Rivian R1T Truck & R1S SUV Will Challenge Tesla Dominance: Analyst

FEB 11 2019 BY DOMENICK YONEY 48

A premature pronouncement, perhaps?

Tesla dominates the electric vehicle market. This is especially true in the U.S. where it enjoys an 80-percent slice of the electric vehicle pie. That’s largely due to its popular Model 3. According to one Morgan Stanley analyst, though, this commanding position is at risk from new competition. The company pointed to as being a particular threat? Rivian.

That analyst is Adam Jonas, who has been with the firm since 1996. He focuses on the automotive sector. He was once extremely bullish on the California automaker. However, in recent times lowered his share price targets significantly — from $376 last May to $283 as of last week. Tesla is trading at $316.08, up $10.28 (3.36%) at the time of this writing.

Tesla’s Dominance Called Into Question Due To Rivian

CNBC reports Jonas now believes that a challenge to Tesla’s dominance of the electric vehicle sector will not come from traditional automakers, but rather from new companies that take a “clean sheet” approach. Rivian is, of course, such a company. It’s probably the one with the highest profile at the moment. That’s after shocking the world with the reveal of its R1T pickup truck and R1S SUV at the L.A. Auto Show.

We believe Jonas makes a good point about the ability of startups to disrupt the automotive market. However, we feel he may be overstating his case here. Sure, Rivian appears to have terrific products lined up and a factory in which to manufacture them. It also has a good number of pre-orders, judging from the excitement and participation in the pre-order thread on the InsideEVs ForumBut, with vehicles only reaching customers in significant numbers — provided there are no unexpected delays — in 2021, we feel it’s premature to say they will have much of an impact on Tesla’s market position.

Consider that the Tesla will unveil its own pickup truck design this summer and that it also has extremely high-volume sales potential with its Model Y crossover, expected to be officially revealed next month. While we certainly hope Rivian will have unmitigated success, we feel the companies impacted by its success will more likely be the traditional high-end pickup manufacturers. That market is currently dominated by Ford, Ram, and GM.

Certainly, Tesla’s overall market percentage may come down over time, but we expect its sales volumes overall to keep on increasing for some time. There is, after all, a huge gas-powered fleet that will be replaced in the coming years, with lots of room for all-electric competition to grow.

Source: CNBC

 

Categories: Rivian, Tesla

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48 Comments on "Rivian R1T Truck & R1S SUV Will Challenge Tesla Dominance: Analyst"

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Rivian deserve to do well, and they’re well positioned now to do so.

However, they are still at the the start of their journey. They have a long way to go before they can grow to a size that will worry Tesla, or indeed anyone else.

And for both Tesla and Rivian, the competition isn’t other EVs, it’s the wider auto marketplace. They won’t compete with each other at all until Tesla releases their own pickup (or until Rivian releases a sedan), and even then my bet is that both of them will be taking sales away from ICE pickups rather than from each other.

Maybe the ‘analyst’ will want to wait until the pickup truck makers actually are able to manufacture a production model of their product and sell one, before comparing it with the leader. How about just making a projection that they will be able to produce the vehicle. Hope they can. But a Tesla pickup is coming….

The ‘analyst’ Adam Jonas is well known for his accurate predictions with Tesla.
In fact, he is one of the few that has been that way (which indicates a number of them are bought).

Go to Tip Rank and look him up.
He really IS good.

And yeah, Rivian is one of the first that will actually compete against Tesla.
I also think that the Taycan will take on MS/3.

The Tesla pickup might not even compete in the same segment of the market, going by what we know thus far… Nor is the Rivian SUV really going to compete in the same segment as the Model X or Model Y.

The 2 Rivian are high-end vehicles.
It remains to be seen what Elon will design/build for the truck.
HOPEFULLY, he will do a working truck, since that is desperately needed.
But even better would be if he developed both working and ‘goat-roper’ trucks.

Losing dominance (as measured by percentage of market share) isn’t really concerning when the EV market is growing 40-60% per year. Similar to how Apple once dominated the smartphone market, but lost that dominance to Samsung over time. Apple is still a huge company and a big player, and I think Tesla will continue to be a huge player in the EV market and energy storage for an indefinite period of time.

uh, apple was NEVER the dominated the smart phone market.
And no, it is not samsung. Samsung is just a player in the Android market place.

Not a chance. Rivian is awesome and I really hope they do extremely well, but this is the common misconception once again that the “EV market” is some tiny space that any new player will take away sales from existing players. That just isn’t true. The EV market is the entire automobile market and it will gradually take over the entire market. Right now they are selling 1% of the market, there is 100 fold room for growth.

The only losers from more EV production are ICE vehicles and companies that focus on them exclusively..

Jonas is a bit of a nut job. Very little he says makes sense. He used to value Tesla much higher based on some imagined synergies between autonomous drivng and Starlink. He turned negative on Tesla when he asked a dumb question along those lines in an earnings call and Musk slapped him down.

Why was it a dumb question? Why did Elon slap him down? I think it is a given that eventually Tesla cars will come with transceivers for Starlink and this will give high speed Internet access, local WIFI and that in turn will be part of autonomous driving. Right now Tesla updates have to go through 3rd party cell towers etc. so it makes sense to me that Tesla will use Musk’s Starlink system as soon as they can.

IIRC Elon’s answer was that Starlink is not meant for mobile usage, because the antennas would be too large as I recall?

I remember that question. Was it Adam? I didn’t realize. That’s so funny! I still rank him higher than John Broder.

No, it was NOT jonas.
It was Toni Sacconaghi.
https://www.tipranks.com/analysts/toni-sacconaghi

I posted above, but it has 3 links (story and to both adam and tony).
Hopefully, the mods will pass it quickly.

https://www.cnbc.com/2018/05/02/tesla-stock-drops-as-elon-musk-gives-bizarre-earnings-call.html

Shares in Tesla took a nosedive in after-hours trading today as Elon Musk cut off analysts during a first-quarter earnings call. He dismissed a question about gross margins from Bernstein senior analyst Toni Sacconaghi as “boring.” Instead, Musk and other executives answered multiple questions from a Tesla enthusiast and Youtuber named Gali Russell.

Adam Jonas had nothing to do with that conversation.
https://www.tipranks.com/analysts/adam-jonas

It was
https://www.tipranks.com/analysts/toni-sacconaghi

He’s Just Trying To Influence the Tesla Stock Price , Knock it Down, So That He & His Cronies Can Buy More Tesla Stock on the Cheap!…

Of course. TSLA can go up or it can go down, there is profits to be made either way. The only thing that’s bad is for TSLA to be stable, there is no money in that for speculators. That’s where shills like Jonas come in, to talk the stock up or down depending how Morgan Stanley is invested.

Looks like he is trying to revived the “Tesla killer”canard for the umpteenth time, I wonder of people still buy into that tired old scam.

“Jonas now believes that ( a challenge to) Tesla’s dominance of the electric vehicle sector will not come from traditional automakers”…without adding in a challenge to the sentence does not make sense.
It’s still a bit early to say on Rivian, they haven’t passed my 10k vehicles on the road test yet, so in a sense they are not really a challenge at all, just posers. Really good posers, and I hope they are a success, as, Tesla can’t continue to pull an Atlas and hold up the ev revolution on their own, at some point they will shrug. That’s was not the plan Stan, that they do it all.
Adam Jonas is like the jilted lover who now find fault in everything their former paramour now does.

Yawn, another stupid moronic analysis from CNBC. Hi CNBC, if you read this and want a real analyst give me a call. Oh that’s right, you only hire people to fit your agenda and not real news.
Looks like Rivian will do well if the truck is a success and it would be great if the all the upstarts took over. Need fresh new young minds for the future and not the old ones that just want to keep the status quo and wreck the environment.

Mean but accurate, just the sort of analyst I like.

Still fuzzy on how Rivian will secure it’s supply of batteries. Either you build it or depend on a supplier. Big auto is going the latter route and still having tons of problems producing quantity. I see this problem getting worse and worse.

Bingo! Battery supply will be THE issue in EVs for a long time.

To anyone reading this: Assume the worldwide sales of EVs to be, say, 25 million units, at an average of 50 kWh/car. How many fully operational GFs running at capacity does that translate to? I’ll leave the math as an exercise, but here’s a spoiler: It’s a scary number.

The top 4 cell makers announced plans that by the end of next year (2020) they will be making over 400 GW-h of cells combined. Add in another 100 GW-h for the smaller manufacturers and you are at 500 GW-h. Enough for 10 million 50 kw-h cars in 2021.

Where did you see these numbers? I know all battery makers are heavily ramping up capacity — but the specific numbers given sound way off…

25 million cars, 50kWh each, you need 1,250GWh per year of battery production capacity.
Assuming a 100% completed Gigafactory can produce 150GWh per year, you would need 9 if them. Right now Gigafactory 1 only puts out 35GWh per year, at this rate we need 36 Gigafactories.

The real number is even worse than this though. Since your numbers(25,000,000 cars, 50kWh each) are way too optimistic. Realistically, global car demand is more like 50,000,000 cars per year and 70kWh batteries…
That’s 3,500GWh per year or 100 Gigafactories.

Not to mention Trucks, Buses, Grid Storage. Trucks and buses will requare 5-10x batteries per vehicle compared to cars. Also I really think grid storage is going to eat up more batteries than people think, especially when battery prices go south of $100 Kwh and when cheap used battery cells and banks are readily available from old Model 3’s.

I think Elon said that about 100 “gigafactories” would be needed to supply the entire global auto market, once it’s converted to BEVs.

And he was talking about gigafactories based on Tesla’s original projection of what Gf1 was intended to produce, which as I recall was 35 kWh of battery cells per year.

But the plug-in EV market is only ~2% of the entire market, and even some of that is PHEVs with a small battery pack. There is a long road ahead for both EV makers and battery makers until they produce enough to supply the entire world’s demand for cars! And it looks like the market for heavy trucks will be growing at the same time, which means significantly more battery cells will be needed.

“…According to one Morgan Stanley analyst [Adam Jonas], though, this [Tesla’s] commanding position is at risk from new competition…”
——————————

Any company that has acquired a commanding position selling a product or service is at risk from new competitors entering the market… certainly not unique to Tesla.

Rivian has a challenging journey ahead of it to prove they are a viable EV maker… they have not yet entered volume production so they are still at the foothills of a very high mountain to climb. Hopefully they survive the climb.

Also, Rivian is largely relying on Electrify America as its fast charge network solution… meaning that Rivian is at the mercy of EA’s ability to build out that network. For now Tesla has a substantial fast charge advantage. Yes in parts of California there is wide CCS access but most of United States remains highly hit-and-miss.

I do agree with Jonas that a “clean sheet” startup [that is well funded] has a better chance in competing against a Tesla than a traditional car maker. I did not believe that 3 years ago but I’m now convinced traditional car makers have too many legacy constraints to be able to compete against Tesla.

Rivian will not challenge Tesla. For one thing, Scaringe clearly stated they are focusing on premium vehicles. Therefore, Rivian will not be building lots of cars for the foreseeable future. Second, both the model X and most likely the Tesla truck are more oriented to city dwellers, who want something looking kind of adventurous, but not really interested in being so.

Model X is a premium family SUV. Just like the Rivian R1S…

And all those models will compete far more with gasmobiles than they will with each other.

The growing EV market is not a zero-sum game, and won’t be for a decade or more.

you mean a premium minivan

I don’t think Tesla needs to worry about Rivian. The only competition between them will be for batteries and the materials that go into producing batteries. Ford and Toyota are the ones who should be concerned. Americans love big, strong, multi-role trucks. Analysts dramatically overestimate the importance of engine type and fuel. Truck buyers aren’t going to pass up the savings in maintenance and fuel costs as well as ignore the impressive torque and performance numbers — they will switch to electric if the ride height, interior finishes, and capabilities are there.

Once again Tesla’s competition is misunderstood as other EV’s, from legacy auto or otherwise, when it’s really all legacy ICEV. Legacy ICE manufactures have to seriously compete with themselves in the EV space before they will even touch companies like Tesla or perhaps Rivian down the line. Tesla will produce 300-400 thousand EV’s this year. A company, like say GM, would have to massively disrupt its own business to achieve that volume of EV production. Legacy auto has proven time and again they aren’t willing to do that, leaving companies like Tesla to hoover up more and more EV market share. While legacy auto rests on their laurels, Tesla and others are tirelessly creating a bigger and bigger market all their own, leaving legacy auto out in the cold to freeze in ICE.

There is room in the growing market for EVs for both Tesla and Rivian. If there will be competition between them, that will be good for those looking for good buying choices.

The philosophy of “There can be only one” does not apply to the EV market!

“CNBC reports Jonas now believes that a challenge to Tesla’s dominance of the electric vehicle sector will not come from traditional automakers, but rather from new companies that take a ‘clean sheet’ approach. Rivian is, of course, such a company. It’s probably the one with the highest profile at the moment.”

If Jonas is saying that, it’s hardly an example of penetrating perceptive analysis. One only needs to look at the history of disruptive tech revolutions to see that “young Turk” startups often grow rapidly to become new market leaders with the new tech, leaving some or most legacy manufacturers in the dust or even driven into bankruptcy.

At any rate, it’s rather premature to forecast the success or failure of Rivian.

Go Rivian!
Go Tesla!

I’ll gladly root for both! 🙂

What’s he talking about? Room for all – Trucks & Cars. Elon wants help to change things, yes Rivian and more

Better get some higher power rechargers out there and soon!

Highly doubtful. Maybe .0001% of Americans have heard of Rivian. One of the reasons Tesla has been successful is because of the ridiculous amount of free advertising Elon Musk has given the company by being everywhere all the time. Another reason people bought a Tesla is because they wanted to be part of his bigger vision. It was compelling and still is. Rivian’s pitch so far is not world changing, it’s just a truck for adventure, and that adventure is probably destructive to the environment. Or it’s a ginormous SUV. Again, who cares?

Worst of all, their vehicles are terribly inefficient. Tesla moved in the right direction with the Model 3, but all the new luxury EV’s are just awful. Electron guzzlers.

Well, their pitch is essentially going on adventures while being *less* destructive to the environment… I think people will get behind that. I agree though that it seems a fairly small niche compared to how Tesla is positioned.

No one can compete with Tesla because Tesla pays far less for batteries than any other manufacturer.

I don’t think anyone seriously believed Tesla would keep an 80% BEV market share in the long run… Jonas now suddenly pointing this out sound rather silly.

And the idea that a small startup that has yet to prove itself in a fairly small niche of the market, would take more of that share than all the legacy makers, also sounds highly questionable.

Rivian – seems to be positioned as a ‘Yuppie Truck’ since the Bed doesn’t seem big enough for a work truck – and the final price with options seems to be up there – if and when they start selling them.

Tesla is unknown since there is no telling exactly what the truck will really be like, but I would imagine it would be the more practical of the two talked about here, since all Tesla models to date have had some mass appeal.