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Rivian IPO: 5 things to know about the Amazon-backed electric-vehicle maker

Claudia Assis

Rivian to rival Tesla, others as it explores the 'adventure' niche

Electric-vehicle maker Rivian Automotive Inc. is set to become a public company, hoping to carve a niche for itself offering EVs for the great outdoors.

Rivian filed for a confidential IPO in August and publicly submitted the paperwork with security regulators last week. The company is seeking to sell $100 million worth of shares, although that's often a placeholder used to calculate fees.

Amazon.com Inc. (AMZN) and Ford Motor Co. (F) are among Rivian's backers. The EV maker has raised $10.5 billion since 2019 after several investment rounds, with the latest a $2.5 billion funding round in July, led by Amazon.com's Climate Pledge Fund, Ford, and T. Rowe Price funds, among others.

Besides an electric pickup truck and an electric SUV, Rivian also plans to make electric delivery vans for Amazon and have its own charging network. Its IPO comes after several EV startups have gone public, and as the market is about to welcome several electric pickup trucks and SUVs.

Here are five things to know about Rivian:

Its CEO is 'obsessed' with cars and at first wanted to develop a sports car

Founder and Chief Executive Robert "RJ" Scaringe has been "obsessed with cars" since his younger years growing up in Florida, he said in the IPO prospectus

He decided to found Rivian, however, when he realized that the object of his love was "the source of many of society's biggest environmental challenges," he said.

He started from scratch, with "no money, no team, no technology, no suppliers, no brand, no production infrastructure," Scaringe said. The first thought was to build an "efficient sports car," but that didn't feel right, he said.

See also:Chasing Tesla: Here are the current electric vehicle plans of every major car maker

Tesla Inc. (TSLA) famously started off making an expensive and exclusive electric sports car and used the money (and buzz) to develop cheaper EV sedans and eventually branch out to other auto-body styles and prices.

By 2012, however, Rivian had moved away from the sports-car idea and soon began focusing on electric SUVs and pickup trucks, aiming to "establish Rivian as the brand for active lifestyles," Scaringe said.

Its program with Amazon.com delivery vans "serves as our flagship application for the commercial space and positions us to pursue a range of other sizes, use cases, and markets," he said.

Scaringe has kept a low profile on Twitter, keeping his tweets strictly limited to his EV business.

Like a famous competitor, Rivian also wants to skip dealership sales

Rivian launched its R1T, a two-row, five-seat pickup truck, in September. It plans to launch an SUV, the R1S, in December. Wider sales of the truck and the SUV are expected to begin in December and January.

The company calls the flagship autos "electric adventure vehicles" equally capable of "rock crawling" and of leaving sports cars in the rearview mirror.

Like Tesla, Rivian is selling its vehicles directly to consumers, skipping dealership networks, and asking for a refundable deposit when people configure their vehicle on its website.

Related: How auto makers like Ford and GM are reimagining the future of car buying

The pickup truck starts at $67,500 for a basic trim and can go 314 miles between charges.

Rivian is promising a R1T with a range of more than 400 miles by January. Add-ons for the truck include a camping kitchen that slides out the truck's side and a camping tent.

The SUV starts at $70,000 and Rivian is making five- and a seven-seat models, with a camping tent as one of its add-ons. Rivian said it had 48,390 R1T and R1S preorders in the U.S. and Canada as of September.

Rivian also said it plans to deliver 100,000 electric "last mile" vans to Amazon by 2025.

Losses have mounted as the business grows

Perhaps not surprisingly, Rivian has never made money, and doesn't expect to turn a profit in the "foreseeable future" as it invests in its business.

Rivian lost $426 million, or $4.35 a share, in 2019, and went on to lose $1 billion, or $10.09 a share, last year. For the first six months of this year, Rivian lost $994 million, or $9.84 a share. That compares with a loss of $3.77 a share in the first six months of 2020.

Also not surprisingly, it has been spending most of its money on research and development, with R&D expenses rising to $683 million in the first six months of this year.

Total operating expenses, including R&D as well as general expenses, reached $990 million in that time span, up from $381 million in the year-ago period.

"We believe that we will continue to incur operating and net losses in the future while we grow, including following our initial generation of revenues from the sale of our vehicles," Rivian said in its prospectus.

As of June, Rivian had just $3 million in debt. It issued $2.5 billion in unsecured senior convertible notes in July, expecting those to be converted into stock in connection with the IPO. The company said it had no borrowings under its revolving-credit facility as of September.

Its factory is in Illinois, and used to make vehicles for a Japanese car maker

Rivian makes its vehicles at a factory in Normal, Illinois, which Rivian bought in 2017. The plant was Japanese car maker Mitsubishi's only U.S. factory, and more than 1,000 people were left without jobs when the auto maker decided to close it in 2015. Before that, the plant was a JV between Mitsubishi and Chrysler.

Rivian says the factory can handle the production of about 150,000 vehicles a year. It plans to expand capacity to 200,000 vehicles a year by 2023 "as well as build additional domestic and international factories."

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The Illinois plant is vertically integrated, with the "vast majority" of stamping done in house. Battery packs and drive-unit assembly is also done in house, Rivian said.

The company works with more than 300 suppliers, prioritizing those closer to the plants to cut down on costs, it said.

Elsewhere in the prospectus, Rivian says that it relies on third-party chip manufacturers and, like other auto makers, has faced the same shortages that have been plaguing the industry.

Rivian has its headquarters in Irvine, Calif.

Stores? Try 'experience spaces'

If some of its strategies seem similar to Tesla's, Rivian appears to be taking a page from Chinese EV maker Nio Inc. (NIO) when it comes to its stores.

Nio calls its showrooms and the like "Nio Houses," and they are not just places to buy the company's EVs. Instead, Nio says its club-style spaces are meant to bring potential and current customers together to socialize, work, and play. Nio's first House outside of China opened last week in Norway.

Rivian wants to offer four "experience spaces" for its future and current owners.

Its "Hubs" will be permanent stores in big cities "meant to bring an appreciation of the outdoors to urban centers," the company said. "Seasonal Spaces" will be temporary stores in "targeted locations."

"Outposts" will be located near tourist spots and aim to offer gear and vehicle rentals as well as a space to showcase the cars, the company said.

"Preserves" will be located farther out "in nature" on land the company plans "to conserve and save, while also providing the Rivian community an opportunity to enjoy them," the company said.

To power those plans, the company plans to establish its own network of charging stations as well as offer charging spots in hotels and other locations. It also plans to offer fleet charging for its commercial customers, which would come with software and other tools for fleet management.

-Claudia Assis

 

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10-13-21 2104ET

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