November 30, 2022
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The Rivian Story: One of the Major EV Player & Tesla’s Biggest Competitor

The Rivian Story Is This New US-Based EV Company Tesla’s Biggest Threat

The domination of EVs in the automobile industry is one of the most widely discussed topics in recent times, and now it’s on the verge of becoming a reality. The surge of EVs has already begun, which indicates it’s going to take over the industry sooner than we think. Of the total number of cars sold globally, only 5% of them are EVs and it is predicted that the share will increase to 20% by 2020 and leap to 40% by 2030, forming an S-curve on the sales chart. Looking at the huge undertakings of market-leading EV manufacturer- Tesla, the uprising of hundreds of EV startups, and the participation of automobile giants in the EV market, it should come as no surprise that this prediction has been made.

Rivian, a US-based EV company, has recently pushed this further. They have started to deliver their all-electric pickup – the Rivian RT1, and SUV model – Rivan RS1. With that, they have won the race to become the world’s first EV pickup manufacturer, thus beating Tesla to the punch. Being backed by companies like Amazon and Ford, Rivian has already gained immense popularity and trust in the US market. After its market debut, Rivian was valued at $91 billion and had a market cap higher than Ford at the time, which made the investors believe in its potential to challenge Tesla.

So, is Rivian really a threat to Tesla? In this article, we are going to compare both the companies in various aspects and analyze the potential of this EV startup to overthrow Tesla. But before we dive deep, let’s first take a look at the background and the current state of Rivian.

Background and Current State of Rivian

Rivian is an EV startup headquartered in Irvine, California that focuses on autonomous and electric vehicles. The company was founded in 2009 as Mainstream Motors and was renamed Rivian Automotive in 2011. They started working on a broader scale and took over the shuttered Mitsubishi plant in Normal, Illinois, after receiving a large investment in 2015. Later on, in 2017, the company revealed its first two prototypes of EVs, a pickup truck and an SUV. 

In 2019, Rivian got an investment of $700 million from the tech giant Amazon on top of an order of 100,000 specifically developed electric delivery vans. Another huge offer for an investment of $500 million came from the prominent automobile company, Ford, although the contract was later terminated. Rivian’s shares went public on November 10, 2021, in a much-anticipated initial public offering (IPO). At an initial offering price of $78.00, 153 million shares were sold, and Rivian’s market value increased to $127.3 billion only after three days of trading in the share market.

Although the Launch Edition of Rivian the R1T was expected to reach its customers in September 2021, the company could deliver only 2,148 units out of the 90,000 preorders till the first quarter of 2022. According to the company’s statement, it has produced approximately 5,000 vehicles, including its electric truck, SUV, and delivery van for Amazon till May 9th.

Is Rivian the Biggest Threat to Tesla?

Tesla is far ahead of any other competitors in the industry in terms of production facilities, technologies, supply chain, and much more. However, it’s also true that Rivian had a great start with the IPO, investments from prominent brands, and the cool-looking electric vehicles. So, although it won’t be fair to compare these two companies side by side, a comparative discussion can provide some much-needed insight.

Investment and IPO

As mentioned earlier, Rivian received significant investments from the likes of Ford, Amazon, T. Rowe Price, and Cox Automotive which backed the company. Its market value also increased to $127.3 billion within three days of going public. However, if we compare it with Tesla’s market cap, it amounts to just about 16%. As of May 2022, Tesla has a market cap of $759.63 Billion. Moreover, with the news of Ford selling about 8% of its shares in Rivian, its stocks dropped to an all-time low, and the price was down over 78% since the start of the year. So, there is no actual comparison between these two companies, as Rivian has a long way to go to compete with the market-leading EV behemoth.

Production Capacity

Rivian currently manufactures the R1S and R1T models, as well as a delivery van for Amazon, at its only manufacturing plant in Normal, Illinois. The factory can produce around 150,000 vehicles per year from this factory and has plans to grow its yearly capacity to 200,000 vehicles by 2023. Rivian also plans to produce 400,000 automobiles per year and manufacture battery cells at a new site near Atlanta that will open in 2024. So far, the company has been able to manufacture only 2,148 units out of its 90,000 pre-orders, and during this shortage in production capacity, it is facing a huge loss.

As for Tesla, they have some of the biggest car production facilities in the world. Only in the first quarter of 2022 did Tesla deliver over 310,000 electric cars. And they expect to make 1.5 million vehicles by the end of 2022. Considering the production capacity of their current Gigafactories, Tesla’s goal is very realistic. For example, the Tesla Factory in Fremont, California, alone can produce up to 600,000 vehicles per year. They have three more active Gigafactories like this in Nevada, New York, and Shanghai. In addition, they have two other Giga factories in Berlin and Texas that are going to start production soon.

So the numbers say it all. Even if Rivian makes the best EV ever if they cannot scale up their production, they cannot compete with Tesla, and setting up these substantial production facilities overnight is not possible.

Technologies

Tesla is one of the most innovative car manufacturing companies in the world. For example, they are producing the most advanced batteries for their cars, and soon they will introduce the million-mile batteries. Tesla is full of ingenious features including the most advanced Autopilot, charging network- Supercharging, and keycard access to the vehicle. Plus, their cars are equipped with interesting modes like bioweapon defense mode, sentry mode, ludicrous and plaid mode. Moreover, Elon Musk, the CEO of Tesla, is an innovative person and continues to bring something unique that no other brand can offer – a personality.

On the other hand, Rivian being a new brand and releasing the Launch Editions of their first models of cars, they are quite new to the industry. Although Rivian R1T and R1S have some fantastic features, they are not very unique in terms of innovation. They might also introduce new tech in future models; however, it is not promised yet by the brand.

Supply Chain

Rivian was supposed to produce 25,000 EVs by 2022; however, they could manage to make only 1,227 vehicles in the first quarter of this year. According to the company’s CEO, RJ Scaringe, the main reason behind this delay was the supply chain issue. The company sources batteries and chips from external sources as they don’t yet make them in their factory. Due to the global chip shortage and insufficient supply of batteries, they are running low on these essential components. 

On the other hand, Tesla continues to break their production records even during this period of chip shortage as they don’t solely rely on China for their parts. They have their own battery-making facility in their Giga Nevada Factory which was the first major step to securing battery cell supply for uninterrupted growth. Plus, Tesla is now manufacturing their own chips too. They also never source the programs for their chips; they write them on their own. Overall, Tesla has established a strong supply chain that has secured its production for the future. In comparison, Rivian just does not have the capacity or resources to follow suit.

Our Take

So, after completing this analysis, calling Rivian the “biggest threat” to Tesla will undoubtedly be an overstatement or exaggeration. Clearly, they cannot beat Tesla in the market share race as Tesla is growing rapidly and Rivian is still too premature to compete. Therefore, Rivian must focus on overcoming its challenges and achieving sustainability first.

However, as Rivian is being backed by juggernauts like Amazon and Ford, the company has the potential to become another big name in the EV industry. Their successful IPO was a clear indication of that. They have brought some exciting vehicles and managed to gain immense popularity within a very short time. While the future is not certain, Rivian has the potential to challenge some of the prominent EV makers in the market, if not Tesla.

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