Amazon and Ford-backed Rivian battles losses to launch major IPO for EV industry

Updated: October 18, 2021 3:20 PM

Electric vehicle manufacturer, Rivian, has filed for its initial public offering. Backed by the likes of Amazon and Ford, Rivian is yet to make any revenue in 2021 despite $994 million in losses reported in the first half of the year.

The company’s net loss for 2020 in its entirety was $1.02 billion according to the filing. (Image: REUTERS)

By Dmytro Spilka

Electric vehicle manufacturer, Rivian, has filed for its initial public offering. Backed by the likes of Amazon and Ford, Rivian is yet to make any revenue in 2021 despite $994 million in losses reported in the first half of the year. However, the company’s arrival on Wall Street represents a watershed moment for the EV industry. 

Despite it still being early days in the development of Rivian, and in spite of the company’s sprawling debts, the EV manufacturer has achieved unicorn status with recent estimates putting a $27.6 billion price tag on Rivian

For a company that hasn’t actually sold a car yet, Rivian’s price tag makes the manufacturer an extremely curious prospect for investors. With this in mind, let’s take a look at the company’s fundamentals and analyze what its debut may look like: 

Analyzing Rivian’s Cash Flow

According to Rivian’s S-1 filing with the US Securities and Exchange Commission, Rivian reported a net loss of $994 million on revenue of $0 for the first half of 2021. The company’s net loss for 2020 in its entirety was $1.02 billion according to the filing. 

Speaking on the company’s losses, Rivian noted in its filing that “we are a development stage company and have not generated material revenue to date. Vehicle production and deliveries began in September 2021.” 

However, Rivian has confirmed that it’s taken 48,000 pre-orders for its EV models, the R1T and R1S in the US and Canada, with pre-order customers paying fully refundable deposits of $1,000 each in the process. The S-1 highlights that this $48,000 is the company’s only revenue at this stage. 

The startup has raised $10.7 billion across 10 rounds of funding since its 2009 formation. Big investors in Amazon and Ford both own more than a 5% stake in Rivian, while Fidelity and T. Rowe Price are also listed as backers. 

Although the company’s most recent valuation priced the EV manufacturer at $27.6 billion, its valuation during the initial public offering could reach $80 billion. The firm has also announced that it had intended to make $8 billion as a result of the offering. 

Tapping into a Growing EV Industry

It’s also worth noting that Rivian is a company that has its sights set firmly on the future and sustainability, and with the electric vehicle industry growing exponentially, it’s fair to say that the company’s lack of revenue in the short term is unlikely to be a significant hindrance later on. 

As data shows, the US EV market share is set to reach around 50% by the end of the decade, with Chinese markets also accelerating into the 2030s. 

Governmental initiatives to encourage the adoption of electric vehicles around the world has helped more individuals to make the shift to electric faster – potentially paving the way for Rivian to become a leader in the EV market in the coming years and the wider motoring market in the future. 

With this in mind, Rivian is likely to be regarded as a growth stock which investors may prefer to buy as a speculative investment for the company’s future dominance. With the likes of Amazon and Ford positioning themselves as key stakeholders in the company, it’s likely that there will be plenty of interest in Rivian’s vehicles from consumer and industrial markets as the decade takes shape. 

Speaking on whether Rivian can become a threat to Tesla, Maxim Manturov of Freedom Finance Europe notes “Rivian is considered a serious threat to Tesla because it was the first to launch electric pickups. The main difference between Rivian and Tesla is that Rivian’s product line is more similar to traditional American pickups (higher payload, which Tesla has not). Overall, Rivian could pose a threat to Tesla in the US market.”

The Power of Partnering with Amazon

Perhaps most significantly of all, Rivian’s S-1 filing told of the company’s pact with Amazon, and the details of the startup’s ties to the eCommerce giants. Amazon will have exclusive rights to Rivian’s delivery vehicles for four years after receiving its first one and has the power of the first refusal to buy the vans for the two years that follow. 

Significantly, Amazon has ordered 100,000 last-mile trucks to be delivered by 2030 – with the first 10,000 set to begin rolling out this year. Furthermore, “the company now has 48,390 cars on pre-order. In total, the company has raised $10.5bn (Amazon and Ford Motor are among the investors)” adds Maxim Manturov.

Here, it’s important to note that the filing shows Amazon’s logistics unit isn’t exclusively bound to buy any electric delivery vehicles from Rivian, and Amazon is still capable of working with any other potential automotive partners where it sees fit. 

In the filing, Rivian stated that “while the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.” 

Rivian’s upcoming IPO is set to be a curious one for investors. Rarely do companies that post losses just shy of $1 billion in the space of six months alongside zero revenue look so appealing. With strategic relationships with some major companies and the rollout of vehicles due to begin in late 2021, it seems that Rivian is debuting at the beginning of what may be a significant scaling period for the company. Investors may feel inclined to join the manufacturers in riding this wave of growth. 

(Dmytro Spilka is a technology and finance writer based in London. He is the Founder of Solvid and Pridicto. Views expressed are the author’s own.)

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