Rivian is another company stepping up in the market as the competitor of Tesla. However, it has recently made waves in the market for its low stock prices and losses. So, is Rivian going out of business? Or is this just a strategy that growing companies often use?
Rivian is an electric vehicle manufacturing company that has delivered products like R1T, and R1S. R1X is backed by a 20% stake in Amazon. But recently, it has faced many ups and downs, but does it mean that it is going to shut down?
Let’s find out by understanding what Rivian is, what does it financial statements have to say about the company, and is it really going out of business.
What Is Rivian?
Rivian is an American electric vehicle manufacturer, automotive technology, and outdoor recreating company which was founded in 2009.
Rivian produces its vehicle on a skateboard platform that can support future vehicles and be adopted by other companies. It is an Irvine, California-based company with a manufacturing unit in Normal, Illinois, and other units in Vancouver, Plymouth, Wittman, Palo Alto Carson, and Woking.
Rivian started delivering its R1T pickup trucks in late 2021 and also has a partnership with Amazon to manufacture an electric delivery van called Rivian EDV.
How Rivian Started?
The company started in 2009 and went through different names, such as Mainstream Motors in 2009 and Avera Automotive, until the founder Robert ‘RJ’ Scaringe, finally settled to Rivian Automotive in 2011.
The company began focusing on autonomous and electric vehicles, and its first car was intended to be a sports car.
2015 marked a significant year for Rivian as it began growing rapidly after it received a huge investment in the year.
It acquired a manufacturing plant in Mitsubishi Motors, Normal, Illinois, and launched its first two products: an electric five-passenger pickup truck and an electric seven-passenger SUV named A1T and A1C, respectively.
On November 10, 2021, Rivian went public through an IPO. It sold 153 million shares at an initial public offering price of $78.00, valuing the company at $66.5 billion.
Fast forward to 2023, Rivian is focused on Tesla’s electric vehicle charging standard, the North American Charging Standard (NACS), into its R1 trucks and R1S SUV in 2025.
What Products Does Rivian Offer?
Rivian Automotive Inc. has launched R1T, R1S, R1X, and EDV, and currently, its set to launch its R2 vehicles.
Here are a few electric vehicles launched by Rivian:
1. R1T Vehicle
R1T features 4 electric motors, two located on each axle. The vehicle is offered in three battery sizes: 105 kWh, 135 kWh, or 180 kWh. Extra batteries can also be mounted in the R1T’s bed for improved range.
In December 2021, R1T was named the Motor Truck of the Year. However, in August 2022, the company announced it would that it would eliminate the base model of R1T called the Explore package.
2. Electric Delivery Van (EDV)
Amazon Logistics Division entered into a collaboration with Rivian to design, produce and purchase 100,000 electric delivery vehicles. In November 2022, the company announced that it had delivered 1,000 vehicles to Amazon to date.
The van is designed to be built in three sizes carrying 14 m3 (500 cu ft), 20 m3 (700 cu ft), or 25 m3 (900 cu ft) of package.
R2 is a new creation of the company that is expected to be a smaller, less expensive SUV on a new platform. It is scheduled to be launched by 2025.
It was reported that the R2 would cost between $40,000 to $60,000 on its launch which is less expensive as compared to the R1 models of the company.
Is Rivian Going Out Of Business?
No, Rivian has faced many setbacks during the past years but is still going strong.
In an interview with Tesal Silicon Valley Owners Club, Tesla’s CEO Elon Musk said, “Unless something changes significantly with Rivian and Lucid, they will both go bankrupt. They are tracking toward bankruptcy.”
He further added- “I hope they can do something, but unless they can cut their cost dramatically, they are in deep trouble and will end up in the car cemetery like every other, with the exception of Tesla and Ford.”
However, Rivian is on the same path as Tesla was once. Tesla was also losing money and relied on raising more capital until it got its cost under control.
The company faced a loss of $1.7 billion from April to June 2022. However, according to the experts, this is expected from a growing car company, and $1.7 billion is not a big deal for Rivian as it still has a lot of money and waiting for orders yet to be fulfilled.
So, overall, it’s common for a growing car company to lose money, but it doesn’t mean that it is going to shut down.
What Is The Financial Position Of Rivian?
One of the most crucial things to check when judging a company if it’s doing well or not is by checking its financial statements. In the case of Rivian Automotive Inc., the company has surely gone through some financial difficulties, but it has also shown that it can successfully raise a lot of money through funding.
And it’s true, for the past many years, Rivian has received huge investments from well-known companies.
The funding opportunity started when it went public, raising $13.5 billion. Then announced in 2019, Rivian raised 2.65 billion through the funding of existing investors like T.Rowe Price, alongside Soros Fund Management, Fidelity Management & Research, Coatue Management, BlackRock-managed Funds Abdul Latif Jameel and Amazon.
Here is a table showing the financial statements of Rivian Automotive Inc.
|Jun 23||Mar 23||Dec 22||Sep 22||Jun 22|
|Total Revenue||$ 1.12B||$661.00M||$663.00M||$536.00M||$364.00M|
|Gross Profit||$-412.00M||$-535.00M||$ -1.00B||$-917.00M||$ -1.69B|
|EBIT||$ -1.14B||$ -1.43B||$ -1.79B||$ -1.70B||$ -1.69B|
|EBITDA||$-918.00M||$ -1.25B||$ -1.59B||$ -1.52B||$ -1.52B|
|Net Income Common Stockholders||$ -2.39B||$ -2.70B||$ -3.45B||$ -1.72B||$ -1.71B|
|Cash, Cash Equivalents and Short-Term Investments||$ 10.20B||$ 11.24B||$ 11.57B||$ 13.27B||$ 14.92B|
|Total Assets||$ 17.23B||$ 18.19B||$ 17.88B||$ 19.02B||$ 20.17B|
|Total Debt||$ 3.02B||$ 3.02B||$ 1.54B||$ 1.76B||$ 1.66B|
|Net Debt||$ -7.18B||$ -8.22B||$ -10.03B||$ -11.51B||$ -13.27B|
|Total Liabilities||$ 5.51B||$ 5.45B||$ 4.08B||$ 3.69B||$ 3.30B|
|Stockholders Equity||$ 11.71B||$ 12.74B||$ 13.80B||$ 15.34B||$ 16.87B|
|Free Cash Flow||$ -1.62B||$ -1.80B||$ -1.74B||$ -1.67B||$ -1.56B|
|Operating Cash Flow||$ -1.36B||$ -1.52B||$ -1.45B||$ -1.37B||$ -1.20B|
|Investing Cash Flow||$ -1.19B||$-283.00M||$-294.00M||$-298.00M||$-359.00M|
|Financing Cash Flow||$ 32.00M||$ 1.49B||$ 37.00M||$ 6.00M||$ 56.00M|
Top Shareholders Of Rivian
|Holder||Shares||Date Reported||% Out||Value|
|Amazon.com, Inc.||158,363,834||Jun 29, 2023||16.70%||3,547,349,821|
|Price (T.Rowe) Associates Inc||73,292,635||Jun 29, 2023||7.73%||1,641,754,996|
|Vanguard Group Inc||63,436,687||Jun 29, 2023||6.69%||1,420,981,764|
|Blackrock Inc.||55,827,991||Jun 29, 2023||5.89%||1,250,546,977|
|FMR, LLC||36,247,012||Jun 29, 2023||3.82%||811,933,054|
|D1 Capital Partners, LP||13,908,880||Jun 29, 2023||1.47%||311,558,906|
|Capital Research Global Investors||13,334,127||Jun 29, 2023||1.41%||298,684,439|
|State Street Corporation||11,704,572||Jun 29, 2023||1.23%||262,182,408|
|Mirae Asset Global Investments Co., Ltd.||8,504,619||Jun 29, 2023||0.90%||190,503,462|
|Morgan Stanley||8,501,926||Jun 29, 2023||0.90%||190,443,139|
Rivian’s Vehicle Sales Over The Years
Rivian faced pretty rough years. Firstly, it had to deal with the supply chain shortage and rising material cost of EVs, which resulted in a slow production process and an increase in operating costs.
In addition, Rivian missed its goal of manufacturing 25,000 vehicles in 2022, coming up short by 663 vehicles.
Here is a table representing the quarterly total sales, cumulative production and total production by the company:
What Is The Probability Of Rivian’s Bankruptcy?
Rivian Automotive Probability of Bankruptcy is used to show the chance of financial distress for the next two years of operations under current economic and market conditions.
All the items used in the estimation of Rivian’s bankruptcy are taken from the Rivian Balance Sheet, cash flow statement, and balance sheet.
|Revenues USD||55 M||1.66 B||1.37 B|
|Revenues||55 M||1.66 B||1.37 B|
Currently, Rivian Automotive’s Probability Of Bankruptcy is less than 26%.
Rivian’s Stock Decline Over Years
When Amazon purchased $200 million in stocks of Rivian in the IPO, it raised its total stake to 22%, but later, in 2021, Amazon stated that it owns a 20% stake in the company.
In November 2021, the stock peaked at a closing price of $146.07. From this point, the stock price of the company fell less or more due to the tech sell-off using 2022. Then at the end of April 2022, the market value declined at a loss of 79%.
This phenomenon continued in May 2022, when the stock price fell further, closing at an all-time low of $22.78.
Is Rivian going out of business?
Well, every company faces ups and downs, but this doesn’t mean that they are closing. Rivian is all set to bounce back into the market as, at some point, the world will need 20 times more rechargeable batteries.
Moreover, these losses are expected from the growing car companies, as they spend a lot of money on hiring employees, buying equipment, building factories, and setting up supply chains.
Is Rivian still loosing money?
Unfortunately Yes, Rivian is still losing money on every vehicle it manufactures, but the losses have narrowed down as the company is set to make a profit by the end of 2024.
Does Rivian has a future?
Rivian might be facing losses currently due to its raised operating cost, but it is set to launch its third R1 vehicle, and in 2026, it intends to roll out its second generation of R2 vehicles. So Rivian definitely has a future as it also has many deliveries to fulfill.
What will Rivian be in 5 years?
These 5 years, 2025-2029, would bring an increase in the stock prices of Rivian, moving it from $61.27 to $101.42, which is 66% up.