Rivian Automotive Inc’s smashing entry into Wall Street, where its value soared higher than that of the traditional Detroit automakers, is confirmation of investors’ voracious appetite for any company making electric vehicles.
The initial public offering (IPO) was the largest in the United States since 2014, and even before its debut, Rivian had raised US$11.9 billion in financing.
In its first day of trading, shares in the company backed by Amazon.com Inc and Ford Motor Co leapt as high as 50 percent, taking Rivian’s market capitalization to more than US$100 billion, if stock options and other convertible shares are taken into account.
Photo: Bloomberg
That was above General Motors Co (GM) and Ford itself, even though those companies produce millions of vehicles each year, whereas Rivian is expected to deliver only 1,000 by the end of this year, and has yet to make a profit.
The promising stock market debut has attracted comparisons between Rivian and Tesla Inc, Elon Musk’s electric vehicle phenomenon that recently passed the symbolic US$1 trillion valuation mark.
Yet the road ahead for Rivian might indeed be bumpy. Fellow electric vehicle start-ups Nikola Corp, Canoo Inc, Lordstown Motors Corp and Fisker Inc all saw their shares peak when they went public this year, before falling back heavily. Lucid Group Inc and China’s Xpeng Inc (小鵬) have seen more stable share prices.
Tesla’s experience might be most instructive. While its shares are valued at about US$1,077 today, they were worth US$6 just 10 years ago.
The rising interest in electric vehicles comes as investors sensitive to environmental or social issues increase demand for green companies.
Adding to the positive sentiment are moves by Washington to increase the availability of electric vehicle charging stations and encourage people to switch from fossil-fuel burning vehicles.
The electric vehicle sector remains tiny, comprising just 3 percent of all sales in the US, yet it has benefited from this attention, which has not escaped the notice of traditional automakers.
“When General Motors says that by 2035 all of its cars will be electric, the hope for a rapid electrification of the sector is enormous,” Meeschaert Financial Services president Gregori Volokhine said.
For GM chief executive Mary Barra, the astronomical valuations of electric vehicle start-ups that have sold little to no vehicles shows that her company, which has planned to invest more than US$35 billion in electric and autonomous vehicles by 2025, is “so undervalued.”
“If anything, it motivates me to work even harder,” she said at a conference on Wednesday.
The Detroit automakers’ transition to electric fleets would take time, while with Rivian, “investors have a pure electric player on hand,” Volokhine said.
Also helping Rivian’s case is that founder Robert Scaringe, a car enthusiast who started the company right out of school, “chose wisely on his executive team,” which is stacked with auto industry connoisseurs, iseecars.com analyst Karl Brauer said.
From their design to their interiors and options, Rivian’s products are convincing, said Brauer, who was able to test the company’s R1T pickup truck himself.
The model’s high price of at least US$67,500 should not prevent it from finding its audience, just as Tesla has been able to target the high-end market, Brauer said.
Perhaps most important for Rivian are its partnerships with Ford and Amazon.
In addition to owning about one-fifth of the company, Amazon has placed an order for 100,000 of the company’s delivery vans by 2030. Ford, meanwhile, owns about 12 percent of Rivian’s stock and has a vested interest in its growth.
With after-sales maintenance usually a weak point of auto start-ups, “Ford could come out with a statement in the next two months to two years saying there are going to have dedicated dealers that will also be fully capable of servicing the Rivians,” Brauer said.
To Jay Ritter, an IPO specialist at the University of Florida, the enthusiasm of investors who have paid so much for a company that has thus far delivered so little is “surprising.”
However, he said that with the money raised, Rivian would be able to hire engineers and increase production, bringing it closer to markets’ lofty expectations.
Nissan Motor Co has agreed to sell its global headquarters in Yokohama for ￥97 billion (US$630 million) to a group sponsored by Taiwanese autoparts maker Minth Group (敏實集團), as the struggling automaker seeks to shore up its financial position. The acquisition is led by a special purchase company managed by KJR Management Ltd, a Japanese real-estate unit of private equity giant KKR & Co, people familiar with the matter said. KJR said it would act as asset manager together with Mizuho Real Estate Management Co. Nissan is undergoing a broad cost-cutting campaign by eliminating jobs and shuttering plants as it grapples
PERSISTENT RUMORS: Nvidia’s CEO said the firm is not in talks to sell AI chips to China, but he would welcome a change in US policy barring the activity Nvidia Corp CEO Jensen Huang (黃仁勳) said his company is not in discussions to sell its Blackwell artificial intelligence (AI) chips to Chinese firms, waving off speculation it is trying to engineer a return to the world’s largest semiconductor market. Huang, who arrived in Taiwan yesterday ahead of meetings with longtime partner Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), took the opportunity to clarify recent comments about the US-China AI race. The Nvidia head caused a stir in an interview this week with the Financial Times, in which he was quoted as saying “China will win” the AI race. Huang yesterday said
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
RSS