Rivian Out of Reach

Electric vehicle developer Rivian (private) has reportedly closed another round of financing to support its bid to bring the first all-electric pick-up truck to market.  The company reportedly raised $2.5 billion in a private placement to key institutional shareholders in early July 2020.  Reportedly T. Rowe Price Associates led the round with participation by Fidelity Management, Baron Capital Group and Soros Fund Management.  Depending upon the source Rivian has raised a total of $6.0 billion (Pitchbook) or $5.5 billion (CNBC) since inception.  In addition to the crew already mentioned Ford Motor Company (F:  NYSE), Amazon (AMZN:  Nasdaq) and Blackrock (BLK:  NYSE) are key investors.

Rivian appears to be the polar opposite of one of its primary competitors, Tesla (TSLA:  Nasdaq).  Rivian’s chief executive officer Robert Scaringe is quiet and self-effacing, letting the company’s pick-up truck design tell the company’s story.  As a consequence Rivian is not as well known as Tesla and its enigmatic CEO, Elon Musk.

Lack of social media exposure does not seem to have held Rivian back.  The most recent capital raise was apparently triggered by better than expected interest in the Rivian vehicles.  Amazon is thought to have pre-ordered as many as 100,000 all-electric Rivian vans to replace conventional trucks in its delivery fleet.

Scaringe may be getting some help from a review of Rivian’s R1T all-electric pickup truck by Car and Driver, a magazine for automotive enthusiasts.  The review for the magazine’s 1.23 million subscribers focused on driving range, acceleration times and engine performance  -  the sort of details that wins acceptance and motivates buyers.  A driving range of 400 miles and a mere three seconds to reach 60 miles per hour from a standing position are the sort of details that make a good impression.  The R1T is an all-wheel drive model with an electric motor to power each wheel.  Though none of the recognized automotive experts have made the connection, this author believes the R1T bears a striking resemblance to the highly popular and sleekly designed Ford Bronco.

It is the R1T is expected to be the first to go into production in early 2021.  After premature rumors Rivian was taking customer deposits in late 2019, the company is now expected to begin accepting orders as early as late 2020, through a direct-to-consumer approach.  The most recent price talk is a range of $70,000 to $81,000 depending upon motor size in terms of kilowatt hours.

With no electric truck on the market today, Rivian’s progress is under close scrutiny.  There are plenty of others with electric pickup truck aspirations.  For a couple of years already Tesla has been bragging out its Cybertruck as having the utility of a truck with sports car performance.  Tesla claims it has take over a half million pre-orders and is ready to release the truck in late 2021.  Nikola Corporation (NKLA:  Nasdaq) goosed the range of its first electric pickup truck with a hydrogen fuel cell to augment battery power sources. With the peculiar name the Badger, it is not clear how many are jumping on the reservation list that Nikola opened in late June 2020.

There are more.  Fisker Automotive, which is going public through a special acquisition corporation (SPAC), has been teasing an electric pickup truck for two years.  However, Fisker has not yet brought its Ocean model to market, a car design purportedly more complete.  Even Ford has plans to electrify its famous F150 pickup truck.

Investors keen on getting a taste of the electric car market can pay dearly for public shares of Tesla.  Alternatively, Nikola has shares already trading the public market with more on the way in large planned offering of an additional 24 million shares.  NKLA shares have pulled back in anticipation of the deal, but the stock is still priced dearly.  Likely Fisker will have publicly traded shares in the next few months through acquisition by a special purpose public corporation. 

Rivian, with its beguiling and high performance pickup truck, seems shy about the becoming a public company.   Leadership has shown little interest in the ordeal of an initial public offering, using the private placement process to screen and cherry pick institutional and strategic investors.  Alexandra Ford English, the daughter of Ford Motor Chairman Bill Ford joined the Rivian board earlier this spring, bringing the two companies closer together than ever.  It is not the family tie that stands out.  English works at Ford as director of corporate strategy, making her just the right person to answer important questions about Rivian’s future and when minority investors will ever get a chance at a position Rivian public shares.  Is a joint venture or Ford buyout of Rivian a more likely outcome? 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.