Once the source of much special purpose acquisition company (SPAC) hoopla and conjecture, electric vehicle truck Lordstown Motors (NASDAQ:RIDE) is now its own company with RIDE stock just days removed from its debut.
Things are going pretty well. The electric truck maker had a market capitalization of $460 million on Oct. 29, its first day of trading. As of Nov. 3, that figure is up just north of $632 million.
Backed by General Motors (NYSE:GM) and occupying one of the venerable automobile maker’s old factories, Lordstown, at least for now, has a singular focus: Production of the Endurance, which the company calls the “world’s first all electric commercial pickup.”
Manufacturing electric vehicles, trucks or otherwise, means competition. For its part, Lordstown will be butting heads with Tesla (NASDAQ:TSLA), among others, but rivalries are ingrained in the fabric of the auto business and the industry’s history shows there’s often room for multiple competitors. In other words, investors mulling RIDE stock shouldn’t run away simply because Tesla is on this dance floor, too.
RIDE Stock Could Truck Higher
Investors are following the likes of Tesla and Nio (NYSE:NIO).
These are two of the most credible EV makers, and they know that this is a market ripe with potential. Those two manufacturers continue to prove that the growth expectations are underpinned by sound demand fundamentals.
Good news for Lordstown and other aspiring electric truck makers: The same is true in this segment. As recently as 2013, electric trucks barely registered a blip, but it’s expected to reach north of 1.50 million units by 2025, good for a compound annual growth rate (CAGR) of 18.5%. Some electric truck forecasts are even more impressive than that 18.5% figure.
“The global electric truck market generated $422.5 million in 2019 and is estimated to reach $1.89 billion by 2027, registering a CAGR of 25.8% from 2020 to 2027,” according to Allied Market Research.
Those statistics signal potentially massive opportunity and there’s some other good news. Over the years, truck owners were often viewed as fiercely brand. Specific to the American brands, GM truck owners typically stuck with that brand while Ford (NYSE:F) truck enthusiasts did the same.
Indeed, data suggests truck owners are loyal to a point, a price point that is. The CarGurus’ 2019 Truck Sentiment Survey indicates that 70% of truck owners are open to switching labels if their current brand raises prices.
That suggests opportunity for Lordstown because the starting price for the Endurance is $45,000. A base Ford F150 starts just under $31,000, but a fully loaded model can cost upward of $80,000.
Tussling with Tesla
Obviously, the prime competition for the Endurance is Tesla’s Cybertruck. If production forecasts prove accurate, Lordstown may enjoy a head start of several months as it’s estimating a late summer 2021 debut for the Endurance. Conversely, Tesla is saying “late 2021” for rollout of the Cybertruck with the dual-motor all-wheel and the tri-motor versions following in 2022.
On price, Endurance will be competitive with Cybertruck with various models of the Tesla product priced from around $50,000 to $70,000.
Lordstown has some other advantages, ones that aren’t always part of traditional investment analysis. First, Tesla’s reputation as a luxury carmaker could come back to haunt it with truck purists. Want to know why Lexus and BMW don’t make pickups in the U.S.? Probably because the devout truck crowd wouldn’t be interested.
Second, there’s the matter of aesthetics. I’m not saying Cybertruck is ugly, but it doesn’t look as much like a traditional pickup as it does a futuristic take on a crossover sport utility vehicle (SUV). On the other hand, the Endurance actually looks like, well, a pickup. Believe it or not, those are real fundamentals and they augur well for Lordstown, assuming it can execute on production and keep costs tolerable.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
