I was five years old when I first learned to drive a truck.
As an ambitious young lad, I decided to sneak outside my old family farm home with a solid plan: The truck was right there, the keys were already inside, and I had plenty of room to maneuver – so I thought.
Certainly, I was capable enough to pull this off, right? So, super pumped with the misguided moxy of a five-year-old, I fired it up. I quickly realized I was out of my element and drifted the thing into an embankment.
Doink.
My parents were less than pleased. But this was no ordinary truck: a rusted old Ford that my father bought off the side of the road for like five hundred bucks. We used the pale blue beater to haul stuff to the dump and take little fun runs around our ancient farm home.
But one chilly winter’s day, that truck turned into a legend…
The Bat Truck
I had gone with my father and brother to a downtown auto show in Baltimore to meet Batman himself: Adam West, aka the best Batman ever. Not only did he graciously sign a picture for us — which hangs in my kitchen to this day — but he also personally introduced us to the original Batmobile.
(Editor’s Note: Adam West’s real name is William Anderson. He adopted the catchier name for his first film, The Young Philadelphians, in 1959 – long before Batman. West was his mother's maiden name. Adam just sounded cool alongside it.)
Now, as a five-year-old, you could imagine how incredible it was to sit in the driver’s seat of the most iconic car in the world. I was floored…
So as soon as we came back home, I suggested to my Dad that we make our own Batmobile using the scrappy truck we had just acquired. He graciously and excitedly agreed, and we sat down together, designed a stencil, and grabbed a can of black spray paint.
The Bat Truck was born:
That’s me on the left of the bed, behind my father. The truck became a neighborhood legend, and kids from all around would come to our house to do hayrides in the Bat Truck. This was in 1987.
Fast forward to today, and my father is still driving a pickup truck, and while it doesn’t have Batman decals or rocket boosters, it’s about as high-tech as a pickup truck can get.
The Maverick
My dad has traded up to Ford’s (NYSE: F) Maverick Lariat. While it’s a great deal smaller than the old F-150 and a foot shorter than the Ranger, it’s the perfect truck for drivers who aren’t hauling a dumpster full of materials on an everyday basis.
It’s also a hybrid…
The hybrid version of the Maverick sports 42 miles-per-gallon city driving and 33-mpg on the highway. As far as trucks go, that’s amazing – more than a few compact cars can’t compete with that efficiency.
(Editor’s Note: The average fuel economy for pickup trucks is 20.6 miles per gallon, and the median is 18 MPG. The average pickup truck is 30% less fuel-efficient than the average automobile.)
And it has the pickup that could give the Batmobile a run for its money. This particular Maverick managed to do a quarter-mile in just 13.565 seconds.
While the 4.5-foot cargo bed is a little short for most tasks, it’s perfectly fitting, especially when you consider the under-seat storage found in the Maverick's second row or the truck's available bed extender, segmented divider slots, and multiple anchor points.
But as I mentioned, the Maverick is a hybrid, not the full-on electric pickup truck that is currently all the rage for drivers and investors.
Electric Shock Therapy
While the Ford Lariat isn’t all-electric, many other companies have made waves over the past few years by promising fully electric trucks. They’ve had mixed results so far, to say the least.
Nikola (NASDAQ: NKLA), Lordstown Motors (NASDAQ: RIDE), and Rivian (NASDAQ: RIVN) all saw their stocks go crazy as they raced to unveil the first fully-electric truck on the market.
(And yes, we’ll also get into Tesla’s Cybertruck eventually).
All three have since been plagued by scandal. Let’s start with the biggest fiend in the electric truck wars…
Nikola (NASDAQ: NKLA)
The worst offender is Nikola (NASDAQ: NKLA). Its trucks were empty shells that didn’t even function. Last week, founder and former CEO Trevor Milton was convicted on three charges of criminal fraud after accusations of lying about the capabilities of the company’s electric trucks.
Back in 2016, while desperately trying to attract attention and investors, Nikola staged a demonstration of its “groundbreaking” electric semi-truck, the Nikola One. In a video called “Nikola One in Motion,” the company debuted the electric semi-truck rocketing down a dusty highway.
But it wasn’t. The company just rolled the non-functioning truck down a hill, much like a box-car derby but with billions of dollars riding on the race. I do suppose that would technically be considered “in motion,” but surely not what CEO Trevor Milton alluded to when he told potential investors that:
“It’s my pleasure to actually let you guys see the truck, know it’s real, touch it, feel how sturdy it is. You’re going to see that this is a real truck. This is not a pusher. Thank you so much, everyone!”
It turns out that Milton was the pusher, and he now faces jail time. Milton pleaded not guilty to securities and wire fraud and was released on $100 million bail.
Nikola’s share price reached $65.90 in June 2020. Today it trades for around three bucks. The company still has a $1.3 billion market cap but has yet to produce anything but bad headlines – much less an affordable electric truck.
Their first entry into the pickup truck market was supposed to be the Badger: a battery-electric truck with 906 Horsepower, a 600-mile range, and a tailpipe that probably blasted out rainbows.
They even joined General Motors in a deal to help each company produce the Badger. It was a deal that solidified the upstart company with a legacy car manufacturer and sent the stock soaring. However, this was much less than a match made in heaven. GM made the deal in exchange for an 11 percent stake in the company, valued at $ 2 billion then.
Milton said at the time that “it’s probably 70% Nikola, 30% GM when it comes to the parts that are really important to us.”
Like most things Milton said, this was entirely untrue.
Scott Damman, a senior General Motors executive, testified in court against Milton, saying:
“There were no components coming from Nikola. They owned the creative design, what the vehicle looked like and felt like, but all of the parts were to come from General Motors.”
The whole thing looks like a complete scam from the get-go.
The Badger started at $60,000 for the basic package, but the hydrogen fuel-cell electric vehicle version with an EV battery pack starts at $80,000. The company has already agreed to refund all submitted orders for the presale.
Extravagant pricing aside, the Badger looks dead, face down in the water.
Nikola has also launched the Nikola Tre electric semi, a commercial series electric truck tested in pilot operations with Anheuser-Busch. While that certainly is a more impactful arrangement, it hardly moves the needle when it comes to Nikola becoming a global automobile powerhouse.
Hilariously enough, the Tre was just recalled because the seat belt shoulder anchorage assembly may have been improperly installed. It seems like the company can’t do anything right.
This is a cautionary tale for retail investors: individual investors own most of the company with 36% ownership.
That is typically the case with a “story stock” that feeds on dumb money. They can afford a public relations and advertising campaign that sends the stock price to new heights while failing to provide the actual data and results needed for institutional investors.
I would stay far away from Nikola – I don’t think that runaway truck has finished rolling down that hill.
Lordstown Motors (NASDAQ: RIDE)
Lordstown Motors began as a Cinderella story. The EV truck maker set up shop in an abandoned General Motors plant in Ohio, promising local jobs and prosperity to a town that had witnessed the ravages of the “Big Three” (Ford, General Motors, and Chrysler) shipping jobs overseas, leaving the rust belt far rustier than their heyday of auto manufacturing.
It seemed like a win-win situation.
The company was founded in 2018 by Steve Burns, the former CEO of Workhorse Group, which also made commercial electric vehicles alongside delivery drones.
The Endurance – Lordstown's flagship electric truck – was supposed to be the company’s first production automobile. It made waves as one of the first movers in the space, and its sleek, American-made design:
President Donald Trump even showed off the Endurance electric pickup truck outside the White House, claiming success for boosting the region’s economy after General Motors.
“It’s incredible what’s happened in the area,” Trump said. “It’s booming now. It’s absolutely booming … It’s an incredible piece of science, and technology. It’s going to happen now with more and more trucks. And ultimately, they say you’ll be able to do it for less money, and it’s better, which is a good combination.”
But like many promises from politicians and CEOs, it was nothing but lies. The Endurance still hasn’t even seen the light of day.
In 2019, Lordstown announced that the truck would be released by late 2020 at $52,500. In November 2020, the release date was delayed until September 2021, with production ramping up through 2022.
You see where this is going…
That was before Hindenburg Research – the famed short seller analysts – released a damning report on Lordstown that may have doomed it for good.
The report sent a shock wave throughout the auto industry and shined a light on Lordstown’s history of misleading investors. Here are some quick highlights:
- Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities.
- The company has consistently pointed to its book of 100,000 pre-orders as proof of deep demand for its proposed EV truck. Our conversations with former employees and business partners and an extensive document review show that the company’s orders are largely fictitious and used as a prop to raise capital and confer legitimacy.
- For example, Lordstown recently announced a 14,000-truck deal from E Squared Energy, supposedly representing $735 million in sales. E Squared is based out of a small residential apartment in Texas that doesn’t operate a vehicle fleet.
- Multiple former senior employees who have worked with Lordstown Founder & CEO Steve Burns openly described him as a “con man”, or a “PT Barnum” figure. One senior employee told us that, while working with Steve for a couple of years, they saw more questionable and unethical business practices than they had seen in their entire career.
While I am often skeptical of short sellers purposely trying to tank a stock for their own purposes, there was too much smoke in this report for there to be no fire. Both CEO Steve Burns and CFO Julio Rodriguez stepped down from their posts in disgrace.
The stock hit a high of $31.40 before plummeting to the ground:
It’s ironic that Lordstown’s ticker symbol is RIDE because that is what every one of their investors has been taken on. Lordstown had promised 100,000 trucks by 2024. They have produced two vehicles. Yes, TWO! While another 500 are expected by the end of the year, all I can say is “Good Lord.” Even if “PT Barnum” CEO Steve Burns is gone, you’d be best to stay away from this circus.
Rivian Automotive, Inc. (NASDAQ: RIVN)
Like Nikola and Lordstown, electric vehicle upstart Rivian took the investing world by storm when it unveiled its plans for the R1T pickup truck.
The truck delivers between 260 – 400+ miles of range depending on your select battery pack and motor. It can also go from zero-to-sixty in three seconds. It can tow up to 11,000 pounds.
And it’s pretty slick looking if I do say so myself:
It was also the first fully electric pickup truck to hit the market, beating the Ford F-150 Lightning.
Rivian went public in 2021 with not only electric pickups and SUVs but batteries. They have a membership system that provides owners with access to vehicle chargers around the country.
However, while the company looks far more solid than the likes of Nikola and Lordstown, Rivian has its own series of blunders to address. The company just issued a statement that it recalled more than 12,000 of the 14,000 vehicles it delivered to customers.
An insufficiently torqued steering knuckle fastener could cause excessive wheel camber or, in rare instances, a separation, affecting the driver's ability to control the vehicle and increasing the risk of a crash.
(Editor’s note: What this means is the damn wheel falls off the truck, and you go into a ditch, at best.)
It’s a blow to a new company, where first impressions are everything. Shares traded 7.3% lower the day the recall was announced.
However, Rivian has handled it admirably. Here’s a model response to dealing with a crisis:
Rivian will offer Mobile Service appointments, no appointment-needed visits to Rivian Service Centers or pop-up service locations, and prioritized appointments at Rivian Service Centers to inspect and, as necessary, sufficiently secure the steering knuckle fasteners for the affected vehicles. For the very small percentage where parts replacements are required, loaner vehicles will be made available while the vehicle is brought into a Rivian Service Center. The recall service and, as needed, trip interruption and towing services will be available at no cost to you.
Rivian still isn't expected to begin reporting profits from its automotive business until at least 2027. The company was certainly swept up in the electric vehicle craze of the past few years, with its stock reaching a high of $172 in November. Since then, it’s come crashing down to earth:
But Rivian does have a lifeline: Amazon has announced it will buy 100,000 custom-built electric delivery vans from Rivian. These will join Amazon’s efforts to electrify its fleet by 2040. The company is also cutting back on its production and supply chain to prepare for the future of its vehicles. They are cutting the entry-level versions of their vehicles and abandoning the R1T truck and R1S SUV models next year. That should allow them to concentrate on their goal of producing 25,000 vehicles by the end of next year.
Major investors have quietly been adding to their positions at the current depressed prices: legendary hedge fund manager Ray Dalio bought 62,800 shares of Rivian last quarter, David Einhorn’s Greenlight Capital bought 74,000 shares, and billionaire George Soros currently holds 17.8 million shares.
We’ll be watching Rivian’s transition from an upstart EV maker to a major player in the next few years.
Pick Me Up
Trucks are still big money-makers. Pickups dominate the U.S. car market. The three top-selling pickups accounted for about 13% of the 14.5 million vehicles estimated to have been sold last year in the U.S. That trend will continue for the electric variety.
Joe Biden’s Inflation Reduction Act’s tax credits will gift up to $7,500 for light- and medium-duty electric vehicles and $40,000 for heavy-duty trucks. According to a new report from the policy group Energy Innovation, the law’s tax credits could double or even triple the share of electrified trucks and vans used in fleets by 2030.
New entries by the companies I mentioned – alongside the Ford F-150 Lightning, the Chevrolet Silverado EV, the Canoo Pickup and, yes, Tesla’s Cybertruck – will grow this new market exponentially.
While this article was more of a cautionary tale, next time, I’ll take you through my three best – and safest – investments for the electric and hybrid truck market. I want to learn along with you so I don’t repeat my five-year-old self and drive an investment into a ditch.
Godspeed,
Jimmy Mengel
The Profit Sector
