Rivian has hit the ground running on the Nasdaq stock exchange this Wednesday. After more than a decade of operating in silence, the Illinois-based electric vehicle brand started trading its share publicly at around $78 per share, giving it almost $80 billion in valuation. The market reacted positively, sending the total valuation to above $100 billion on its first day of trading.
According to Bloomberg, Rivian’s debut is the sixth-largest ever in the history of the US stock exchange.
Rivian couldn’t have debuted at a better time because it is unarguably benefiting from the goodwill Tesla has created for electric vehicle companies. Since becoming the first automobile company to hit a $1 trillion valuation, it has become the tide that lifts all boats for EV makers, giving investors confidence in other EV startups.
However, this is not to say Rivian does not deserve the positive attention it is getting. The EV startup is among the most likely to give meaningful competition to Tesla in the long run. It has started deliveries of its R1T electric pickup truck, which is marketed towards nature adventurers. While most of the deliveries are reportedly to its own staff, the EV has received overall positive reviews, apart from holding the title of the first battery-powered pickup truck on the market.
Rivian also has the benefit of a stable leadership with a clear roadmap. The company was founded by RJ Scaringe, who is the current CEO. He had wanted to enter the market with a sports car, just like Tesla, but decided to go with a pick truck and SUV first, both of which debuted at the LA Auto Show in 2018. It steadily worked on the two vehicles and largely avoided the drama surrounding other EV startups by releasing reasonable goals, unlike some other startups that promised huge growth in the short term.
The Illinois-based EV maker also has the backing of heavyweights in global business, including Amazon, which owned 20 percent of the company through multiple investments. One of the fruits of the relationship is a 100,000 order for electric vans made by Amazon, which at the time was the biggest ever made. Amazon will use the vans for deliveries in a bid to reduce its global carbon footprint. Rivian also picked up $500 million from Ford. GM nearly became an investor but backed out of the deal.
Rivian also deserves credits for delivering vehicles before going public, unlike other EV startups like Faraday Future, Fisker Inc, Lordstown Motors, and Nikola, who are already trading shares public but has not put a single vehicle on the road.
Before the close of its first day of trading, Rivian share had jumped to $106, shooting its valuation to above $100 billion. This puts Rivian above other automakers apart from Tesla, Toyota, Volkswagen, and BYD. Interestingly, the CEO of GM, Mary Barra, said Rivian’s valuation was evidence that traditional automakers are undervalued.
Rivian netted more than $12 billion, cash that will come in handy for the company to survive in the money-intensive auto industry. It hemorrhaged almost a billion dollars in the first half of 2021 and is expected to lose much more in the coming years, especially with more than 10,000 workers on its payroll already. The cash will also go towards building a second production facility for which it is already looking for a suitable site.
The EV startup has a production target of 1 million units per year by 2030. In the short term, Rivian will have all its three vehicles in production before the end of 2021, meaning it will be making its R1T, R1S, and the electric van intended for Amazon. Rivian will also start selling the van to other customers in the coming years, although it will have to find a way around the exclusivity clause Amazon had worked into the electric van contract. However, as an investor, it is in the best interest of Amazon for Rivian to sell vans to other buyers.
Rivian has more than 55,000 pre-orders for its R1T and R1S and might take until the end of 2023 to deliver all of them. The two vehicles are priced in the high end.