Shares of Tesla (TSLA) are moving higher ahead of the unveiling of its "Cybertruck" electric pickup truck on Thursday evening as rivals Ford (F), General Motors (GM) and Rivian are also in pursuit of their own models. Citi analyst Itay Michaeli said he believes Ford is more vulnerable than General Motors into the event.
'CYBERTRUCK' REVEAL: Tesla CEO Elon Musk is expected to reveal the carmaker's first electric pickup truck, codenamed "Cybertruck," on Thursday night in Los Angeles, California, near the SpaceX rocket factory.
In recent months, Musk has teased details suggesting the truck will have capabilities similar to those of Ford's F-150 and a design inspired by the science fiction movie “Blade Runner.” “It’s closer to an armored personnel carrier from the future,” Musk said October 13 on Twitter, adding that "Cybertruck doesn't look like anything I've seen bouncing around the Internet." During a June 2019 appearance on the Ride the Lightning podcast, Musk revealed that the truck would start at "less than $50,000," which compares to the base price of the Model 3 at $39,400 and the Model S of $79,990 sedans. “It’s got to be, like, $49,000 starting price max. Ideally less,” Musk said at the time, adding that "It just can’t be unaffordable. It’s got to be something that’s affordable."
Musk has also said that the base model of the pickup truck will be equipped with a dual-motor setup and a dynamic suspension that adjusts automatically based on how much weight the truck is carrying. Additionally, He has said it will have an electric battery range of up to 500 miles and will come standard with four-wheel-drive.
WHAT'S NOTABLE: Ford is developing an electric version of its popular F-150 model, while GM is planning to assemble an electric truck at a plant in Michigan. Electric truck maker Rivian, whose investors include Ford and Amazon (AMZN), has also said that it plans to start producing its R1T electric pickup truck in 2020.
CYBERTRUCK TO BE MORE AFFORDABLE THAN COMPETITION: On Wednesday, Wedbush analyst Daniel Ives, who said Tesla has done a "fantastic job" at keeping the specs of the pickup truck under wraps, that he believes the base version of this pickup should cost around $50,000 as Musk has hinted that the Cybertruck will be more affordable than its main competitor Rivian, whose R1T electric pickup starts at a price of $69,000. Ives said he believes believe this next generation pickup truck could help Tesla expand its market opportunity outside its core customer base over time, although gaining market share with stalwarts such as Ford and GM will be a difficult task.
LOWER NICHE PRODUCT: Assuming most performance specifications are in line with those teased over time by Elon Musk, Deutsche Bank analyst Emmanuel Rosner said the focus of Thursday's event will likely be on how well the actual design resonates with pickup buyers. Based on Musk's comments that the truck "looks like an armored personnel carrier from the future," and is "unrecognizable from the trucks from the past 20-40 years," the analyst sees risk of the truck not attracting traditional pickup buyers, "leaving it a lower-volume niche product."
FORD 'VULNERABLE' INTO TESLA EVENT: Citi analyst Itay Michaeli told investors in a research note that if Tesla's pickup impresses, Ford is competitively more exposed to share loss risk than General Motors given its "materially higher" earnings exposure. He views Ford shares as being "more vulnerable" to any resulting headline risks from Tesla's event. Regarding Tesla, Michaeli stated that while a positive stock reaction is possible, given the recent run-up in the shares and the "fairly muted" reactions to the last two unveilings, he does not see a "convincing setup into the event."
PRICE ACTION: Ahead of the event, shares of Tesla are up 1.4% to $357.29. Ford, meanwhile, is down fractionally and GM is also down about 0.4%.