Electric Truck Maker Rivian Has the Biggest IPO of the Year

Rivian Automotive’s stock market debut is promising, as shares have soared more than half a percent.

Rivian had a market worth of $91billion after its opening trade for $106.75. Rivian was more valuable than General Motors and Ford. That’s noteworthy because Rivian has so far delivered about 150 of its electric pickup trucks to customers, mostly employees, whereas Ford and GM sell millions of cars globally each year.

Ford is one of Rivian’s high-profile backers, having invested a half-billion dollars into the company in 2019. Amazon was the other backer, holding a 20% share in Rivian before its IPO.
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Rivian plans to capitalize on the growing demand for electric cars from investors and consumers. It joins what’s becoming a long line of companies trying to peel away market share from Tesla, which has dominated the market for EVs.

Rivian listed the offering for 153 million shares at $78, bringing in nearly $12 billion. According to the company, the proceeds of the IPO will be used by the company for production increases in its SUVs, trucks and vans.

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Both big and small automakers are now chasing Tesla. Tesla is the market leader in electric vehicles for over a decade and has amassed more than $1 billion. Tesla has so far sold approximately 627,000.

Craig Irwin is an analyst for Roth Capital who covers electric vehicles and EV charging businesses. He says there’s still plenty of space for new companies, even though more companies are entering the market.

“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 and Amazon have signed a contract to construct 100,000 electric delivery vans in its factory. It is a former Mitsubishi plant located in Normal, Illinois. Ford Motor Co. owns a 13% share and said that the two companies will work together to develop electric cars.

Rivian was able to place approximately 55,400 vehicles preorders across the U.S.A and Canada as of Oct. 31. These orders require a $1000 deposit, which can be cancelled and refunded.

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Rivian launched its R1T electric truck, its first vehicle. The R1S electric SUV will be available in December. The truck starts at $67,500 while the base package for an SUV is $75,500. All add-ons make it even more expensive.

An option for these vehicles is a $10,000 battery upgrade which will improve the range of the vehicle from 314 miles (50 km) to 400 miles (643km). The cost of a three-person tent with a roof adds $2650 and an extra $600 to an off-road recovery kit.

The company stated that it hopes to manufacture approximately 1,200 R1Ts, 25 R1Ss, and deliver roughly 1,000 R1Ts or 15 R1Ss by 2021.

The R1T will compete with Ford’s F-150 Lightning electric pickup, which goes on sale next year. While the Lightning starts at $40,000 in price, customers can add many more options to make it a much better buy. General Motors announced plans to produce an electric Silverado pickup.

“Although the R1T’s advantage is that it’s first to market and it will likely appeal to a Tesla-type shopper, the long-term volume expectations for a $70,000+ midsize truck aren’t very high,” said Jessica Caldwell of the automotive website Edmunds in an email.

LMC Automotive reports that EVs made up 3% and 2% respectively of the U.S. automotive market by 2020 according to the research company. These numbers are expected to rise to 15% and 12% respectively by 2025, according to the group.

Rivian was established in 2009 and reports a loss of $426 million for 2019 and $1Billion last year. The company reported that it lost nearly another $1 billion in six months. Tesla’s first ever annual profit was recorded in 2010 after the company went public.


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