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2021-10-21
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How Well Can Rivian Compete With Tesla?
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As such, our stance remains neutral on Rivian ahead of its upcoming IPO.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/426afcd9b23aa51eb437f865febe422c\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\"><span>Phillip Faraone/Getty Images Entertainment</span></p>\n<p>Rivian (pre-IPO:RIVN) is one of the most promising EV startups in recent years, backed by high-profile investors including Ford (F) and Amazon (AMZN). With a focus on making lifestyle vehicles suited to bring users closer to nature and enable greater outdoor exploration, Rivian debuted the R1T electric pickup truck and R1S electricSUVfor the consumer segment about three years ago, with plans to begin customer deliveries before the end of this year. In addition to consumer segment vehicles, Rivian is also known for their arrangement with Amazon to deliver 100,000 last-mile delivery electric vans before 2030.</p>\n<p>Having just began commercial productions of the flagship R1T electric pickup truck about a month ago,Rivian is slated for an IPO valued at up to $80 billion sometime around Thanksgiving. While many electric vehicle (“EV”) startups have chosen to go public in recent years through reverse mergers with blank-cheque companies for quick access to funding for their capital-intensive ventures, Rivian will be doing it the traditional way, which is almost unprecedented for a pre-revenue company. The projected $80 billion valuation would also make Rivian’s IPO the highest valued debut on the Nasdaq this year. This puts Rivian’s anticipated valuation at almost 1/10ththe size of industry leader Tesla’s (TSLA) recent market cap of more than $800 billion, double the size of industry peer Lucid’s (LCID) $40 billion market cap, and about 1/3rdmore than Ford’s $60 billion market cap.</p>\n<p>As one of the most vertically integrated EV makers to come after Tesla, with direct participation in vehicle design and battery development to building an exclusive network of charging infrastructure, investors have begun to draw comparisons between the two and ponder on whether Rivian has the potential to grow into something like the EV titan. For years, Tesla has dominated the global EV sector in terms of sales volume and valuation due to its first-mover advantage in pioneering the passenger EV industry, and building everything from its batteries to the Supercharging network from ground-up to support mass market adoption in the last decade. But the rising number of new entrants to the emerging industry in recent years, including Rivian which provides a similar comprehensive ecosystem to support its vehicles, may just be enough to put Tesla on notice.</p>\n<p>Although Rivian has built its consumer and commercial vehicle line-up with a very specific audience in mind, namely outdoor enthusiasts and last-mile delivery operators, it does have the operational capacity and regulatory green light to proceed with sales ahead of the most comparable Tesla Cybertrucks and Semis, which have been delayed to next year. Rivian also has better range capability than some of the other pickups and SUVs, two of the best-selling vehicle segments, slated to rollout starting next year which gives it a head-start in the increasingly competitive landscape.</p>\n<p>Rivian has already gotten its foot down on the most difficult part, which is getting its vehicles to the start of production. And with proven demand as evidenced by the 48,390 reservations recorded to date for the R1T and R1S models and a long-term contract for the last-mile delivery vans with Amazon, it does appear to be among “one of the most promising of a large pool of EV startups” in recent years to compete for market share against Tesla. But with a projected valuation of $80 billion right from the get-go, Rivian is left with very little wiggle room for error in the execution of its vehicles’ upcoming debut on roadways, production ramp, and long-term growth roadmap. On this basis, we are neutral on Rivian’s anticipated valuation ahead of its upcoming IPO.</p>\n<p><b>Rivian Overview</b></p>\n<p>It took almost 12 years for Rivian, founded by RJ Scaringe, to debut its first customer-ready vehicle. Based in Irvine, California, Rivian has its mission to “keep the world adventurous forever” etched deeply into every one of its vehicles. The EV maker currently services both the consumer and commercial sector with a line-up that consists of the R1T pickup truck, R1S SUV, and EDV-series last-mile delivery vans.</p>\n<p><b>The R1-Series</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a9241989beaf7d245c669a7e27d83480\" tg-width=\"640\" tg-height=\"276\" width=\"100%\" height=\"auto\"><span>Source: Rivian.com</span></p>\n<p>The R1T and R1S are built on the R1-platform designed for the consumer segment. The R1 platform combines “performance, utility and efficiency” to enable a streamlined driving and passenger experience for all adventures. In terms of technology, the R1-series vehicles capture a comprehensive in-car infotainment system with built-in connectivity features to support cloud-enabled over-the-air (“OTA”) updates, paired with a proprietary battery pack designed to deliver range capability of up to 400 miles on a single charge. The vehicles also come standard with Driver+, Rivian’s advanced driver-assistance system (“ADAS”), with features including automatic emergency braking, lane-keeping assistance, highway assist and parking assist. So far, the comprehensive suite of in-vehicle technology vies closely to those offered by Tesla, as well as many of the other contenders within the EV sector.</p>\n<p>But what really differentiates Rivian is its commitment to curating an experience-driven lifestyle vehicle that suits the needs of every outdoor enthusiast, while also ensuring compatibility across different use cases and geographies to drive demand. The consumer-centric R1-series are equipped with a complementing suite of value-add accessories and services ranging from camp tents and kitchens to exclusive insurance plans tailored to provide coverage even for extreme adventures like off-roading. While pickup trucks have been historically associated with work rigs, Rivian’s R1T electric pickup proves that it can address the needs of diverse use cases with a battery system and propulsion that can sustain extreme road conditions, while offering ample storage and additional accessories to accommodate extended road-trips.</p>\n<p>The R1-Series vehicles, especially the R1T pickup, has a better mass market appeal than Tesla’s comparable, the Cybertruck, to some extent due to its diversified use case, which underscores a robust sales outlook for Rivian. Tesla’s proposed launch for the Cybertrucks have also again been proven to be overly optimistic given its extremely complex manufacturing process, which gives Rivian a head start in the competition for market share. The quirky steel-bodied electric pickup truck, which was originally slated for start of production and deliveries by 2021 year-end, has been quietly delayed until at least the end of 2022 per a recent update made to the vehicle’s online sales page. Nonetheless, both contenders have some serious competition coming up, including Ford’s F-150 Lightning and GMC’s electric Hummer which start customer deliveries next year. The F-150 Lightning and GMC electric Hummer’s ICE-counterparts have historically been the biggest sellers amongst the pickup truck segment, and both battery-powered pickups seem to be on track towards similar achievements, with Ford having recently doubled its annual production capacity for the F-150 Lightning to 80,000 units to address rising demand.</p>\n<p><b>The EDV-Series</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/01e6b9f7f3154d596eafce2dc1491baa\" tg-width=\"640\" tg-height=\"362\" width=\"100%\" height=\"auto\"><span>Source: Rivian Automotive, Inc. Form S-1</span></p>\n<p>In addition to consumer-oriented EVs, Rivian also services fleet-based mobility with its EDV-series electric last-mile delivery vans. The vans come in three models based on different storage capacities and range capability:</p>\n<ul>\n <li>EDV 500 – Slated for initial deliveries in December, the EDV 500 has range capability of up to 150 miles on a single charge with 500 cubic feet of storage.</li>\n <li>EDV 700 – Slated for initial deliveries in early 2022, the EDV 700 has range capability of up to 150 miles on a single charge with 660 cubic feet of storage.</li>\n <li>EDV 900 – The EDV 900 will launch after deliveries begin for the EDV 500 and EDV 700 vans. As the world’s first long-range electric work van, the EDV 900 boasts 840 cubic feet of storage capacity and is capable of traveling up to 120 miles on a single charge.</li>\n</ul>\n<p>Built on the RCV platform, the EDV-series boasts a range of up to 150 miles on a single charge and are equipped with the same advanced technology as the R1-series, like Driver+. The EDV-series are also exclusively compatible with Rivian’s proprietary fleet management service tool, FleetOS. FleetOS is a cloud-based fleet management tool that offers a wide array of services ranging from fleet distribution and charging management, to fleet insurance and financing. The tool aims to minimize total costs of ownership for fleet operators, while ensuring a recurring revenue stream for Rivian over the course of the vehicles’ lifecycles.</p>\n<p>With accelerated e-commerce adoption during the pandemic and increasingly urgent carbon neutralization mandates, global demand for electric last-mile delivery vehicles is expected to advance at a compounded annual growth rate (“CAGR”) of more than 13% over the next five years, which makes strong tailwinds for Rivian’s commercial business unit in the long-run. Paired with a long-term exclusive contract to provide 100,000 EDV-Series delivery vans to Amazon into 2030, Rivian benefits from higher financial visibility. Amazon currently has exclusive rights to Rivian's EDV-Series vehicles in the first four years following initial productions, and a right of first refusal in the two years thereafter. Amazon and Rivian’s collaboration will also serve as validation for other commercial customers in the long-run, which further bolsters the segment’s sales outlook. And similar to the narrative on Tesla’s Cybertruck, delays on the comparable Semi trucks also put Rivian ahead of the EV titan in penetrating the fast-growing last-mile delivery market.</p>\n<p><b>Direct Go-to-Market Strategy</b></p>\n<p>Similar to Tesla and many of its industry peers, Rivian adopts a direct sales go-to-market strategy that involves showroom-style “experience spaces” supported by an online sales platform. Rivian currently makes most of its sales online, and operates six service centers across California, Illinois, Washington and New York, along with a fleet of 11 on-demand mobile service vehicles and a 24/7 service support center in Michigan. Another 120 service centers and 1,000 mobile service vans are on the way, with planned rollouts through to 2023. Rivian’s vehicles will be displayed through four primary types of experience spaces:</p>\n<ul>\n <li>Hubs: Permanent experience centers situated in high-density city neighborhoods. The first Rivian hub will open in Venice, California on October 17th.</li>\n <li>Seasonal Spaces: Temporary pop-up spaces aimed at introducing the Rivian brand to new communities</li>\n <li>Outposts: Outposts are typically located in adventure destinations, where Rivian vehicles can be rented by users to enable immediate exploration of the outdoors</li>\n <li>Preserves: Protected land that Rivian plans to help conserve and save. Rivian vehicles will be provided for community use in preserves.</li>\n</ul>\n<p>In addition to the experience spaces, test drives can also bearranged online, where an exclusive Field Specialist will be allocated to guide the process.</p>\n<p>Like many recent EV startups, migrating away from traditional dealership sales will allow Rivian to further enhance brand awareness through a refined and relaxed environment. With showrooms located in city neighborhoods and experience-oriented spaces, Rivian hopes to alleviate the pressure to purchase that customers typically experience in sales-centric dealerships and instead provide a refined and information space for them to learn about the brand and engage with the technology that it has to offer. And from a cost perspective, the direct sales strategy through experience spaces combined with a supporting online sales platform will help Rivian reduce inventory financial costs. It will also enable buyers with the option to customize vehicle purchases to their own liking, and provide a completely customer-centric experience as promised. The realized cost efficiencies will also allow greater capital deployment towards other areas of growing the business, such as enhancing customer experience, and ultimately creating incremental value for its shareholders.</p>\n<p>Rivian’s R1-Series vehicles will first be made available in North America, with further expansion to Western Europe starting in 2023. Although Rivian’s foreseeable markets lackluster compared to Tesla’s presence across 40 countries on the map, it has been strategically planned to maximize value and support the company’s long-term growth.</p>\n<p>With the Biden Administration’s recent pledge to reduce greenhouse gas pollution by at least 50% to 52% from 2005 levels by 2030, the U.S. has seen a heightened urgency towards electrifying the transportation sector. Multiple infrastructure bills that are currently under review have been set to include funding for building out the U.S. EV economy. President Biden has also recently made it a national goal to have half of new car sales be emissions-free by 2030. The continued rollout of favorable policy support from the government are expected to stimulate the American EV economy, and propel domestic EV demand growth at a CAGR of 30% through to the end of the decade. This makes strong tailwinds for Rivian, which is expected to have its vehicles become a key part of the estimated 14 million EVs on American roads by 2030.</p>\n<p>Rivian’s further expansion into Western Europe beginning 2023 is also a strategic move that is expected to pay large dividends in the long-run. Europe is currently the world’s second-largest EV market, running closely behind China and accounting for 42% of global EV sales in 2020. The region’s EV adoption rate has continued to soar in the first half of 2021, with almost 20% of new passenger vehicle sales being battery-powered. Much of this progress is by courtesy of Europe’s stringent regulatory landscape over greenhouse gas emissions. The EU has recently tightened its climate change policy by raising its emissions reduction target to at least 55% by 2030 compared to 1990 levels through the “Fit for 55” legislation package. The pact has also committed to having all new vehicle sales be emissions-free by 2035 to encourage greater EV adoption across the broader European markets, including France and Germany, in coming years. With Tesla only accounting for 7% of Europe’s EV market share, and SUVs continuing to dominate the region’s new car sales, Rivian is well-positioned for high-growth opportunities ahead.</p>\n<p><b>A Highly Vertically Integrated Business Model</b></p>\n<p>Rivian is also one of the most vertically integrated EV start-ups in recent years. Not only does it design and manufacture its vehicles and related technology in-house, Rivian also operates an exclusive network of charging infrastructure like Tesla does. The EV maker also provides a wide variety of post-sales turnkey solutions to secure recurring revenues, underpinning sustainable long-term growth.</p>\n<p><b>In-House Production Strategy</b></p>\n<p>Rivian currently performs its own in-house R&D for almost every aspect of its vehicles, including the powertrain, battery technology, in-car infotainment and connectivity system, integrated safety, chassis and Driver+ ADAS system. Productions for the R1-Series and EDV-Series are also currently in process at its Normal, Illinois plant, which was purchased from Mitsubishi in 2017. The Normal plant currently has an annual production capacity of 150,000 units, with further expansion to 200,000 units by 2023 at full production ramp.</p>\n<p>The EV maker has begun its hunt for a second assembly plant in the U.S. since July, with speculations of a finalized investment in a factory located near Fort Worth, Texas. The new facility is expected to have an annual production capacity of 200,000 vehicles. If Rivian confirms its investment in the Texas plant, it is slated to benefit from tax incentives valued at up to $440 million, which offsets some of the significant investment costs. Many California-based companies, including Tesla, have set up offices and manufacturing facilities in Texas in recent years to take advantage of the state’s lower tax rate, as well as affordable costs of living, while pressing forward with expansion plans. The Texas plant would cost Rivian about $5 billion. Much of the capital investment commitment would be deployed towards real property improvements and other construction costs required to bring the plant online by 2024.</p>\n<p>At the same time, Rivian is also looking for a location to house its productions in Europe starting in 2023. While no site has been confirmed yet, the U.K., Germany and Hungary are amongst the key locations being considered. The materialization of Rivian’s production expansion plans across North America and Europe will strengthen its efficiency in scaling productions, while further bolstering its market penetration capabilities against Tesla and other industry peers, as global EV adoption takes off with heightened demand in coming years.</p>\n<p><b>Turnkey Post-Sales Solutions</b></p>\n<p>In addition to the design and development of its vehicles and batteries, Rivian also makes its own exclusive suite of after-sales services. These include FleetOS, Driver+, Rivian Financial Services and Rivian Telematics-Based Insurance, which are all powered by Rivian Cloud:</p>\n<ul>\n <li>Rivian Cloud: Facilitated by AWS, Amazon’s cloud business, Rivian Cloud enables remote diagnostics, remote vehicle controls and OTA software updates. It also stores and analyzes data to enable Rivian’s suite of after-sales services and solutions, including FleetOS, Driver+, Rivian Financial Services, and Rivian Telematics-Based Insurance.</li>\n <li>FleetOS: FleetOS is a fleet management tool that accompanies its commercial segment vehicles, starting with the EDV-Series. Using data collected and analyzed by Rivian Cloud, FleetOS is capable of managing vehicle distributions, telematics, software services and solutions, charging cycles, driver safety and training, vehicle security, remote diagnostics, 360+ collision reports, and other connectivity solutions.</li>\n <li>Driver+: The level 2 ADAS that comes standard in every Rivian vehicle. Driver+ is compatible with in-vehicle connectivity to support OTA deployment of level 3 autonomy in the future when the technology becomes available. Driver+ works with a suite of cameras, ultrasonic sensors, radars and a high-precision GPS antenna to enable ADAS features including automatic emergency braking, lane-keeping assistance, highway assist, and parking assistance. Driver+ for EDV-Series vehicles also includes an overhead clearance warning feature. Meanwhile, Tesla continues to press forward with its Autopilot and Full Self-Driving developments, which will likely be incorporated into level 4/5 fully autonomous robotaxis in the future and plays a critical role in Tesla’s elevated valuation at the moment. This pretty much puts Rivian in the backseat when pitted against Tesla’s valuation prospects.</li>\n <li>Rivian Financial Services: Rivian offers exclusive financing options for its buyers through Rivian Financial Services. The lending program is jointly operated with Chase Bank. Rivian Financial Services enables Rivian to offer its buyers with personalized financing options, while securing recurring revenues from commission fees earned for the conversion of customers on the Rivian Financial Services platform.</li>\n <li>Rivian Telematics-Based Insurance: Rivian’s in-house telematics-based insurance uses user data collected from vehicles to tailor the quality of coverage and lower after-sales costs for buyers. Rivian is not the first to launch this kind of insurance offering. With the advent of cloud-based technology enabling real-time analytics on data collected from in-vehicle sensory infrastructure, others including Tesla,GM and Ford have launched similar telematics-based auto insurance programs. Considering better quality of coverage and cost efficiencies offered by telematics-based insurance from both the underwriters’ and consumers’ point of view, the eventual elimination of traditional auto insurance is imminent. By offering in-house telematics-based insurance coverage, Rivian puts itself in a competitive position against industry peers, while also attracting sales by lowering total costs of ownership. Rivian currently offers telematics-based insurance coverage on its vehicles in 48 states, while Tesla only offers similar in California and Texas.</li>\n</ul>\n<p>Based on an average useful life of 10 years, Rivian expects each consumer and commercial vehicle sold to generate additional lifetime revenues of $67,900 and $64,600, respectively, through the provision of the above after-sales services.</p>\n<p>Based on an average useful life of 10 years, Rivian expects each consumer and commercial vehicle sold to generate additional lifetime revenues of $67,900 and $64,600, respectively, through the provision of the above after-sales services.</p>\n<p><b>Exclusive Charging Network</b></p>\n<p>Tesla was the first EV maker to set up its own exclusive network of charging infrastructure. Although an incredibly expensive endeavor to take on, it was really the EV titan’s only option to encourage mass market adoption of its vehicles during the early stages when public charging was rare. To date, only Chinese EV maker NIO and Rivian have engaged in similar investments, while the majority of EV startups and legacy automakers have instead relied on exclusive partnerships with public charging infrastructure providers to avoid additional capital deployment.</p>\n<p>The main reason for Rivian’s investment into building out its own exclusive network of charging infrastructure is really to close the loop on its comprehensive suite of complementary offerings and set its customers free from range anxiety, even when they are travelling further out in secluded areas. Rivian currently offers the following charging solutions:</p>\n<ul>\n <li>Rivian Adventure Network (“RAN”): RAN will eventually be composed of a network of more than 3,500 Rivian-designed direct current (“DC”) fast chargers located across 600 sites by 2023. The network of fast chargers are designed to charge up to 140 miles within 20 minutes, and will be strategically located in more remote “adventure destinations”, in addition to major highways.</li>\n <li>Rivian Waypoints: Rivian’s proprietary network of level 2 chargers installed at partner destinations, such as hotels, offices, restaurants and parks, across the U.S. and Canada. Rivian Waypoint chargers can charge up to 25 miles per hour.</li>\n <li>Fleet Charging: Commercial customers have the option of installing Rivian’s proprietary charging depot hardware at onsite. Fleet Charging enables commercial customers to manage fleet charging seamlessly and centrally with FleetOS.</li>\n</ul>\n<p><b>Is the $80 Billion Valuation Viable?</b></p>\n<p>While Rivian is amongst one of the most promising EV startups in recent years, a potential $80 billion valuation at its upcoming IPO would put it in the ranks of established legacy automakers like GM, Ford, Stellantis(NYSE:STLA)and Honda(NYSE:HMC)by market cap. It would also make it almost 1/10ththe value in which Tesla is currently being traded at, despite not having generated any meaningful revenues yet.</p>\n<p>Based on Rivian’s latest S-1 filing, the company has not generated any revenues so far. Commercial productions have only started last month, with deliveries to begin any day now. This puts Rivian in a similar position as Lucid, another highly valued pre-revenue EV startup that went public in July. With a start of production and delivery timeline similar to Rivian’s, Lucid currently trades at about 3x its estimated revenues for 2025 with a market cap of $41 billion. Using the metric as a proxy on Rivian’s anticipated $80 billion valuation, the EV maker would need to generate revenues of $27.3 billion by 2025.</p>\n<p>Our preliminary back-of-the-envelope calculation shows that Rivian would have to sell approximately 350,000 vehicles by 2025 to justify an $80 billion valuation based on comparable industry multiples (i.e. $27.3 billion revenue / $78,000 ASP):</p>\n<ul>\n <li>Rivian is estimated to sell its vehicles at an average selling price (“ASP”) of about $78,000.</li>\n</ul>\n<ul>\n <ul>\n <li>The R1T starts at $67,500 with an adventure option priced at $73,000. Pricing on the R1T can go as high as $103,965 with fully loaded options. This generates an estimated ASP of $81,488.</li>\n <li>Meanwhile, the R1S starts at $70,000 with an adventure option priced at $75,500. Pricing on the R1S can go as high as $98,765 with fully loaded options, including the foldable tent and camp kitchen accessories which are currently unavailable for the SUV, but will be eventually. This generates an estimated ASP of $81,422.</li>\n <li>Pricing on the EDV-Series is currently undisclosed, but the industry average is about $50,000 with the most expensive Bollinger Deliver-E expected to be priced at $75,000 and the least expensive Canoo MPDV expected to be priced at $33,000.</li>\n <li>The average of consumer and commercial vehicle lifetime revenues are approximately $66,300 over 10 years. This makes average other revenues of about $6,630 per vehicle per year.</li>\n <li>Taking the three separate vehicle ASPs together, Rivian’s consolidated vehicle ASP is forecasted at about $71,000. Adding average incremental revenues of $6,630 per vehicle on top, Rivian’s ASP is projected at about $78,000.</li>\n </ul>\n <li>In terms of production capacity, Rivian’s Normal plant can currently produce up to 150,000 vehicles per year. By 2023, the plant is expected to reach production capacity of 200,000 vehicles per year. An additional Europe plant is expected to come online by 2023 to support Rivian’s overseas expansion plans, and a second U.S. plant is expected to come online by 2024. Assuming both additional plants can produce 150,000 vehicles each on an annual basis, total production capacity would reach 500,000 vehicles by 2025. On this basis, Rivian is expected to have sufficient production capacity to meet the revenue threshold required to support its potential $80 billion valuation.</li>\n <li>In terms of actual demand, global passenger EV sales are expected to exceed 12.2 million units by 2025.28% of related sales are expected to come from Europe,10% from the U.S. and about 15% from Canada. Hence, by geography, Rivian has a total addressable market of about 6.5 million units. With SUVs and pickup trucks accounting for about 70% of annual new car sales, this further narrows Rivian’s total addressable market down to about 4.5 million vehicles by 2025. Selling 350,000 vehicles by 2025 would yield an 8% share of Rivian’s TAM of 4.5 million units. This makes a tough market share figure to compete for against reputable pickup truck and SUV brands like Ford, GM and Toyota(NYSE:TM), which are all undergoing an aggressive transition to electric.</li>\n <li>Rivian_-_Supporting_Calculations.pdf</li>\n</ul>\n<p>While it is not entirely out of the question for Rivian to achieve our projected sales target by 2025, it will be a tough one. The EV maker has almost no room for error in the execution of its long-term growth roadmap in order to justify the $80 billion valuation. With Rivian having recently been a victim of the ongoing chip supply shortages, which had caused delays to the start of production of the R1T and R1S, similar woes are expected to recur as auto chip makers continue to warn of extended lead times that will not be going away anytime soon. Based on these considerations, we are neutral on Rivian’s anticipated valuation ahead of its upcoming IPO.</p>\n<p><b>Conclusion</b></p>\n<p>Despite a highly vertically integrated business model and robust demand from its niche market, Rivian still has much to prove for its potential $80 billion valuation, let alone competing against the valuation prospects of Tesla. On the considerations of our foregoing analysis, our stance remains neutral on Rivian’s $80 billion valuation ahead of its IPO next month.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>How Well Can Rivian Compete With Tesla?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nHow Well Can Rivian Compete With Tesla?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-21 13:38 GMT+8 <a href=https://seekingalpha.com/article/4460856-how-well-can-rivian-compete-with-tesla><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRivian, an EV start-up backed by Amazon and Ford, has been the talk-of-the-town in recent weeks after its announcement of a potential $80-billion IPO next month.\nAfter 12 years of R&D, Rivian...</p>\n\n<a href=\"https://seekingalpha.com/article/4460856-how-well-can-rivian-compete-with-tesla\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉","RIVN":"Rivian Automotive, Inc."},"source_url":"https://seekingalpha.com/article/4460856-how-well-can-rivian-compete-with-tesla","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1161425329","content_text":"Summary\n\nRivian, an EV start-up backed by Amazon and Ford, has been the talk-of-the-town in recent weeks after its announcement of a potential $80-billion IPO next month.\nAfter 12 years of R&D, Rivian's flagship R1T electric pickup truck finally began commercial productions last month, with the first customer deliveries happening any day now.\nRivian is one of the most vertically integrated EV makers in recent years and even has its own exclusive network of charging infrastructure similar to Tesla's Superchargers.\nSimilarities in both EV makers' business models have drawn comparisons between the two, with some even pondering if Rivian has a chance to challenge Tesla's valuation.\nBut with a limited product line made for a market niche, and a limited global footprint, Rivian still has much to prove for its potential $80-bilion valuation, let alone challenging Tesla's elevated valuation prospects. As such, our stance remains neutral on Rivian ahead of its upcoming IPO.\n\nPhillip Faraone/Getty Images Entertainment\nRivian (pre-IPO:RIVN) is one of the most promising EV startups in recent years, backed by high-profile investors including Ford (F) and Amazon (AMZN). With a focus on making lifestyle vehicles suited to bring users closer to nature and enable greater outdoor exploration, Rivian debuted the R1T electric pickup truck and R1S electricSUVfor the consumer segment about three years ago, with plans to begin customer deliveries before the end of this year. In addition to consumer segment vehicles, Rivian is also known for their arrangement with Amazon to deliver 100,000 last-mile delivery electric vans before 2030.\nHaving just began commercial productions of the flagship R1T electric pickup truck about a month ago,Rivian is slated for an IPO valued at up to $80 billion sometime around Thanksgiving. While many electric vehicle (“EV”) startups have chosen to go public in recent years through reverse mergers with blank-cheque companies for quick access to funding for their capital-intensive ventures, Rivian will be doing it the traditional way, which is almost unprecedented for a pre-revenue company. The projected $80 billion valuation would also make Rivian’s IPO the highest valued debut on the Nasdaq this year. This puts Rivian’s anticipated valuation at almost 1/10ththe size of industry leader Tesla’s (TSLA) recent market cap of more than $800 billion, double the size of industry peer Lucid’s (LCID) $40 billion market cap, and about 1/3rdmore than Ford’s $60 billion market cap.\nAs one of the most vertically integrated EV makers to come after Tesla, with direct participation in vehicle design and battery development to building an exclusive network of charging infrastructure, investors have begun to draw comparisons between the two and ponder on whether Rivian has the potential to grow into something like the EV titan. For years, Tesla has dominated the global EV sector in terms of sales volume and valuation due to its first-mover advantage in pioneering the passenger EV industry, and building everything from its batteries to the Supercharging network from ground-up to support mass market adoption in the last decade. But the rising number of new entrants to the emerging industry in recent years, including Rivian which provides a similar comprehensive ecosystem to support its vehicles, may just be enough to put Tesla on notice.\nAlthough Rivian has built its consumer and commercial vehicle line-up with a very specific audience in mind, namely outdoor enthusiasts and last-mile delivery operators, it does have the operational capacity and regulatory green light to proceed with sales ahead of the most comparable Tesla Cybertrucks and Semis, which have been delayed to next year. Rivian also has better range capability than some of the other pickups and SUVs, two of the best-selling vehicle segments, slated to rollout starting next year which gives it a head-start in the increasingly competitive landscape.\nRivian has already gotten its foot down on the most difficult part, which is getting its vehicles to the start of production. And with proven demand as evidenced by the 48,390 reservations recorded to date for the R1T and R1S models and a long-term contract for the last-mile delivery vans with Amazon, it does appear to be among “one of the most promising of a large pool of EV startups” in recent years to compete for market share against Tesla. But with a projected valuation of $80 billion right from the get-go, Rivian is left with very little wiggle room for error in the execution of its vehicles’ upcoming debut on roadways, production ramp, and long-term growth roadmap. On this basis, we are neutral on Rivian’s anticipated valuation ahead of its upcoming IPO.\nRivian Overview\nIt took almost 12 years for Rivian, founded by RJ Scaringe, to debut its first customer-ready vehicle. Based in Irvine, California, Rivian has its mission to “keep the world adventurous forever” etched deeply into every one of its vehicles. The EV maker currently services both the consumer and commercial sector with a line-up that consists of the R1T pickup truck, R1S SUV, and EDV-series last-mile delivery vans.\nThe R1-Series\nSource: Rivian.com\nThe R1T and R1S are built on the R1-platform designed for the consumer segment. The R1 platform combines “performance, utility and efficiency” to enable a streamlined driving and passenger experience for all adventures. In terms of technology, the R1-series vehicles capture a comprehensive in-car infotainment system with built-in connectivity features to support cloud-enabled over-the-air (“OTA”) updates, paired with a proprietary battery pack designed to deliver range capability of up to 400 miles on a single charge. The vehicles also come standard with Driver+, Rivian’s advanced driver-assistance system (“ADAS”), with features including automatic emergency braking, lane-keeping assistance, highway assist and parking assist. So far, the comprehensive suite of in-vehicle technology vies closely to those offered by Tesla, as well as many of the other contenders within the EV sector.\nBut what really differentiates Rivian is its commitment to curating an experience-driven lifestyle vehicle that suits the needs of every outdoor enthusiast, while also ensuring compatibility across different use cases and geographies to drive demand. The consumer-centric R1-series are equipped with a complementing suite of value-add accessories and services ranging from camp tents and kitchens to exclusive insurance plans tailored to provide coverage even for extreme adventures like off-roading. While pickup trucks have been historically associated with work rigs, Rivian’s R1T electric pickup proves that it can address the needs of diverse use cases with a battery system and propulsion that can sustain extreme road conditions, while offering ample storage and additional accessories to accommodate extended road-trips.\nThe R1-Series vehicles, especially the R1T pickup, has a better mass market appeal than Tesla’s comparable, the Cybertruck, to some extent due to its diversified use case, which underscores a robust sales outlook for Rivian. Tesla’s proposed launch for the Cybertrucks have also again been proven to be overly optimistic given its extremely complex manufacturing process, which gives Rivian a head start in the competition for market share. The quirky steel-bodied electric pickup truck, which was originally slated for start of production and deliveries by 2021 year-end, has been quietly delayed until at least the end of 2022 per a recent update made to the vehicle’s online sales page. Nonetheless, both contenders have some serious competition coming up, including Ford’s F-150 Lightning and GMC’s electric Hummer which start customer deliveries next year. The F-150 Lightning and GMC electric Hummer’s ICE-counterparts have historically been the biggest sellers amongst the pickup truck segment, and both battery-powered pickups seem to be on track towards similar achievements, with Ford having recently doubled its annual production capacity for the F-150 Lightning to 80,000 units to address rising demand.\nThe EDV-Series\nSource: Rivian Automotive, Inc. Form S-1\nIn addition to consumer-oriented EVs, Rivian also services fleet-based mobility with its EDV-series electric last-mile delivery vans. The vans come in three models based on different storage capacities and range capability:\n\nEDV 500 – Slated for initial deliveries in December, the EDV 500 has range capability of up to 150 miles on a single charge with 500 cubic feet of storage.\nEDV 700 – Slated for initial deliveries in early 2022, the EDV 700 has range capability of up to 150 miles on a single charge with 660 cubic feet of storage.\nEDV 900 – The EDV 900 will launch after deliveries begin for the EDV 500 and EDV 700 vans. As the world’s first long-range electric work van, the EDV 900 boasts 840 cubic feet of storage capacity and is capable of traveling up to 120 miles on a single charge.\n\nBuilt on the RCV platform, the EDV-series boasts a range of up to 150 miles on a single charge and are equipped with the same advanced technology as the R1-series, like Driver+. The EDV-series are also exclusively compatible with Rivian’s proprietary fleet management service tool, FleetOS. FleetOS is a cloud-based fleet management tool that offers a wide array of services ranging from fleet distribution and charging management, to fleet insurance and financing. The tool aims to minimize total costs of ownership for fleet operators, while ensuring a recurring revenue stream for Rivian over the course of the vehicles’ lifecycles.\nWith accelerated e-commerce adoption during the pandemic and increasingly urgent carbon neutralization mandates, global demand for electric last-mile delivery vehicles is expected to advance at a compounded annual growth rate (“CAGR”) of more than 13% over the next five years, which makes strong tailwinds for Rivian’s commercial business unit in the long-run. Paired with a long-term exclusive contract to provide 100,000 EDV-Series delivery vans to Amazon into 2030, Rivian benefits from higher financial visibility. Amazon currently has exclusive rights to Rivian's EDV-Series vehicles in the first four years following initial productions, and a right of first refusal in the two years thereafter. Amazon and Rivian’s collaboration will also serve as validation for other commercial customers in the long-run, which further bolsters the segment’s sales outlook. And similar to the narrative on Tesla’s Cybertruck, delays on the comparable Semi trucks also put Rivian ahead of the EV titan in penetrating the fast-growing last-mile delivery market.\nDirect Go-to-Market Strategy\nSimilar to Tesla and many of its industry peers, Rivian adopts a direct sales go-to-market strategy that involves showroom-style “experience spaces” supported by an online sales platform. Rivian currently makes most of its sales online, and operates six service centers across California, Illinois, Washington and New York, along with a fleet of 11 on-demand mobile service vehicles and a 24/7 service support center in Michigan. Another 120 service centers and 1,000 mobile service vans are on the way, with planned rollouts through to 2023. Rivian’s vehicles will be displayed through four primary types of experience spaces:\n\nHubs: Permanent experience centers situated in high-density city neighborhoods. The first Rivian hub will open in Venice, California on October 17th.\nSeasonal Spaces: Temporary pop-up spaces aimed at introducing the Rivian brand to new communities\nOutposts: Outposts are typically located in adventure destinations, where Rivian vehicles can be rented by users to enable immediate exploration of the outdoors\nPreserves: Protected land that Rivian plans to help conserve and save. Rivian vehicles will be provided for community use in preserves.\n\nIn addition to the experience spaces, test drives can also bearranged online, where an exclusive Field Specialist will be allocated to guide the process.\nLike many recent EV startups, migrating away from traditional dealership sales will allow Rivian to further enhance brand awareness through a refined and relaxed environment. With showrooms located in city neighborhoods and experience-oriented spaces, Rivian hopes to alleviate the pressure to purchase that customers typically experience in sales-centric dealerships and instead provide a refined and information space for them to learn about the brand and engage with the technology that it has to offer. And from a cost perspective, the direct sales strategy through experience spaces combined with a supporting online sales platform will help Rivian reduce inventory financial costs. It will also enable buyers with the option to customize vehicle purchases to their own liking, and provide a completely customer-centric experience as promised. The realized cost efficiencies will also allow greater capital deployment towards other areas of growing the business, such as enhancing customer experience, and ultimately creating incremental value for its shareholders.\nRivian’s R1-Series vehicles will first be made available in North America, with further expansion to Western Europe starting in 2023. Although Rivian’s foreseeable markets lackluster compared to Tesla’s presence across 40 countries on the map, it has been strategically planned to maximize value and support the company’s long-term growth.\nWith the Biden Administration’s recent pledge to reduce greenhouse gas pollution by at least 50% to 52% from 2005 levels by 2030, the U.S. has seen a heightened urgency towards electrifying the transportation sector. Multiple infrastructure bills that are currently under review have been set to include funding for building out the U.S. EV economy. President Biden has also recently made it a national goal to have half of new car sales be emissions-free by 2030. The continued rollout of favorable policy support from the government are expected to stimulate the American EV economy, and propel domestic EV demand growth at a CAGR of 30% through to the end of the decade. This makes strong tailwinds for Rivian, which is expected to have its vehicles become a key part of the estimated 14 million EVs on American roads by 2030.\nRivian’s further expansion into Western Europe beginning 2023 is also a strategic move that is expected to pay large dividends in the long-run. Europe is currently the world’s second-largest EV market, running closely behind China and accounting for 42% of global EV sales in 2020. The region’s EV adoption rate has continued to soar in the first half of 2021, with almost 20% of new passenger vehicle sales being battery-powered. Much of this progress is by courtesy of Europe’s stringent regulatory landscape over greenhouse gas emissions. The EU has recently tightened its climate change policy by raising its emissions reduction target to at least 55% by 2030 compared to 1990 levels through the “Fit for 55” legislation package. The pact has also committed to having all new vehicle sales be emissions-free by 2035 to encourage greater EV adoption across the broader European markets, including France and Germany, in coming years. With Tesla only accounting for 7% of Europe’s EV market share, and SUVs continuing to dominate the region’s new car sales, Rivian is well-positioned for high-growth opportunities ahead.\nA Highly Vertically Integrated Business Model\nRivian is also one of the most vertically integrated EV start-ups in recent years. Not only does it design and manufacture its vehicles and related technology in-house, Rivian also operates an exclusive network of charging infrastructure like Tesla does. The EV maker also provides a wide variety of post-sales turnkey solutions to secure recurring revenues, underpinning sustainable long-term growth.\nIn-House Production Strategy\nRivian currently performs its own in-house R&D for almost every aspect of its vehicles, including the powertrain, battery technology, in-car infotainment and connectivity system, integrated safety, chassis and Driver+ ADAS system. Productions for the R1-Series and EDV-Series are also currently in process at its Normal, Illinois plant, which was purchased from Mitsubishi in 2017. The Normal plant currently has an annual production capacity of 150,000 units, with further expansion to 200,000 units by 2023 at full production ramp.\nThe EV maker has begun its hunt for a second assembly plant in the U.S. since July, with speculations of a finalized investment in a factory located near Fort Worth, Texas. The new facility is expected to have an annual production capacity of 200,000 vehicles. If Rivian confirms its investment in the Texas plant, it is slated to benefit from tax incentives valued at up to $440 million, which offsets some of the significant investment costs. Many California-based companies, including Tesla, have set up offices and manufacturing facilities in Texas in recent years to take advantage of the state’s lower tax rate, as well as affordable costs of living, while pressing forward with expansion plans. The Texas plant would cost Rivian about $5 billion. Much of the capital investment commitment would be deployed towards real property improvements and other construction costs required to bring the plant online by 2024.\nAt the same time, Rivian is also looking for a location to house its productions in Europe starting in 2023. While no site has been confirmed yet, the U.K., Germany and Hungary are amongst the key locations being considered. The materialization of Rivian’s production expansion plans across North America and Europe will strengthen its efficiency in scaling productions, while further bolstering its market penetration capabilities against Tesla and other industry peers, as global EV adoption takes off with heightened demand in coming years.\nTurnkey Post-Sales Solutions\nIn addition to the design and development of its vehicles and batteries, Rivian also makes its own exclusive suite of after-sales services. These include FleetOS, Driver+, Rivian Financial Services and Rivian Telematics-Based Insurance, which are all powered by Rivian Cloud:\n\nRivian Cloud: Facilitated by AWS, Amazon’s cloud business, Rivian Cloud enables remote diagnostics, remote vehicle controls and OTA software updates. It also stores and analyzes data to enable Rivian’s suite of after-sales services and solutions, including FleetOS, Driver+, Rivian Financial Services, and Rivian Telematics-Based Insurance.\nFleetOS: FleetOS is a fleet management tool that accompanies its commercial segment vehicles, starting with the EDV-Series. Using data collected and analyzed by Rivian Cloud, FleetOS is capable of managing vehicle distributions, telematics, software services and solutions, charging cycles, driver safety and training, vehicle security, remote diagnostics, 360+ collision reports, and other connectivity solutions.\nDriver+: The level 2 ADAS that comes standard in every Rivian vehicle. Driver+ is compatible with in-vehicle connectivity to support OTA deployment of level 3 autonomy in the future when the technology becomes available. Driver+ works with a suite of cameras, ultrasonic sensors, radars and a high-precision GPS antenna to enable ADAS features including automatic emergency braking, lane-keeping assistance, highway assist, and parking assistance. Driver+ for EDV-Series vehicles also includes an overhead clearance warning feature. Meanwhile, Tesla continues to press forward with its Autopilot and Full Self-Driving developments, which will likely be incorporated into level 4/5 fully autonomous robotaxis in the future and plays a critical role in Tesla’s elevated valuation at the moment. This pretty much puts Rivian in the backseat when pitted against Tesla’s valuation prospects.\nRivian Financial Services: Rivian offers exclusive financing options for its buyers through Rivian Financial Services. The lending program is jointly operated with Chase Bank. Rivian Financial Services enables Rivian to offer its buyers with personalized financing options, while securing recurring revenues from commission fees earned for the conversion of customers on the Rivian Financial Services platform.\nRivian Telematics-Based Insurance: Rivian’s in-house telematics-based insurance uses user data collected from vehicles to tailor the quality of coverage and lower after-sales costs for buyers. Rivian is not the first to launch this kind of insurance offering. With the advent of cloud-based technology enabling real-time analytics on data collected from in-vehicle sensory infrastructure, others including Tesla,GM and Ford have launched similar telematics-based auto insurance programs. Considering better quality of coverage and cost efficiencies offered by telematics-based insurance from both the underwriters’ and consumers’ point of view, the eventual elimination of traditional auto insurance is imminent. By offering in-house telematics-based insurance coverage, Rivian puts itself in a competitive position against industry peers, while also attracting sales by lowering total costs of ownership. Rivian currently offers telematics-based insurance coverage on its vehicles in 48 states, while Tesla only offers similar in California and Texas.\n\nBased on an average useful life of 10 years, Rivian expects each consumer and commercial vehicle sold to generate additional lifetime revenues of $67,900 and $64,600, respectively, through the provision of the above after-sales services.\nBased on an average useful life of 10 years, Rivian expects each consumer and commercial vehicle sold to generate additional lifetime revenues of $67,900 and $64,600, respectively, through the provision of the above after-sales services.\nExclusive Charging Network\nTesla was the first EV maker to set up its own exclusive network of charging infrastructure. Although an incredibly expensive endeavor to take on, it was really the EV titan’s only option to encourage mass market adoption of its vehicles during the early stages when public charging was rare. To date, only Chinese EV maker NIO and Rivian have engaged in similar investments, while the majority of EV startups and legacy automakers have instead relied on exclusive partnerships with public charging infrastructure providers to avoid additional capital deployment.\nThe main reason for Rivian’s investment into building out its own exclusive network of charging infrastructure is really to close the loop on its comprehensive suite of complementary offerings and set its customers free from range anxiety, even when they are travelling further out in secluded areas. Rivian currently offers the following charging solutions:\n\nRivian Adventure Network (“RAN”): RAN will eventually be composed of a network of more than 3,500 Rivian-designed direct current (“DC”) fast chargers located across 600 sites by 2023. The network of fast chargers are designed to charge up to 140 miles within 20 minutes, and will be strategically located in more remote “adventure destinations”, in addition to major highways.\nRivian Waypoints: Rivian’s proprietary network of level 2 chargers installed at partner destinations, such as hotels, offices, restaurants and parks, across the U.S. and Canada. Rivian Waypoint chargers can charge up to 25 miles per hour.\nFleet Charging: Commercial customers have the option of installing Rivian’s proprietary charging depot hardware at onsite. Fleet Charging enables commercial customers to manage fleet charging seamlessly and centrally with FleetOS.\n\nIs the $80 Billion Valuation Viable?\nWhile Rivian is amongst one of the most promising EV startups in recent years, a potential $80 billion valuation at its upcoming IPO would put it in the ranks of established legacy automakers like GM, Ford, Stellantis(NYSE:STLA)and Honda(NYSE:HMC)by market cap. It would also make it almost 1/10ththe value in which Tesla is currently being traded at, despite not having generated any meaningful revenues yet.\nBased on Rivian’s latest S-1 filing, the company has not generated any revenues so far. Commercial productions have only started last month, with deliveries to begin any day now. This puts Rivian in a similar position as Lucid, another highly valued pre-revenue EV startup that went public in July. With a start of production and delivery timeline similar to Rivian’s, Lucid currently trades at about 3x its estimated revenues for 2025 with a market cap of $41 billion. Using the metric as a proxy on Rivian’s anticipated $80 billion valuation, the EV maker would need to generate revenues of $27.3 billion by 2025.\nOur preliminary back-of-the-envelope calculation shows that Rivian would have to sell approximately 350,000 vehicles by 2025 to justify an $80 billion valuation based on comparable industry multiples (i.e. $27.3 billion revenue / $78,000 ASP):\n\nRivian is estimated to sell its vehicles at an average selling price (“ASP”) of about $78,000.\n\n\n\nThe R1T starts at $67,500 with an adventure option priced at $73,000. Pricing on the R1T can go as high as $103,965 with fully loaded options. This generates an estimated ASP of $81,488.\nMeanwhile, the R1S starts at $70,000 with an adventure option priced at $75,500. Pricing on the R1S can go as high as $98,765 with fully loaded options, including the foldable tent and camp kitchen accessories which are currently unavailable for the SUV, but will be eventually. This generates an estimated ASP of $81,422.\nPricing on the EDV-Series is currently undisclosed, but the industry average is about $50,000 with the most expensive Bollinger Deliver-E expected to be priced at $75,000 and the least expensive Canoo MPDV expected to be priced at $33,000.\nThe average of consumer and commercial vehicle lifetime revenues are approximately $66,300 over 10 years. This makes average other revenues of about $6,630 per vehicle per year.\nTaking the three separate vehicle ASPs together, Rivian’s consolidated vehicle ASP is forecasted at about $71,000. Adding average incremental revenues of $6,630 per vehicle on top, Rivian’s ASP is projected at about $78,000.\n\nIn terms of production capacity, Rivian’s Normal plant can currently produce up to 150,000 vehicles per year. By 2023, the plant is expected to reach production capacity of 200,000 vehicles per year. An additional Europe plant is expected to come online by 2023 to support Rivian’s overseas expansion plans, and a second U.S. plant is expected to come online by 2024. Assuming both additional plants can produce 150,000 vehicles each on an annual basis, total production capacity would reach 500,000 vehicles by 2025. On this basis, Rivian is expected to have sufficient production capacity to meet the revenue threshold required to support its potential $80 billion valuation.\nIn terms of actual demand, global passenger EV sales are expected to exceed 12.2 million units by 2025.28% of related sales are expected to come from Europe,10% from the U.S. and about 15% from Canada. Hence, by geography, Rivian has a total addressable market of about 6.5 million units. With SUVs and pickup trucks accounting for about 70% of annual new car sales, this further narrows Rivian’s total addressable market down to about 4.5 million vehicles by 2025. Selling 350,000 vehicles by 2025 would yield an 8% share of Rivian’s TAM of 4.5 million units. This makes a tough market share figure to compete for against reputable pickup truck and SUV brands like Ford, GM and Toyota(NYSE:TM), which are all undergoing an aggressive transition to electric.\nRivian_-_Supporting_Calculations.pdf\n\nWhile it is not entirely out of the question for Rivian to achieve our projected sales target by 2025, it will be a tough one. The EV maker has almost no room for error in the execution of its long-term growth roadmap in order to justify the $80 billion valuation. With Rivian having recently been a victim of the ongoing chip supply shortages, which had caused delays to the start of production of the R1T and R1S, similar woes are expected to recur as auto chip makers continue to warn of extended lead times that will not be going away anytime soon. Based on these considerations, we are neutral on Rivian’s anticipated valuation ahead of its upcoming IPO.\nConclusion\nDespite a highly vertically integrated business model and robust demand from its niche market, Rivian still has much to prove for its potential $80 billion valuation, let alone competing against the valuation prospects of Tesla. On the considerations of our foregoing analysis, our stance remains neutral on Rivian’s $80 billion valuation ahead of its IPO next month.","news_type":1},"isVote":1,"tweetType":1,"viewCount":313,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":1,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/853603621"}
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