What happened
General Motors (GM -0.17%) stock stomped on the accelerator on Wednesday, up by 4.1% as of 1:50 p.m. ET.
Any number of factors could be contributing to the jump in share price, such as a lower-than-expected inflation report this morning (8.5%, hooray!), or continued enthusiasm over the Senate's recent passage of the electric-vehicle-friendly Inflation Reduction Act of 2022. If you ask me, though, the most likely reason the stock is motoring ahead today is the news that just came out of Ford Motor Company (F 0.66%).
Specifically, Ford's decision to raise prices on its F-150 Lightning electric pickup.
So what
As reported in The Wall Street Journal on Tuesday, Ford plans to reopen its F-150 Lightning electric truck for new orders this week, but will charge significantly higher prices on the vehicle in order to offset increased input costs caused by inflation. Some configurations of the F-150 Lightning are expected to rise between 7% and 18% in price.
The most base level F-150 Lightning will therefore end up costing just under $47,000 (and pricier trims could cost as much as $97,000).
But let's focus just on the "cheap" version of the F-150 Lightning. A $47,000 MSRP on the truck will be about $7,000 more expensive than the sub-$40,000 price tag Ford initially announced. It will also be $7,000 more expensive than General Motors' competing electric Silverado pickup truck, which has been advertised at $39,990.
Now what
So you see why this might excite GM investors. If GM is able to hold the price of its electric Silverado steady below $40,000 while Ford jacks its prices up toward $47,000, then the GM truck is obviously going to look a whole lot more attractive to truck buyers.
Granted, General Motors announced a price hike on its GMC Hummer electric SUV in June. It's entirely possible that the Silverado's price will also be going up as inflation marches inexorably higher. But if GM raises prices on the Silverado no more than the 8% bump the Hummer saw in June, then the GM trucks should only cost as much as competing electric models from Ford -- and still at least be competitive.
To me, that looks like a "heads, GM wins; tails, GM at least doesn't lose scenario" -- and thus good news for General Motors stock.
