Shares in Rivian Automotive are 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.
Ahead of the start of trading, Rivian shares priced at $78, which gives the company an estimated market value of $66.5bn. It’s a noteworthy figure, given that Rivian has so far delivered about 150 of its electric pick-up trucks to customers, mostly employees, and lost $1bn in the first six months of this year. The valuation is up there with established automakers such as Honda ($53bn) and Ford ($80bn), which sell millions of cars worldwide each year.
Rivian has some high-profile corporate backers: Ford held a 13 percent stake in Rivian coming into the offering, and Amazon had a 20 percent stake.
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 $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 [initial public offering] marks a point of incremental maturation for the industry and shows that billions in capital is available for credible players.”
Rivian could raise as much as $12bn with the sale of 153 million shares, which would top the $8bn 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.
Rivian has a contract with Amazon to build 100,000 electric delivery vans at its factory, a former Mitsubishi plant in Normal, Illinois in the United States. Ford Motor Co invested a half-billion dollars into Rivian in 2019 and said the companies would work jointly to develop electric vehicles.
As of October 31, Rivian had about 55,400 vehicle preorders in the US and Canada. Those orders are placed with a $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 $67,500, while the SUV base package starts at $75,500 and gets even steeper with all the add-ons.
Options for the vehicles include a $10,000 battery upgrade that will extend the driving range from 505km (314 miles) to more than 643km (400 miles). A three-person roof-mounted tent adds $2,650 to the bill and an off-road recovery kit will cost an additional $600.
The company said it aims to produce about 1,200 R1Ts and 25 R1Ss and deliver around 1,000 R1Ts and 15 R1Ss by the end of 2021.
The R1T will compete with Ford’s F-150 Lightning electric pick-up, which goes on sale next year. The Lightning has a starting price of $40,000, but will sell for thousands of dollars more once customers add options. General Motors has announced plans for an electric version of the Silverado pick-up.
“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.
The research firm LMC Automotive says in 2020, EVs made up a little more than 3 percent of the global auto market and less than 2 percent of the US auto market. The group projects those numbers to shoot up to about 15 percent and 12 percent, respectively, by 2025.
Rivian, which was founded in 2009, says it lost $426m in 2019 and $1bn 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.