What happened
Electric vehicle (EV) makers are working hard to challenge Tesla's leading market share, and the stocks of three popular names jumped today. It wasn't just the large legacy carmakers Ford Motor Company (F 0.47%) and General Motors (GM 4.37%) that have investors buying, but also start-up Rivian Automotive (RIVN 2.84%). All three stocks were rising sharply today. As of 3:53 p.m. ET, these shares were higher as follows:
- Rivian by 4.8%
- Ford by 4.9%
- GM by 4.6%
So what
The moves came on a generally positive market day, but Ford and General Motors (GM) in particular made moves to further directly challenge Tesla's hold on the EV consumer. For its part, Rivian shares bounced off all-time lows as investors may have reconsidered what was initially thought to be bad news.
Rivian's enterprise value recently dipped to just about zero, meaning the company's cash on hand was nearly equivalent to its market capitalization and debt combined. That valuation should be taken in context, however, as the $12 billion in cash and equivalents the company held at the end of the fourth quarter isn't quite as big a cushion as it seems. The company already has announced it plans to raise up to another $1.5 billion to support its growth plans as it continues to lose money on its sales. Investors had also sold the stock recently as some questions arose about its partnership with Amazon. But some of those questions have been clarified, and that has helped give the stock a near-term bottom.
Ford and GM each made news today related to advancements in their EV ambitions. Ford announced today that it was opening up reservations for a new fully electric SUV in Europe that will use the iconic Explorer name. Orders for the new offering will be taken starting this year.
Image source: Ford.
While Ford as already begun selling some EVs internationally, adding its popular SUV nameplate to its European EV lineup shows it hopes to take on Tesla, Volkswagen, and others head-on. The Explorer adds to the lineup of other iconic names Ford is using for its EV offerings, including Mustang Mach-E and F-150 Lightning.
GM is striking at Tesla from a different angle. While the robotaxis that Elon Musk had famously promised years ago haven't hit the road yet, GM is expanding its self-driving taxi business. The company's Cruise self-driving business has applied to expand the testing of its vehicles to all of California, reports Barron's. Cruise has been testing its driverless ride-hailing service in a small footprint around San Francisco since 2020. But an expansion throughout the state marks a big step in the process. GM hopes to use its Cruise technology for both a robotaxi use as well as implementing its technology into its other vehicles.
Now what
Today's news doesn't immediately impact market share or the status of EV penetration. But it does mark steps by the two major domestic automakers as they work to take some of what Tesla has dominated.
Rivian began its business with a different strategy by offering pickup trucks and electric delivery vans for Amazon, both areas that Tesla had not yet entered. Amazon recently confirmed that it still intends to purchase 100,000 Rivian delivery vans by 2030, even though its 2023 order was at the low end of the expected range.
Tesla has a big lead and is even entering new markets with its Cybertruck and Semi heavy truck. But it's apparent that the competition isn't resting on its laurels either. Investors should find plenty of opportunity to choose which strategy they want to put their money behind in the EV space.
