Rivian’s Initial Public Offering (IPO): Points to Note About Amazon’s Electric Vehicle Maker
3 min readHere are some facts about Rivian:
Its CEO is ‘obsessed’ with automobiles and wanted to create a sports car initially.
Robert “RJ” Scaringe, the company’s founder and CEO, wrote in the IPO prospectus that he has been “crazy with vehicles” since he was a kid growing up in Florida. However, he chose to start Rivian after realizing that the item of his affection was “the root of many of society’s most serious environmental concerns,” as he put it. Scaringe said he started from the ground up, with “no money, no staff, no brand, no technology, no suppliers, no production infrastructure.” The first idea was to create an “efficient sports car,” but he said it didn’t feel right.
Tesla Inc. TSLA, +1.30 percent is known for starting with a pricey and exclusive electric sports vehicle and then using the money (as well as buzz) to produce cheaper EV sedans before branching out to various auto-body types and costs.
Rivian, on the other hand, had drifted away from a sports-car concept by 2012, focusing instead on electric SUVs as well as pickup trucks, with the goal of “establishing Rivian as the label for active lifestyles,” according to Scaringe. “Our initiative with Amazon.com delivery trucks serve as the flagship application for the commercial sector,” he said, adding that it “positions us to explore a variety of other sizes, markets, and use cases.” Scaringe has kept a quiet profile on Twitter, tweeting only about his electric vehicle company.
Rivian, like a well-known competitor, aims to avoid dealership sales.
In September, Rivian unveiled the R1T, a 2-row, 5-seat pickup truck. It aims to release the R1S, an SUV, in December. The truck and SUV are projected to see increased sales in December and January.
The company refers to its flagship vehicles as “electric adventure vehicles” that are capable of “rock crawling” as well as leaving sports vehicles in the dust. Rivian, like Tesla, sells its automobiles directly to consumers, bypassing the dealership network, and requires a refundable deposit when customers configure their car on the Rivian website. The basic trim of the pickup truck begins at $67,500 and has a range of 314 miles between charges. By January, Rivian claims to have an R1T featuring a range of over 400 miles. A camping kitchen which does slide out the truck’s side and also a camping tent is among the truck’s options.
The SUV begins at $70,000, and Rivian offers five- and seven-seat versions, and also a camping tent as an option. As of September, Rivian had 48,390 R1T as well as R1S preorders in Canada and the United States. Rivian has stated that by 2025, it intends to provide 100,000 electric “last mile” vans to Amazon.
As the company expands, the losses have increased.
Rivian has never generated a profit and does not plan to do so in the “foreseeable future” while it invests in its company. Rivian company lost about $426 million in 2019, or $4.35 per share, before losing $1 billion, or $10.09 per share, the previous year. Rivian company lost about $994 million in the very first half of this year or $9.84 per share. During the first 6 months of 2020, the company lost $3.77 per share.
It has also been spending the majority of its revenue on research as well as development, with the R&D expenses reaching $683 million in the first half of this year. In that period, total operational expenses, including R&D and general expenses, increased to $990 million, up from $381 million the year before. In its prospectus, Rivian stated, “We believe that we will continue to experience operating and net losses shortly as we grow, including following the initial production of revenues from the sale of our vehicles.”
Rivian was only $3 million in debt as of June. In July, it acquired $2.5 billion in the unsecured senior convertible notes, which will be converted into equity as part of the IPO. As of September, the company reported it had no loan under its revolving credit arrangement.
