The Chevrolet Silverado is one of the most popular vehicles in the U.S.
Courtesy Chevrolet
Today is a big day for General Motors . The company is expected to unveil the all-electric Chevy Silverado pickup truck at the consumer electronics show in Las Vegas.
“We believe the Silverado E is a breakthrough electric truck platform that speaks to the massive innovation going on for GM in the 313 area code,” which covers Detroit, wrote Wedbush analyst Dan Ives in a Tuesday report previewing the launch.
Ives is bullish on EVs and rates stock in Tesla (ticker: TSLA), the leader in the business, at Buy, with a price target of $1,400. He is also upbeat about General Motors (GM), believing it can be a winner as car companies battle for share in the expanding EV market. He rates GM shares Buy and has a $85 price target for the stock, with a “bull case” call of $100.
The bull case values GM at 15 times estimated 2022 earnings of $6.87 a share. That is far higher than the 10 times expected earnings the stock trades at today.
“The GM EV transformation story heading into 2022 is slowly starting to get recognized by the Street as we believe a EV driven re-rating is now in process,” Ives said. That re-evaluation is what could get the price/earnings ratio up to 15 times or better.
The Silverado will be key to that process. It’s hard to understate the importance of the truck for GM. The Silverado isn’t only one of the bestselling trucks in American, it is one of the most popular vehicles.
Chevy sold almost 530,000 Silverado trucks in the U.S. in 2021, down from the roughly 594,000 delivered in 2000, as a shortage of semiconductors limited output. The 11% drop, however, was less than the overall 13% decline for all GM shipments. GM made as many trucks as it could, which makes sense because trucks are GM’s most profitable product line.
The timing of the release of the electric Silverado will be a key point to watch, given that the electric-pickup segment is getting crowded. Tesla, Ford Motor (F), Rivian Automotive (RIVN), and Lordstown Motor (RIDE) all will have electric pickup trucks on sale this year.
GM isn’t totally shut out: The electric GMC Hummer is already being shipped.
Investors’ base expectation is that an electric Silverado will arrive in 2023. If it happens sooner than that, investors will be happy, while a later start to shipments would be a disappointment.
The truck’s features will be another area to watch. A Rivian R1T can come with a kitchen, complete with an induction stove and sink. A Ford F-150 Lightning can power a home for days in a power outage. A Cybertruck has power-outlet options, an air compressor, and lockable storage. GM, a truck leader, will have to match or exceed what the competition is bringing.
Prior to the launch, GM stock was down about 1.8% in early trading Wednesday after rising 7.5% Tuesday. The S&P 500 and Dow Jones Industrial Average were nearly flat.
