Electric vehicle (EV) manufacturer Rivian filed for its initial public offering (IPO) with the Securities and Exchange Commission (SEC). The filing is confidential, prohibiting investors from accessing the details. But various reports have suggested Rivian is seeking an initial valuation of $80 billion.
That’s about 2.4 times the company’s pure-play electric car making predecessor, Lucid Motors (NASDAQ:LCID), whose market capitalization currently hovers around $33 billion.
While the math is different, one thing’s the same. The numbers are shocking. And Rivian, like Lucid before it, has yet to deliver a single vehicle. Yet the company, headed by founder and CEO RJ Scaringe, claims to be first of its class.
Rivian will be one of the first companies to bring an all-electric pickup truck, the R1T, to market when it begins deliveries next month. The company is backed by e-commerce giant Amazon (NASDAQ:AMZN), for whom it is building electric delivery vans. Other key backers include automaker Ford (NYSE:F) and privately-held Cox Automotive.
In Rivian, we have an upcoming EV IPO with a whopping valuation that claims to be the first and best of its kind. Sound familiar?
At a glance, the frenzied anticipation surrounding Rivian’s IPO and the company’s implied valuation tell a story very similar to that of Lucid Motors. Here’s a closer look at the similarities and differences between Rivian’s IPO and its similarly-heralded predecessor.
Rivian Is IPO-ing the Old Fashioned Way
First, there’s an important difference between Rivian and Lucid Motors. Rivian is doing things the old-fashioned way: the company is coming to market via a traditional IPO.
A major advantage of a confidential filing like Rivian’s is that the company can keep sensitive information under wraps for a longer period of time. This also means its competitors will have to wait before getting detailed insights into the company’s operations.
All of those other electric vehicle startups have taken the special purpose acquisition company (SPAC) route to an IPO. In other words, they combined with companies that were already publicly traded and specially created for that purpose.
Rivian’s offering, if successful, would be the first non-SPAC IPO for a pure-play electric vehicle maker in more than a decade. That path was originally paved by Tesla (NASDAQ:TSLA) in 2010. At the time, it had delivered only the Roadster, and the Model S was still in development.
The $226 million raised by Tesla’s IPO was also a fraction of the $465 million in Department of Energy loans received by the company. This occurred despite Tesla CEO Elon Musk’s prognostications of Tesla as a “friggin’ technology velociraptor” making “frickin’ badass” cars.
No Deliveries? No Problem
There’s a second important difference between Rivian and Lucid Motors. EV valuations have come a long way, even in a few short months. Rivian’s implied valuation of $80 billion is considerably higher than that of Lucid, the only real publicly traded carmaker that’s not yet shipping.
However, unlike Lucid, Rivian does have some revenue — although we’ll have to wait for the filing before we know just how much.
Frequent InvestorPlace readers are by now very familiar with my view on Lucid’s valuation. Simply put, it’s a bubble waiting to burst.
Lucid currently trades at more than 2.4 times its 2025 revenue estimate. Let’s set aside my enormous lack of confidence in this revenue projection for a moment. Using this same multiple to calculate Rivian’s 2025 sales, you get a result of $33 billion. For reference, that’s about as much as Tesla’s sales last year ($31.5 billion, to be exact).
The math is theoretically possible – but it’s a stretch. Currently, Rivian’s factory has a capacity of 300,000 vehicles per year and is seeking another location that can build 200,000 more. With vehicle prices that average $75,000, Rivian could generate approximately $37 billion. I did this math some time ago for Lucid Motors with fairly similar results.
Rivian and Lucid, like every carmaker before them, face significant execution risks in achieving this steep of an automotive production ramp.
Putting Rivian’s Valuation in Perspective
Without a doubt, Rivian’s implied valuation sets a higher bar than even Lucid. But if we view it through a wider lens, we can draw some incremental comparisons.
First, the implied valuation is $10 billion more than the $70 billion discussed by the company back in May. It’s also a shocking jump from the company’s $27.6 billion valuation, which originated from a $2.5 billion July fundraising round.
Second, Rivian’s proposed valuation would make it the sixth-most valuable car company in the world, beating General Motors’ (NYSE:GM) market cap of $72 billion. Daimler (OTCMKTS:DMLRY) is in the fifth position at $90 billion.
Third, Rivian’s implied $80 billion valuation is astounding by any measure. For context, Elon Musk’s short-lived privatization attempt in 2018 at $420 per share would have resulted in an implied valuation of $71 billion for Tesla. That’s $9 billion less than Rivian’s estimated target.
By that time, Tesla had already released several vehicles. These included the Model S premium sedan, the Model X sport utility vehicle (SUV) and the Model 3. The company was also already well into operating Gigafactory Nevada, one of the largest battery production facilities in the world.
There are also differences when it comes to cash balances. Since 2019, Rivian has raised $10.5 billion from investors over multiple funding rounds, including a recent one that brought in $2.5 billion. In contrast, Lucid Motors currently has $4.5 billion in cash on its balance sheet following its July IPO.
Lucid clearly raised an impressive amount of cash in its public offering. But Rivian’s numbers demonstrate a substantial difference — particularly in automotive manufacturing, where capital is king. Its most recent funding round also coincided with the announcement that it is seeking a second plant location.
The Bottom Line on Rivian
Like Lucid, Rivian boasts some impressive “industry best” (albeit unverified) features. The R1T truck will have a range of more than 300 miles when it launches. The R1S SUV features a towing capacity of 7,700 pounds.
Both companies face the challenges associated with capturing their share in a highly-competitive consumer market. But Rivian could have an important advantage and an explosive revenue trajectory if its Amazon relationship takes off.
The e-commerce giant has set an aggressive goal to deploy Rivian’s commercial delivery vehicles. Amazon recently expanded testing of these delivery vans from Los Angeles to San Francisco. It expects to have a delivery fleet of 10,000 Rivian vehicles on the road as soon as next year.
On a related note, if you’re interested in what kind of impact Amazon’s fleet electrification will have on EV charging infrastructure, check out my recent Fireside Chat with Neha Palmer, CEO of fleet electrification specialist Terawatt Infrastructure.
Valuations for both Rivian and Lucid leave absolutely no room for the early production challenges that plagued Tesla and Nio (NYSE:NIO). And unlike Tesla’s largely greenfield competitive environment in its early days, there’s a lot more competition today, and even more expected in the next few years.
While a Rivian investor, Ford has also started shipping its F-150 Lightning EV pickup and already has 120,000 reservations. Tesla’s Cybertruck is expected to be ready in 2022. Other companies like Nikola and Lordstown Motors, who have struggled with capital issues, could potentially reboot and bring competitive models to the market.
With all of these factors in play, Rivian’s IPO investors may get to experience combustion firsthand.
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On the date of publication, Joanna Makris did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joanna Makris is a Market Analyst at InvestorPlace.com. A strategic thinker and fundamental public equity investor, Joanna leverages over 20 years of experience on Wall Street covering various segments of the Technology, Media, and Telecom sectors at several global investment banks, including Mizuho Securities and Canaccord Genuity.
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