SUV maker Rivian shuts down after hot IPO

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distance Buying shares in Rivian — the electric car maker that promised a much-anticipated Tesla SUV or truck — at $72 a share, San Francisco Technology Program Director Carter Gibson was not happy when the price sank to an all-time low of $19.25. last week.

A darling on Wall Street, backed by Ford and Amazon, the latter of which has placed an order for 100,000 electric delivery trucks, Rivian Automotive Inc. Biggest IPO of 2021. The company has been valued more than General Motors and Ford, with shares offered at $78 before soaring to $179.47 — then back down to earth.

“It doesn’t look great,” Gibson admitted. But as one of the rare owners of the first Rivian, the R1T Launch Edition with a starting price of $79,500, his enthusiasm for the five-seater pickup truck he’s been driving for nearly a month — his first electric car — has tempered his worries about his car. stock portfolio.

“The truck itself is better than it is entitled to. The build quality is higher than similarly priced (or more expensive) electric cars.”

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After the company’s glittering debut, the stock market took a bleak view of Rivian’s prospects — and supply chain turmoil lowered production estimates. In addition, in a letter to the National Highway Traffic Safety Administration, the company said It is recalling 502 of its RT1 trucks, or about 10 percent of its total production to date, due to an airbag defect that could injure a child in a car crash.

But on an earnings call on Wednesday, Rivian CEO RJ Scaringe said the upstart EV truck maker is Confident in her ability to overcome production hurdles and put her worst problems in the rearview mirror. Rivian reported 90,000 pre-orders for its R1-series truck and SUV as of May 9, indicating continued strong demand.

“Let’s call it what it is, Rivian has been a train wreck since its initial public offering and a generally black eye for the electric car industry,” Wedbush analyst Dan Ives wrote in a research note Wednesday night. “The company has the potential to transform electric cars and the auto industry with a lot of noise coming out of the gates, and instead it’s been a huge disappointment.”

Regardless of the frustrations, Ives remains optimistic about the company, citing plenty of interest as expressed in pre-orders.

“This quarter has not been without problems, but it finally looks like Rivian is on the right track,” he wrote.

The Irvine-based startup’s rapid ride culminated in a stunning stock price drop last week after Ford sold about 8 percent of its holdings, or 8 million shares, when its post-IPO closing period ended.

Ford still owns about 94 million shares. Amy Mast, Director of Corporate Communications at Rivian said, “It is not uncommon to see investors seize an opportunity like this after a successful initial public offering. We are grateful to them for supporting our journey to bring the first electric truck to market.”

However, Ford’s divestiture of some of its Rivian stock comes right as the first batch of customers receives its own iteration of the electric pickup truck, the Ford-150 Lightning. Developed in-house, the truck hits the market at about half the price of its entry-level competitor.

On Wednesday, Rivian reported lower-than-expected revenue of $95 million for the first quarter, versus a loss of $1.6 billion.

In March, the company missed massive price increases for its R1T trucks and R1S SUVs — $12,000 and $14,500 respectively — only to reverse course after a backlash from customers who had already placed $1,000 in deposits. Rivian quickly said that he would honor the original price for these clients.

That same month, the company announced that it would produce only half of the 50,000 vehicles it had planned this year due to logistical and supply chain concerns.

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However, even after price hikes and production delays, the company has received more than 10,000 R1T pre-orders in the US and Canada, despite the relatively high average price of more than $93,000, Scaringe said on the earnings call.

“We have done all of this in one of the most challenging operating environments in decades. We have $17 billion in cash and believe we have a clear path to launching R2 in Georgia in 2025 with our current money on hand,”

Scaringi said the company also hopes to increase its natural plant in Illinois to full capacity of 150,000 vehicles a year. From January to March, the company produced 2,553 cars and delivered 1,227 to customers like Gibson.

“We’ve really seen the worst of it, or sort of a valley if you will, from the limitations of the show,” She said.

Like other automakers during the pandemic, Rivian has been hit by massive supply chain problems, increased material costs affecting battery production and logistical hurdles.

But Jessica Caldwell, executive director of insights at Edmunds, noted that shortfalls in semiconductors and microchips over the past year have been particularly modest for upstart automakers.

Although automakers and manufacturers in general have been quick to deal with pandemic disruptions, it has been more difficult for smaller companies like Rivian still trying to ramp up production.

In addition to starting the process from scratch, a startup doesn’t necessarily have the leverage Or relationships with producers or the promise of large numbers of more established players.

“Output in general is being cut down quite a bit — it almost bankrupted Tesla when they started ramping up and trying to go into the mass market,” Caldwell said. She said.

“For someone like Ford or Toyota, it might seem a little easy and straightforward, but only because they’ve been doing it for decades,” she said.

Meanwhile, another flashy electric car maker on the scene, Lucid Group Inc., has struggled. , of similar setbacks lowered production expectations and also had to raise prices for luxury sedans, which were originally on the verge of competing directly with Tesla.

“A lot of start-up companies will realize that it is very cool to create this concept and a very low volume, specialized vehicle that is very expensive,” Caldwell said. “But frankly, in order for the company to survive in the long term, it has to attract the mass market. That means producing thousands and thousands of vehicles.”

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Rivian debuted with strong financial backers such as Ford, Amazon, T. Rowe Price and BlackRock.

Ford initially invested $500 million in Rivian. Amazon owns about 20 percent of the company and has placed an initial order for 100,000 of Rivian’s custom commercial delivery trucks. (Amazon founder Jeff Bezos owns The Washington Post.)

But while start-ups like Rivian and Lucid have been struggling to bring their sleek promises to reality, traditional automakers have developed their own electric trucks and SUVs. These products are now coming to market in larger numbers and often at lower price points, Caldwell said.

“Ford has a lot of riding in the truck market. They’ve been theirs for years. So they don’t want the new and the next and take their crown,” she said.

Its first electric truck, the Ford F-150 Lightning, is on its way to dealerships for about half the price of the Rivian RT1. But this is not the only competition. General Motors is expected to release the Silverado EV in early 2023, the Hummer EV is currently available from GMC, and GM plans to launch the Chevrolet Equinox EV and Blazer EV next year.

“Not many people in the US can afford this $70,000 price point. But a $40,000 Ford 150 Lightning is probably something they can afford.”

Gibson, a senior manager at Google, still works at Rivian. He said he has no regrets about the $85,392.99 he spent (minus his $1,000 deposit and before the $7,500 federal tax credit).

The large size comes in handy while moving into a new home and for storing camping and snowboarding gear, as well as traveling with husband, Great Dane and Weimaraner. He is also the moderator of the Rivian subreddit.

As for the company’s future and his stock holdings, he takes a distant look: “It may be a bumpy ride, but the product itself is amazing.”

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