With high-profile backers, EV start-up Rivian goes public

Shares in Rivian Automotive were set to trade publicly on Wednesday, and the world should get a better idea of just how excited investors are about the electric vehicle market.

Rivian, the EV start-up backed by Amazon and Ford, hopes to raise about US$12 billion with the sale of 153 million shares, which would top the US$8 billion Uber raised in its IPO in 2019. Rivian said it will use the money to ramp up production of its trucks, vans and SUVs. It’s the latest in what’s becoming a long line of companies trying to carve out some of Tesla’s dominant market share.

With shares priced at US$78 and about 850 million shares outstanding after the offering, Rivian would have a market value of US$66.5 billion. That compares with Honda’s US$53 billion and Ford’s US$80 billion.

Automakers big and small, new and old, are chasing Tesla, which has largely dominated the electric vehicle market for years, amassing a market value of more than US$1 trillion along the way. So far this year, Tesla has sold around 627,300 vehicles.

Craig Irwin, an analyst who covers electric vehicle and EV-charging companies for Roth Capital, says that even with more companies entering the EV market, there is still plenty of room for newcomers.

“EVs are inevitable, and it’s a good thing for the markets to have another credible EV competitor come public,” Roth said. “Rivian’s IPO marks a point of incremental maturation for the industry and shows that billions in capital is available for credible players.”

Rivian has a contract with Amazon to build 100,000 electric delivery vans at its factory, a former Mitsubishi plant in Normal, Illinois. Amazon.com Inc owns about 20 per cent of Rivian before accounting for the public offering.

Ford Motor Company invested a half-billion dollars in Rivian in 2019 and said the companies would work jointly to develop electric vehicles. The Detroit automaker has about a 13 per cent stake in Rivian leading up to the public offering.

As of October 31, Rivian had about 55,400 vehicle preorders in the US and Canada. Those orders are placed with a US$1,000 deposit that can be cancelled and refunded.

Rivian rolled out its first vehicle, the R1T electric truck, in September and will launch its electric SUV, the R1S, in December. Prices for the truck start at US$67,500, while the SUV base package starts at US$75,500, and gets even steeper with all the add-ons.

Options for the vehicles include a US$10,000 battery upgrade that will extend the driving range from 314 miles (505 kilometres) to more than 400 miles (643 km). A three-person, roof-mounted tent adds US$2,650 to the bill, and an off-road recovery kit will cost an additional US$600.

The research firm LMC Automotive says in 2020 EVs made up a little more than 3 per cent of the global auto market and less than 2 per cent of the United States auto market. The group projects those numbers to shoot up to about 15 per cent and 12 per cent, respectively, by 2025.

Rivian, which was founded in 2009, says it lost US$426 million in 2019 and US$1 billion last year. It reported losing nearly another billion dollars in the first six months of this year. Tesla, which went public in 2010, recorded its first annual profit last year.

AP