Does Rivian have what it takes to compete with Tesla?

Nov 23, 2021 Electric

 

On Nov. 11, Rivian, an electric car startup invested by Amazon, officially listed on the Nasdaq, which trades under the symbol "RIVN". The company opened about 37% higher on its first day of IPO, and once expanded to more than 50% during the day, with a market value of more than $90 billion, surpassing General Motors and Ford Motor. By the close of trading, its shares were trading at $100.73, up 29.14%, with a market capitalization of $85.9 billion.

Prior to the IPO, Rivian became the third largest IPO in the U.S. in the past decade, and one of the largest and most anticipated deals in the 2021 IPO firestorm. After the IPO, will Rivian be able to surpass a host of older car companies and become a second Tesla?

 

Electric truck is the biggest attraction

Founded in 2003 as Mainstream Motors, Rivian Automotive's founder is an MIT automotive engineering graduate who once won an innovation award from the Obama administration.

At the 2018 LA Auto Show, Rivian launched the first of the world’s first two Electric Adventure Vehicle — all-electric pickup R1T and R1S - that instantly went viral. As a result, Rivian has closed a huge amount of funding totaling over $10.5 billion since 2018 to date, and more than $5 billion in 2021 alone, with both Amazon and Ford as core investors.

The firm has experienced seven rounds of financing since its inception, with the latest one occurring in January of this year, when it was valued at $27.6 billion, according to Qichacha, a website that compiles corporate registration information.

It is worth mentioning that Ford's current market value is $77.367 billion, and Stellantis (the merger of FCA and PSA Group) currently has a market value of $64.234 billion, so Rivian has now surpassed the market value of the two oldest car companies.

Rivian's main product is the R1T electric pickup truck and the R1S SUV, which currently has more than 3,600 employees. The company has signed a contract with Amazon to produce 100,000 electric trucks for the e-commerce giant. The order is also one of the largest in the nation's electric vehicle market in 2019, according to foreign media.

Although Rivian's electric truck is highly anticipated, how much of an advantage does Rivian have in a market where car companies such as Tesla, Ford and GM have all released electric truck models?

 

Mass production of Rivian R1T may be affected under the chip crisis

Let's take a look at the parameters of the electric trucks released by the three major U.S. car companies.

Tesla first released its cool electric pickup CyberTruck with a range of up to 805 kilometers and a price of $69,900, and according to Musk, its orders have now exceeded one million.

Lightning launched by Ford has entered mass production with a range version between 370km-643km and a starting price of $67,500, with delivery presumably in the spring of next year. GM's new all-electric Hummer SUV, which offers a range of about 563km or more, starts at $112,600 and will be delivered roughly later this year.

In contrast, Rivian's maximum range of up to 643km and starts at $75,000, compared to traditional car companies' electric pickups, is much cheaper. However, Tesla's CyberTruck has a more unique appearance, a maximum range of up to 804km, and a certain price advantage, making it a stronger competitor to the Rivian R1.

But the CyberTruck also has some problems. At the launch of Tesla's electric pickup truck, Musk claimed that the car glass is bulletproof, asking Tesla's chief design officer to demonstrate the strength of the pickup's glass. The latter threw a round metal ball at the driver's side glass, and not surprisingly the glass shattered. The failure of the test reflected Tesla's quality issues.

Also in terms of delivery time, Rivian has set the earliest delivery date, with the latest delivery scheduled for July this year, and if it succeeds in being the first to deliver, its valuation is likely to climb up again.

Unfortunately, this delivery may be impacted. The current global chip shortage is affecting the speed of many car companies to build cars. In 2021, many car giants including Volkswagen, Toyota, Ford, Honda have announced that they meet the reduced production due to the chip supply problem.

Relevant data show that so far this year, Toyota, Suzuki, Honda and other six major Japanese car companies have cut production by more than 1 million units; North America's annual car production may be reduced by about 1.5 million units; in September this year, Volkswagen, Mercedes-Benz, Volvo and other car companies in the United Kingdom, France and other European countries have experienced a significant decline in sales.

The latest forecast released by the global consulting firm AlixPartners said that the continued chip shortage will double the losses caused by the global automotive industry, which is expected to reduce production by 7.7 million vehicles in 2021, and the loss of revenue of the automotive industry will reach $210 billion (about RMB 1.36 trillion).

A report released by consulting firm AlixPartners said the chips crisis will cost the global auto industry $210 billion in revenues this year, which is almost double its estimate in May of $110 billion. And it also predicted that 7.7 million units of production will be lost in 2021, up from 3.9 million in its May forecast.

It is reported that Rivian has already extended the delivery date of the electric pickup truck, and the mass production may renege again under the chip crisis in the car-making industry.

Rivian's development is similar to yesterday's Tesla. Will the much-anticipated Rivian have a chance to become a second Tesla?

 

Into Tesla's biggest competitor, what should Rivian do?

Back then, Tesla developed from a small startup electric car company to the world's first car company by virtue of IT R&D. Like Tesla, Rivian is not a century-old car company, starting from a blank sheet of paper to build electric cars, with a research team from Silicon Valley.

What's different is that Tesla avoided the strengths and weaknesses of other car companies at the beginning of its development and blazed a new trail, positioning itself clearly as a "high-end, stylish electric coupe" and gradually becoming the first brand in this segment to enter the minds of consumers. Such a development strategy made Tesla's stock price rise from just $17 to $625.

Rivian focuses on high-end pure electric vehicles. Last year, the firm launched three models including Explore, Adventure and Launch Edition with a starting price of $70,000. The R1S Launch Edition is scheduled for first delivery in August of this year, with a starting price of $70,000. But the R1S SUV clearly lacks some market buzz compared to the electric pickup.

This is an article from WeChat official accounts MeiGuyanjiushe (ID: meigushe).