Why the electric start-up Rivian’s IPO is critical: NPR
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Electric car maker Rivian has hit public markets with a huge blow.
Rivian shares rose on their first trading day Wednesday, after the company completed one of the largest initial public offerings in US history.
They’ve stabilized a bit after the initial increase, but the company is still valued at nearly $100 billion — more market capitalization than either Ford or GM, although not as high as Tesla’s staggering $1 trillion valuation.
It’s a lot for a company that has only built a few hundred cars, and it hasn’t turned a profit yet. But Rivian hopes to replicate Tesla’s dizzying rise from auto startup to mass-market manufacturer.
It plans to sell pickups, SUVs and a delivery van, and counts Amazon and Ford as major shareholders.
Here’s why Rivian is getting so much fanfare.
Electric cars are heated
Companies may disagree about how quickly the transition to the electric car will happen, but the entire industry is embracing the idea that battery-powered cars are the future.
At COP26 climate talks on Wednesday, Dozens of governments and companies It embraced the goal of only selling zero-emissions cars by 2040 – or 2035 in major markets. Essentially, that means replacing every new gas or diesel car with a battery-powered electric vehicle.
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The scale of this shift is huge, and it’s a major challenge for existing automakers — and an opening for new market entrants.
“There’s a lot of opportunity,” says Stephanie Brinley, an analyst at IHS Markit. “And of course, the meteoric rise of Tesla whetted the appetite for whoever could do it again.”
Tesla is currently the world’s most valuable automaker, despite producing fewer cars than its competitors.
Rivian won the race to build the first electric pickup truck
Americans love pickup trucks, and they spend a lot of money on them, so Automakers were competing To bring the first battery powered truck to market. The Rivian won that race, and began delivering the R1T this fall.
The R1T starts at $67,500, and is marketed to the outdoor enthusiast. One optional feature is a pull-out kitchen, with stovetop and sink, designed for cooking at camp sites. Combines adventure-oriented specifications with luxurious interior design; CNN called him A bright dream truck.
The Rivian may be the first electric truck to hit the market, but it won’t be the last.
Well-known automakers release electric versions of their pickup trucks, including Ford, the maker of America’s best-selling pickup truck.
“It will be difficult for the Rivian to compete with the larger and cheaper Ford F-150 Lightning when it becomes available, and competition in the space will only get fiercer as GM is also expected to unveil an all-electric Silverado at CES next year,” says Jessica Caldwell, executive analyst at Edmunds, referring to a famous trade conference.
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It also targets the commercial delivery market
Rivian has another major advantage: It has a huge deal with Amazon to build electric delivery trucks. Amazon has invested a lot of money in the startup and owns a large stake in Rivian.
The retail giant has committed to buying 100,000 delivery vehicles from Rivian — a big deal for the fledgling automaker.
This is a number of vehicles like Tesla To be delivered to Hertz, a car rental company, in a deal that sent shares of the electric car maker soaring.
Other electric car makers have stumbled
A group of startups have attempted to recreate the magic of Tesla with sporadic success.
Hydrogen truck company Nikola and electric pickup maker Lordstown have been investigated by the Securities and Exchange Commission after allegations of fraud, while other companies have just been disappointed by repeated delays in their promised vehicles and underperforming stocks.
Some analysts believe that Rivian is in a better position than its competitors, especially since it has already proven that it can build its own product.
“Rivian has been, for the most part, a little more than his nose for the grindstone and getting the work done and done,” says Brinley, of IHS Markit.
Another electric start-up could say the same: Lucid, which rolled out to the public earlier this year through a different route, has also begun delivering luxury electric sedans. It currently has a market capitalization of around $70 billion.
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However, expansion will be a big challenge for Rivian
Indeed, delivering a car to consumers was a major achievement for the startup, but the quantities are still small.
Rivian has tens of thousands of pre-orders, but only expects to deliver 1,000 vehicles by the end of 2021. The company’s plant in Normal, Illinois, could hypothetically produce hundreds of thousands of vehicles, but Brinley says that to be truly sustainable, Rivian will need to expand to more of plants.
“Let’s not put the cart before the horse,” says Asad Hussain, a mobility analyst at Pitchbook. “I think the real challenge will be to increase that manufacturing capacity.”
The IPO should help. Its listing brought in nearly $12 billion for Rivian, an infusion of cash that the company will use to tackle this difficult problem of expansion.