happened to GM for a long time effecting corporate culture change away from the culture that lead to the downfall of GM. She was the one that brought the ignition switch issue public shortly after taking charge of the company and was responsible for dealing with the aftermath. The Volt, although a good car, is clearly not the car to herald the future of transportation. They need a new plan, which I hope they are implementing.

Some start of ‘electrification of the entire fleet’ by first saying ‘absolutely no!!!’ to pickups, and then discontinuing 3 phevs. The Bolt Ev can’t have a long life if it is suddenly facing competition from basically equivalent vehicles that are $7500 less. Bolt ev sales – as nice as a car as it is, will simply fall through the basement since who wants to spend so much more money unnecessarily?

You were doing so good and then you had to prove yourself wrong.

The Toyota trucks are very over-rated.

ROFL.
My neighbor just got rid of his toyota.
It was way too many fixes going on. VERY EXPENSIVE.

and yes, there is a HUGE difference in these.
For example, Rivian is a simple pickup for goat-ropers. It is not for working with.

“Legacy auto makes a ton of money on them. So who buys these trucks, apparently not very bright people”

So, people must be stupid for buying vehicles with tons of margins?

Should we apply the same logic for Tesla buyers on the Model S/X with huge gross margins?

I think it is ludicrous to describe Rivian as the next Tesla. Nowhere near alike. Tesla is a company that makes solar cells, battery packs and cars. Tesla is expanding into the SUV and large truck market. Rivian makes high end SUV and pickup using 3rd party batteries. I like Rivian and hope they succeed as an automotive manufacturer, but they are not an energy company focused on saving the planet.

Tesla’s energy business is still a very small part of the company, and many argued they should have stayed out of Solar. For instance, in Q4 2018, Automotive revenue was 6.3B with 25% margin and energy generation and storage was 0.371B with 11% margin. The car portion of Tesla is more than an order of magnitude larger than the energy and storage. They are mostly a car company.

Granted, in 10 years they might be a pretty big energy company at the rate they are growing, but the cars will still be the big part of the business. Not all the companies need to be like Tesla, but Rivian appears to be following Tesla’s business plan of making electric vehicles that are desirable to buy (Tesla’s don’t sell because they are “green”, they sell because they perform well and can fill people’s desire for powerful fast and nice vehicles without producing as many emissions.

Tesla gets probably over 95% of its profits from selling cars, not any other product. And it hasn’t been that long since it was “Tesla Motors”, not “Tesla Inc.”

Calling Rivian “the next Tesla” may be a bit simplistic, but it’s certainly not wrong… let alone Ludicrous™. Even if Rivian fails, it’s still not wrong. It was but a very few years ago when most analysts were predicting Tesla would quite probably fail.

Apparently, GM ‘management’ still believe in “halos”,….guess ol’ el’ Lutzbo is still their shaman.

Let’s pretend for a minute that gas prices creep back north of $3 in the next year or two. Toyota will sell you a normal car that gets 50 mpg and a normal SUV that gets 40 mpg.

Will the GM branded $85,000 Rivian be worth another bailout?

Rivian’s skateboards are ready for GM to use to advance their EV plans.

“We estimate the full sized pickup truck segment accounts for well over 100% of global auto profit for GM and Ford”

Am I interpreting this correctly as GM and Ford sell their pick-up trucks at more than twice their cost? But make only 10% earnings as a corporation? I first read this as pickup trucks were over 100% of the sales as a total of all products cars and larger trucks which of course is physically impossible. Maybe GM and Ford loose money on cars and larger trucks so have negative profit and pickups are their only profitable line, that would fit with the description too.

“Am I interpreting this correctly ”

It implies their global auto profits are negative for their non full sized pickup truck products.

The last part of your comment is correct. It’s one of the reasons Ford got rid of most of their ICE car lineup in North America. They were making them a loss.

I’ve a very hard time understanding pickups – if they’re for work it’s perfectly ok – but USA loves them and so it’s better to be prepared for the transition. Recently the Ford Focus series became the best selling vehicle in the world, even if it’s basically only sold in the USA!

I like the clean design of the Rivian pickup truck and SUV. I read a recent article that portrayed Rivian’s top executive and team as being very down to earth. I think Rivian may very well look for an investor/ partner, especially one that has extensive truck and CUV manufacturing experience. I have serious misgivings about GM, they seem to lack focus and most of all commitment. Commitment to product and customer is singularly important and GM’s track record leaves a great deal to be desired.

Just curious, what actually does Morgan Stanley know about anything?? Does anyone ever ask how/why these purported “experts” know regarding anything electric? And before anyone tries to explain it, please also explain how the “experts” are allowed to be perpetually referenced for their opinion (which actually moves the stock market ticker) while changing their minds practically daily depending on which way the stock is moving??

I confess I have no idea why these self-appointed “analysts” get so much media attention. I have educated myself on the subject of Tesla, and to some extent on the auto industry (altho I am frequently reminded I still have some gaps there), and I regularly, I’d say even usually, find errors of fact in what the so-called “analysts” say about Tesla and its business.

Nor do I understand why investors pay attention to them. These guys are not giving their “analyses” for altruistic reasons; they only deliver “advice” which will further the interests of their own stock portfolio, or that of those who pay their salaries or consultant fees.

Real investment advisors charge for their advice, and they give it in private — not “for free” to the mass media or in public forums.

“…I confess I have no idea why these self-appointed “analysts” get so much media attention….”

Me neither – the difference with you is that you totally disappear into Mommy’s Basement when you are proven wrong.

Your ‘partner in crime “Superdope Nix” acts precisely the same way you do under identical circumstances. Therefore I’ve concluded you are brothers living in the same Mommy’s Basement – using different computers and possibly a VPN or two.

Not sure why you have feel compelled to be so rude, regardless if you disagree with the person. You don’t have to be disrespectful.

Sorry John – I couldn’t resist this time since the guy or guy(s) totally needle me with Romper Room stuff. I’m getting the first jab in here for the first time. The double-entendre in his statement just hit my funny bone.

OF course, most are too thin-skinned to laugh at themselves.

Oh and btw, there is absolutely nothing disrespectful about mentioning that these guys HIDE when proven wrong – in EXACTLY the same way.

I get it. But there’s a difference between poking fun, which is easy to laugh at one’s self, and taking pure attack shots. And honestly, all it does is ensure it continues on both sides. Just one man’s opinion.

Noted… It good for his ego(s).

(⌐■_■) Trollnonymous

A bigger question is do any of them drive an EV?!?!?!

For some reason my reply went to moderation. But briefly, I entirely agree. These self-appointed “analysts” don’t deserve even a small fraction of the attention that both media and investors give them. They are out to promote the financial interests of themselves or the investment firm who pays their salary — not out to help out the average investor.

“Amazon has spent the last few years building out and expanding its logistics network and recently invested in autonomous driving startup Aurora.”

Okay, but what does that have to do with Amazon.com investing in Rivian, a startup EV maker with (so far as I know) no claim to autonomous driving tech?

Maybe it’s just expanding Amazon.com’s investment portfolio with a new and apparently promising high-tech startup.

I can understand that Amazon.com might want to buy EVs for freight hauling or deliveries, but the idea that Amazon.com might want to get into the business of building automobiles or trucks just because they need transport/delivery vehicles, seems as brainless as suggesting that Amazon.com should get into the business of building computers because people use computers to order on Amazon.com.

rivian vehicles are said to ship with level 3 autonomy, and has described level 5 capabilies. now Rivian must already have a team im not sure what amazon brings to table unless aurora is further along but needs a platform

Rivian is NOT a tesla killer.
It is a GM/Ford killer.
They are the fools that are falling back into their old ways of looking for only top profitable vehicles, not realizing that this will encourage other makers to take them on and drop those profits.