In Focus: The Rivian IPO

Rivian Automotive, the electric vehicle maker backed by Amazon ($AMZ), Ford ($F), and T. Rowe Price has filed its paperwork to go public. The well funded EV company has decided to enter the public markets, which is a bit of a surprise.

Rivian has had no problem securing investment dollars as a private company. In June of this year Rivian raised $2.5 billion. In January 2021 Rivian raised $2.65 billion, in July of 2020 the company raised $2.5 billion, and in December of 2019 Rivian raised $1.3 billion. Earlier in the summer when Lordstown Motors ($RIDE) was warning investors that it may run out of money, Rivian was raising money without issue.

Rivian's CEO RJ Scaringe recently wrote to customers who pre-ordered Rivian vehicles and advised that vehicle deliveries would begin this September after months of delays caused by supply chain issues.

Currently Rivian has two vehicles in production. The R1T, a pickup truck, and the R1S, a seven seater SUV. The R1T starts at $67,500 and the R1S starts at $70,000. Both models have 300 plus miles of range according to Rivian.

Is There an Investment Case for Rivian?

A Rivian investment is a head scratcher. In Rivian's IPO filing, they note that they are seeking a valuation of $80 billion. Ford ($F) is currently valued at $53 billion, GM ($GM) comes in at $72 billion, and Tesla ($TSLA) trumps them all at $714 billion. What is it that makes Rivian more valuable than Ford or GM? For Tesla, it was because it labeled itself a tech company. Elon Musk, Tesla's CEO, made sure to notify investors early and often that Tesla is a tech company that makes cars, which made investors okay with the high valuation. Even recently with the announcement of the Tesla Robot, few people flinched, because a tech company making robots sounds logical. Is Rivian a tech company?

The number of Rivian pre-orders is a mystery. I've seen some places say 20,000, while others have shown 30,000 plus. We do know that reservations were full as of November 2020, but the number of reservations the company opened to the public is unknown. In any case, the company has plans to produce 20,000 vehicles in 2021 and twice that number in 2022.

What has been made public is the Amazon order that was placed, which calls for Rivian to deliver 100,000 delivery vans by 2030. Amazon is a major investor and provided the company with $700 million in 2019, and has added to that investment over the years, but can an Amazon investment secure a EV industry win?

The EV Wars are starting. Rivian, Lucid Motors, Workhorse ($WKHS), Lordstown Motors, Faraday Future (FFIE), and Tesla, not to mention the legacy automakers creating EVs. Ford's F-150 Lightning, and GM's electric Hummer.

However, when I size up Rivian's competition, there's nothing there that really poses a threat. Lordstown plans to start production of a vehicle in September, with deliveries happening in January of 2022 if all goes well. So much has gone wrong for this company, why would this delivery date go right?

The Lucid Motors SUV isn't expected until 2023, but the company has plans to deliver its sedan in the second half of 2021. Workhorse delivered a grand total of 14 C Series delivery trucks in Q2 2021. Faraday Future's FF91 is scheduled to go into production next year, and Tesla's Cybertruck production which was supposed to start production in 2021 has been pushed back to 2022. Ford's F-150 Lightning is set to be released in Spring 2022, and GM's electric hummer has a release date of Fall 2021. If Rivian can keep to its September 2021 delivery date for the R1T, it could take a big lead in the EV pickup truck race.

I really like Rivian when I look at what else is out there in the EV truck and delivery van space. As I've said before I'm not sure Ford or GM are fully in on electric vehicles. Ford has shown, but it has yet to prove, we'll see how serious they are come spring 2022. As for GM, the top selling GM vehicle in 2019 was the Chevy Silverado, why would they not go all in on making that electric? The electric Hummer feels like a bad play on Tesla's Cybertruck.

Still, even with their missteps in entering the electric vehicle market, Ford and GM still have their combustible engine breadwinners that they can rely on. Knowing that, is an EV company set to deliver 20,000 vehicles in 2021 and another 40,000 in 2022 worth more than Ford, who sold 4.2 million vehicles in 2020 and GM who sold 6.8 million vehicles in 2020?

Rivian looks like it could be a real winner in the EV pickup truck space, but what is the winner of this space really worth? Time will tell.