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IPO Saga in Auto World Continues: Rivian the Latest Aspirant

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Electric vehicle (EV) companies are seen as an attractive investment opportunity with some of the biggest IPOs happening in the United States and China. In fact, there have been a number of IPO instances during 2020 involving Chinese manufacturers.

To name a few, Li Auto Inc (LI - Free Report) raised $1.1 billion after it debuted on NASDAQ on Jul 30, 2020, being the second China-based EV maker to be listed on the U.S. stock market after NIO Inc. (NIO - Free Report) . XPeng Motors (XPEV - Free Report) also raised $1.5 billion after it made a public debut on the NYSE on Aug 27, 2020.

Elsewhere, Geely Automobile Holdings (GELYY - Free Report) -owned Volvo Cars recently announced its plans to raise at least 25 billion kronor ($2.9 billion) in Sweden’s biggest IPO in decades and expects to debut on the Nasdaq Stockholm before the end of this year.

Amid the trending excitement in the market surrounding IPOs, Amazon (AMZN - Free Report) and Ford (F - Free Report) -backed Rivian Automotive Inc. filed for a confidential IPO in August and publicly submitted its paperwork recently with the security regulators. The EV start-up has applied to trade under the ticker symbol RIVN on the NASDAQ.

About Rivian

Headquartered in Irvine, CA, Rivian commenced operations in the year 2009 as Mainstream Motors before switching to the name Rivian two years later. The company makes an upscale pick-up truck and a sport utility vehicle, both designed to be driven off-road. These vehicles are manufactured at its plant in Normal, IL. The plant has a production capacity of 150,000 units annually.

The company had raised $10.5 billion in venture capital funding as of mid-2021, including from Amazon and Ford, each of which have an ownership of more than 5% in the company.

Rivian unveiled prototypes of its all-electric R1T truck and R1S SUV at the LA Auto Show in late 2018. The R1T and R1S are equipped with the Driver+ advanced driver assistance system. The Level 2 system assists drivers in a wide range of driving and parking situations. The company started deliveries of its R1T pick-up truck this September, beating Tesla, General Motors and Ford by being the first to bring an electric pick-up to the market.

Like Tesla, Rivian sells its vehicles directly to consumers, skipping dealership networks, and demands a refundable deposit when people configure their vehicle on its website.

Inside Rivian’s IPO Filing

In its recent S-1 filing with the Securities and Exchange Commission, Rivian revealed mounting losses and an ardent need for cash as it heads into one of the most anticipated IPOs of the year to fulfill its desire of designing, developing, producing and then selling EVs.

The filing states that Rivian currently operates six service centers in California, Illinois, Washington, and New York, and runs 11 mobile service vehicles that can go to a customer’s home and do repairs.

Rivian claims to have incurred a $994-million net loss in the first six months of 2021. In 2020, the company registered a net loss of $1.02 billion, underscoring the costs and risks involved in developing EVs. Further, the company expects to invest roughly $8 billion on infrastructure and equipment through the end of 2023. The company claims to still be in nascent stage of development having not generated any meaningful revenues till date.

Rivian also disclosed it had secured 48,390 pre-orders for its R1T pickup trucks and R1S SUVs in the United States and Canada as of September. The company also announced plans to roll out its seven-passenger R1S SUV this December. Management said in its filing that it also plans to build multiple vehicles within the consumer and commercial sectors.

Per the filing, Amazon, which has a contract to buy 100,000 last mile-delivery vehicles from Rivian, has invested more than $1.8 billion in the company. Amazon and Cox Automotive also have spots on the board of directors for Rivian, with Ford no longer having any representatives, according to the filing.

Rivian also presented its long-term business strategies in the filing. The company anticipates selling its EVs first in the United States and Canada, and then plans to expand to Western Europe, followed by the Asian-Pacific markets. The company also clarified that it does not expect to be profitable for the foreseeable future as it continues to invest in its business, and scale up its capacity and operations.

The company plans to establish its own network of charging stations as well as offer charging spots in hotels and other locations. Its filing states that the company has secured 24 Rivian Adventure Network direct current fast charging sites in seven states and 145 Rivian Waypoints charging sites in 30 states.

Though the filing did not mention how much money Rivian expects to raise in the offering, the initial reports suggest its IPO valuation could hit $80 billion.

What Lies Ahead for Rivian?

By opting for an IPO, Rivian would be able to raise the much-needed money to carve a niche in the growing and increasingly competitive landscape for EVs. With deliveries already underway, Rivian will start generating revenues soon. However, heavy losses are projected to continue for some time as underlined by the company’s flaring up expenses. Thus, investors need to keep a close eye on this intriguing young EV company to decide whether or not it would be worth betting on it.