Rivian Automotive Inc. barely has its first vehicle out the door, but it’s already done plenty to upset the old way of doing things: an equity stake to the environment and stock for early adopters as the automotive company aims to go public in a move that could make it OC’s most valuable company.
The Irvine electric vehicle maker’s plans for an initial public offering on the Nasdaq under the ticker RIVN became public about a week ago, though details on the number of shares to be offered and at what price are still undisclosed.
The Amazon-backed company has already raised $10.5 billion to date and reportedly has a valuation of $80 billion, which would make its 38-year-old founder and CEO RJ Scaringe one of the youngest CEOs presiding over the largest publicly traded company in Orange County.
If the company raises another $8 billion in the IPO, as has been rumored, it would be the fourth-largest public listing of a company in the U.S. over the past decade, and the biggest since Uber raised $8.1 billion two years ago.
The Exec
Laguna Beach resident Scaringe, true to his millennial generation’s M.O., said in the company’s prospectus, “the singular reason I had started the company was to have impact.”
Rivian is now disrupting a more than century-old industry with plans for a digital ecosystem, direct-to-consumer sales, aspirational branding of an adventurous lifestyle, a close eye on the company’s environmental impact and, so far, fairly regular and candid communication from Scaringe in email newsletters and on social media.
The CEO said earlier this month the company is putting 1% of its equity into a new fund called Forever, focused on preservation programs for wildlands, waterways and oceans among other climate-related programs.
The company’s also set aside an undisclosed number of shares in its IPO to R1T and R1S preorder customers as of Sept. 30.
“We wanted to establish our brand by delivering a combination of efficiency, on-road performance, off-road capability, functional utility and product refinement that simply didn’t exist in the market. Our first vehicles would need to establish Rivian as the brand for active lifestyles and ensure the brand could transcend segments, form factors, use cases, culture and geographies,” Scaringe said.
The CEO’s stake in the company post-IPO hasn’t been specified, though regulatory filings indicate that Class B shares held by him, and a handful of existing investors, will continue to give Scaringe voting control over all corporate matters.
The Business
With Rivian’s first consumer vehicle, the R1T truck, starting deliveries in mid-September, it’s generated what the company said was “minimal revenue” to date. The company’s second vehicle, the R1S SUV, is expected to begin deliveries in December.
It’s incurred an accumulated deficit of $2.7 billion since its inception and said it expects losses to continue as it begins generating revenue.
Rivian saw a loss of $426 million in calendar year 2019. Last year saw a $1 billion loss. The first six months of this year has seen a net loss of $994 million.
“Our future success depends on us commencing commercial sales and attracting a large number of customers for our vehicles,” the company said in its SEC filing.
Both the vehicle maker’s consumer vehicles, the R1T and the R1S SUV, were hampered by the industrywide parts shortage and supply chain issues. It’s unclear what other consumer vehicles the company has in the works, but its filing indicated a desire to focus on its initial vehicles first before expansion, which is in line with the company’s early evolution away from the development of a sports car and over to the highly popular SUV segment.
On the commercial side, Rivian’s deal with Amazon subsidiary Amazon Logistics Inc. gives the e-commerce company a level of exclusivity under an agreement struck in 2019 to deliver some 100,000 electric delivery vans by 2025.
“Just as the R1T and R1S were conceived to serve as the flagship for our consumer business, the Amazon program serves as our flagship application for the commercial space and positions us to pursue a range of other sizes, use cases and markets,” Scaringe said in the filing.
Amazon, Ford Motor Co., T. Rowe Price, Manheim Investments, and a unit of Saudi Arabia’s Global Oryx Co. are Rivian’s largest institutional investors.
The Brand
Rivian, like its closest competitor Tesla, the world’s most valuable car company, is taking a direct-to-consumer approach to its business and brand that’s heavily reliant on digital to sell, finance and lease directly to buyers.
“Digital services represent a significant untapped opportunity in the automotive industry due to legacy structural and technological limitations,” the company said in its IPO filing.
Software updates will eventually bring more subscription services and features, such as varying levels of driving autonomy, along with financing and eventually the Rivian resale market. Meantime, the operating system will include assistance with routing, leasing and charging among other features.
The company will operate its own showrooms, called Rivian Experience Centers, that will serve as ways to experience both the brand and vehicles, including one at the historic Laguna Beach South Coast Cinemas, which it bought for $10.7 million in July.
There’s also the Rivian Service Centers that will handle maintenance issues that can’t be done at a customer’s home. Rivian’s first in OC is planned at Briggs Avenue in Costa Mesa, off the Costa Mesa (55) Freeway near Baker Street.
“Our operating model takes roles traditionally fulfilled by dealerships and performs them online; our website and mobile app facilitate brand engagement, product discovery, demo drives, purchase transactions, vehicle deliveries, vehicle service, account management and resale,” the company said.
September was a big month for the company with the long-awaited vehicle delivery start and the launch of its app. It’s still early days, but Rivian estimates its total addressable market in the longer term to be $9 trillion, which would include consumer and commercial vehicles, the resale market, services and other revenue streams.
“For as long as I can remember, I’ve been obsessed with cars. I grew up restoring them in my neighbor’s garage. I had hoods under my bed, windshields in my closet and engine parts on my desk,” Scaringe said in the filing.
“As I got older, I realized that these things which I was deeply in love with were simultaneously the source of many of society’s biggest environmental challenges—from air quality to reduced biodiversity to climate change. As someone who also loves the outdoors, I was conflicted. Ultimately, I decided to focus my life on helping to drive our transportation system toward a future state that was sustainable and carbon neutral.”
