Rivian made a stunning debut as a publicly-traded company. The second most valuable US automobile manufacturer just behind who? You guessed it right Tesla. Rivian raised $11.9 billion and is backed by Amazon and Ford. Guess what its market cap is around $85.9billion - very close to General Motors evaluation of $86billion and is well above Ford!
Let’s take a deep dive today and see what factors are at play accordingly you may decide if it’s a good ROI or over evaluated.
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Who is Rivian backed by?
Amazon and Ford. Amazon is an early investor in the company and it plans to order 100,00 electric delivery trucks to reduce carbon emissions. Amazon is estimated to have a quarter or a fifth of the company. Ford also plans to work in the future on EV projects with Rivian and is supposed to have a major stake in the company.
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T. Rowe Price is another major player and an early investor, in 2020, he led a $2.5 billion investment round.
What makes it different from other car manufacturers?
Traditional trucks and SUVs lack elegant design and a variety of luxury options (such as an available camp stove fitted into a compartment between the rear wheels and the rear passenger seats).
Rivian’s current consumer-facing portfolio, the R1T pickup truck and R1S SUV are built on the business’s “skateboard platform,” which allows the company to create a variety of vehicles, including electric delivery trucks. The platform, which is a chassis on which a car may be constructed, holds the automobile’s major components, including electric motors, battery packs, and suspension systems, all neatly wrapped beneath the vehicle body, giving it a lower centre of gravity than traditional vehicles.
Rivian’s R1S SUV will compete with other electric SUVs from firms such as Tesla, which manufactures the Model X SUV and the Model Y crossover car. Rivian’s R1T pickup truck may give Tesla’s expected Cybertruck a run for its money, but the Cybertruck’s huge size, disputed form-over-function style, and ongoing delays may give Rivian a fighting chance in the burgeoning EV pickup truck industry.
Enough Bullish, let’s talk about the challenges the company faces.
Faraday Future, a publicly listed firm that captivated audiences with futuristic electric sports cars and was slated to begin production on its FF91 electric sedan, has yet to create any vehicles, but the company claims it will be ready in 2022. Rivian too may face a similar fate.
Ford isn’t about to hand over the electric vehicle market to Rivian. Despite stating that it will continue to collaborate closely with Rivian, Tesla’s own EV goals may assist or hurt the alliance. Ford has received more than 150,000 pre-orders for its all-electric Ford F-150 Lightning, and the electric motor powering the Ford Mustang Mach-E is being used to kickstart the EV-based retrofit and custom vehicle industry.
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Rivian also said during its IPO filing that it will continue to be unprofitable for the foreseeable future. The company has used up to a billion dollars this year in rolling off the line for R1T truck due to pandemic related delays. Then there are the supply chain constraints like the semiconductor shortages which may make it difficult to fulfil the 50,000 pre-orders it plans to deliver.
The Hertz order for Tesla made the company’s evaluation rocket off, for Rivian it’s just Amazon’s commitment.
What’s your take on the story? Will it have a similar fate as to Faraday? Or it will become something like Tesla?