Rivian prices its listing, and values the electric car manufacturer at almost 70 billion dollars.
Rivian, a manufacturer of electric trucks and vans, goes public at a stock price valued at nearly $ 70 billion, a remarkable figure that highlights Wall Street’s belief that the fast-growing electric vehicle market is still wide open.
In a securities file on Tuesday, Rivian said they sold their shares in the offer for $ 78. That sum will raise nearly $ 12 billion. This fundraiser would surpass Uber, which raised $ 8 billion from the 2019 IPO.
The Rivian stock will start trading on Wednesday on the Nasdaq stock exchange under the ticker RIVN. With nearly $ 70 billion, Rivian̵[ads1]7;s market value will approach that of Ford Motor, which is valued at $ 80 billion and sold more than four million cars worldwide last year.
The market environment for the offer has been shaken this week when the shares in Tesla, the leading electric car manufacturer, plunged after CEO Elon Musk said he could sell some of his shares.
Rivian has a huge appetite for money. Prior to this listing, it raised over $ 10 billion from investors including Amazon and Ford, and expects to consume billions of dollars as it seeks to increase production of its three vehicles: an exclusive pickup for off-road drivers; a sports utility vehicle; and a van developed with Amazon, which has a significant stake in Rivian and has ordered 100,000 of the vans.
Rivian and many other car manufacturers are betting that consumers are prepared to switch quickly to electric vehicles over the next decade. General Motors has said it aims to phase out gasoline-powered vehicles by 2035. Tesla, which is set to sell nearly one million electric vehicles worldwide this year, has a market value of $ 1 trillion, which exceeds total value of GM, Ford, Toyota Motor, Volkswagen, BMW and several other car manufacturers.
Much now depends on whether Rivian can scale up production to meet customers’ orders. Tesla went through many rocky months when it struggled to produce its sedan in large numbers.
By the end of last month, Rivian had delivered only 156 of its pickups, known as the R1T; it plans to start deliveries of the SUV, R1S, next month. It said in a financial archive that it did not expect to fulfill the 55,400 orders for the truck and SUV before the end of 2023, and stressed that it would take time to get production lines to collect a significant number of vehicles.
Like other electric car manufacturers that have gone public this year, Rivian reports large losses. In the first six months of this year, it had a net loss of $ 994 million, almost as much as in the whole of 2020, when it lost $ 1.02 billion. Investors may be willing to tolerate the losses for a while. The van contract with Amazon should in theory ensure a steady revenue stream.
And Rivian can also benefit from the view in the car sector that it is well run. Its CEO, RJ Scaringe, holds a doctorate in mechanical engineering from the Massachusetts Institute of Technology and has so far not proved to be easily distracted or the source of unnecessary controversy, criticism of Mr. Musk of Tesla.
Rivian’s pickup and SUV are focused on affluent buyers who enjoy the outdoors. “Keep the world adventurous forever,” proclaims Rivian’s IPO prospectus.
Nevertheless, Rivian will face frightening competition, including established car manufacturers who have a lot of experience with mass production. Next year, Ford will begin producing an electric version of its F-150 pickup, the best-selling vehicle in the United States. GM is expected to start selling an electric GMC Hummer soon – in both truck and SUV versions – and is working on a Chevrolet Silverado electric pickup.
At the listing price, Rivian will be valued even higher, at around $ 75 billion, if bankers sell extra shares they have on hand to meet strong demand and some shares issued as compensation to employees are included in the calculation.
