Rivian Splashes Into Hypercompetitive Auto Market

The new kid on the block, Rivian, is backed by Amazonand Ford.

There is a new player in the electric car industry, and it has already emerged as one of Tesla’s main competitors. Rivian, a new manufacturer of upscale electric pickup trucks and SUVs, became one of the most valuable carmakers on the planet in a matter of days, after the world’s biggest initial public offering of the year in November.

With its market valuation skyrocketing to over $100 billion on the day of debut, the EV startup trumped in a flash the value of century-old companies like Ford, GM and Volkswagen, and took on Elon Musk’s $1 trillion giant.

As Stefano Aversa, global vice chairman at Alix Partners, noted, “Rivian made a few smart moves: focusing on the SUV and truck market, which represents about 75% of the total car sales in the US, and turning it entirely electric; buying a ready-made plant from Mitsubishi rather than building a new one; and getting several strong partners with very large stakes in the company.”

Rivian is backed by Amazon, its main shareholder with a 20% stake, and Ford, which owns 12%. The neophyte automaker also relies on a mighty group of core investors that include BlackRock, Fidelity, T. Rowe Price and Franklin Templeton.

Competition in the auto industry is fierce, however. GM and Ford are both developing new EV trucks, and so is Tesla. Still, Rivian can already count on orders for 100,000 delivery vans from Amazon and other pre-orders for 50,000 luxury vehicles.

Despite Rivian’s expectations of a billion-dollar loss in the next quarter and a warning of slow delivery due to supply-chain shortages, investors are betting big on a car company with a sustainability edge. Rivian’s flotation came against the backdrop of the COP26 UN Climate Change Conference, where corporations and governments pledged to work toward 100% zero emissions for heavy-duty vehicles by 2040. In addition, the US’ $1 trillion infrastructure bill includes $7.5 billion especially aimed at bolstering the EV market.