Rumors are starting to fly as reports surface that electric-pickup maker Rivian may find a pair of new investors.
This brings up some interesting points right off the bat. Starting with General Motors, it underscores the automaker's belief in the future of electric vehicles. While the company recently said it will lean on its Cadillac brand to lead its EV charge -- no pun intended -- this shows that management has a broader take on the industry's potential.
It also makes one consider the potential of the electric trucking market, as well as Rivian specifically. After all, industry observers may point to GM CEO Mary Barra's savvy deals in the past. The company acquired Cruise for just $1 billion in the summer of 2016. By fall of 2018, it was valued at more than $14.5 billion following investments from SoftBank (SFTBY) and Honda Motor (HMC) - Get Report .
It also makes you wonder what exactly Amazon is up to. The e-commerce giant has made moves outside of its bread-and-butter online business, like its Whole Foods acquisition, but transportation is a somewhat new one. Granted, Amazon has invested plenty over the years in A.I., robotics, drones and expanding its own delivery capabilities. Does it see some sort of marriage between delivery, Rivian and autonomous driving -- for which it just invested in a $530 million funding round for Aurora this month?
The Next Tesla?
Tesla (TSLA) - Get Report is a controversial name and so when CEO Elon Musk announced the company's intentions to build an electric pickup truck, it's no wonder it drew plenty of criticism. The remarks ranged from Tesla's solvency to how demand would be too low for electric pickup trucks.
The demand argument is clearly going out the window, with Ford (F) - Get Report willing to pair electric and hybrid options on the nation's best-selling vehicle, the F-Series pickup, and with GM and Amazon reportedly willing to put its cash to work in Rivian. All signs point to the exact opposite of that argument then, that an electric pickup could actually have robust demand.
But Tesla presents a difficult situation for an automaker like GM. Unlike Rivian, which is trying to get to its first $1 billion, Tesla is already standing tall at a $53 billion market cap, about in-line with GM following the latter's big year-to-date rally. As much as the automotive industry still tries to play Tesla off as a non-threat, many have taken notice of the company as it ramps up production.
That doesn't mean Tesla and GM can't or won't ever work together or that Barra & Co. have sleepless nights about what's happening in Tesla's Fremont, CA. production facility. Only that, if GM can bring some of its expertise over to Rivian, perhaps it can create a win-win situation from a product perspective while also getting a notable stake in a company that's trying to become the next Tesla.
However, Rivian as the next Tesla sounds ambitious, at this point. Rivian lacks Tesla's energy business and a polarizing money-raiser like Musk. But that doesn't mean it's a failure or that its valuation can't explode higher if it finds some traction. That said, I wonder more about getting truck drivers to switch away from Silverados and F-150s for a new startup truck instead. That may prove tough.
And what's in it for Amazon? Well, it too benefits from a potentially massive valuation spike in Rivian in the coming years. But it's likely looking to cement some form of future vehicle supply for logistics and delivery operations.
Shares of GM closed down 3 cents per share at $39.00 while Amazon stock closed at $1,640.00, up 12 basis points.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.