On the back of blue-sky investor sentiment, little-known electric vehicle maker Rivian went public last year as the third most valuable auto company in history – but that didn’t last.
Long hailed as a future powerhouse in electric vehicle production, Rivian has struggled to gain momentum since a high-profile IPO in November 2021 – resulting in the removal of $132.78 billion from its valuation.
Shares have since fallen to $22.78 and the company is now worth $20.52 billion, representing a collapse of around 85%, including a 17% decline in the past week alone.
So where did it all go wrong, what caused the catastrophic crisis, and can the company still transform to become the You’re here rival whose supporters have long claimed was inevitable?
Rivian was founded as an electric vehicle specialist 13 years ago in California by engineer Robert Scaringe, and is now backed by renowned investors including FordAmazon, George Soros, D1 Capital Partners and the Vanguard Group.
These were supported by a shared skateboard deck available with dual or quad motors; offering impressive performance, a maximum range of 643 km, smart packaging and original features, including an integrated kitchen (shown below).
However, once the hype subsided, the transition from a small private start-up to a multibillion-dollar public producer was fraught with pitfalls.
According to industry experts and international media, three main factors are responsible for the slowdown: production challenges, unfavorable economic conditions and the upcoming expiration of an initial public offering (IPO) freeze.
After multiple delays and false starts, Rivian claimed it had the capacity to build 50,000 vehicles in 2022, but now claims that manufacturing difficulties and industry-wide parts shortages, including semiconductors, will reduce that number to 25,000.
A second $7 billion plant in Georgia was announced to boost supply in December last year, alongside a $1.5 billion state-funded subsidy program, but local discontent has since threatened to derail the project.
Market conditions beyond Rivian’s control have also hampered development, with runaway inflation and rising interest rates hitting high-growth, low-profit businesses particularly hard throughout 2022.
In March this year, the company announced it was raising prices for current and future orders, but later reneged on the bulk of the price increases following a backlash from existing deposit holders.
Additionally, Rivian’s 180-day IPO freeze — a clause preventing company insiders from selling stock immediately after a company’s IPO — is due to expire at the end of this month ( May 2022).
While the company is already struggling to contain the aforementioned challenges, investors fear that major shareholders including Ford or Amazon will sell off, flooding the stock market and further reducing their value.
While Amazon has hinted that it has no plans to immediately end its relationship with Rivian, Ford did not respond to a request for comment from Conduct and several other media outlets when asked about their own strategy.
A spokesperson for Rivian did not respond when approached by Conduct to comment on his current position, however this story will be updated as more information becomes available.
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