On Electric Vehicles, Rivian and a $60+ billion IPO
EV start-up Rivian Automotive, Inc. (backed by Amazon.com - owns 19.5%, T. Rowe Price, Ford Motor Co.) is planning an Initial Public Offering this week, with a valuation of over $60 billion. The following are provided for consideration:
Rivian founder/CEO Robert J. Scaringe, in the IPO prospectus, said:
“Rivian exists to create products and services that help our planet transition to carbon neutral energy and transportation. Our society today will have a profound impact on the planet and the world our kids, and their kids, will inherit.
“We can spend a lot time debating the specifics of climate change, but the indisputable truth is that we, as humans, are rapidly changing the composition of our atmosphere. This is what inspired me to start Rivian, and it’s what drives every decision we make as an organization. The challenge is as big as it comes but we’re fortunate to get to help solve it with such passionate team members and partners."
Also from the prospectus:
“To date, we have generated minimal revenue from the initial sales of our R1T vehicles and have not generated any revenue from the sales of our other vehicles.
“In the consumer market, we launched the R1 platform with our first-generation consumer vehicle, the R1T, a two-row five-passenger pickup truck, and began making customer deliveries in September 2021 ... as of October 31, 2021, we produced 180 R1Ts and delivered 156 R1Ts.
“Nearly all of these vehicles were delivered to Rivian employees, and we expect to ramp deliveries to third-party customers as we increase our production rate. ... By the end of 2021, we intend to produce approximately 1,200 R1Ts [trucks] and 25 R1Ss [SUVs] ..."
Other Notes
Pricing for the R1T truck starts at $73,000 and the R1S SUV starts at $75,500. Both vehicles have a range of about 300 miles.
On Friday, the market cap of Ford Motor was $77 billion, GM $85 billion, Lucid Group $67 billion and Tesla $1.2 trillion.
Morgan Stanley, Goldman Sachs, and J.P. Morgan are lead underwriters, with 19 other firms participating in the deal. SoFi Securities will offer retail investors about 0.5% of the shares via its online platform.
OUR TAKE
Initial reviews of the Rivian R1T are impressive, and the firm’s offerings illustrate that while Tesla was an early EV leader, market innovation continues – driven by better designs, technologies, service options, and more.
Regarding Rivian’s valuation: Views are varied, ranging from 1) it is cheap relative to Tesla, 2) it is comparable to Lucid Group and 3) it is expensive relative to traditional vehicle manufacturers. In the short term, the stock may have a positive move up.
For Rivian to succeed, it has to ramp up production, build out its services capabilities, maintain quality control, and more. Sales commitments from Amazon and relationships partners and investors should be helpful.