Rivian, the electric truck and SUV startup with substantial investors such as Ford and Amazon, is gaining the attention of Wall Street even though it is a private company.
Analysts at Morgan Stanley Research and corporate credit-rating company Fitch Group both are talking about Rivian in reports to investors and clients.
Rivian is an electric vehicle startup based in Plymouth, Mich., that is developing a line of electric pickup trucks and SUVs. One key strategy play is designing a “skateboard” platform that can be used as the underpinning for a variety of light and commercial electric vehicles that vary by body format.
The automaker will build the vehicles at a 2.6 million-square-foot former Mitsubishi assembly plant in Normal., Ill. It acquired the factory in a 2017 liquidation sale for $16 million.
The company was valued at about $3.5 billion before Amazon announced earlier this month that it plans to purchase 100,000 Rivian electric delivery vans, according to the Wall Street Journal. Rivian has declined to comment on its valuation.
The Amazon order will have significant repercussions throughout the shipping industry, Ravi Shanker, a Morgan Stanley analyst, wrote in a recent report to investors.
Amazon will take delivery of the first Rivian vans next year. It plans to have 10,000 of the trucks on the road by 2022. It expects to have all in service by 2023.
“It is a new benchmark for the scale of Amazon’s internal logistics operation,” Shanker wrote.
By comparison, the online retailer already is in the process of taking delivery of about 25,000 Mercedes-Benz Sprinter vans.
“The Rivian order represents a step-function change in Amazon’s last-mile fleet,” Shanker said. “By comparison, UPS has 123,000 ground-delivery vehicles, including package cars, vans, tractors and motorcycles, globally.”
The analyst said it is unclear if the Rivian order is for the U.S. only or global. “But it is possible that Amazon could have a larger last-mile fleet than UPS by 2024,” Shanker wrote.
PRESSURE TO GO GREEN
The purchase also puts pressure on shipping companies such as UPS, DHL and FedEx to become greener. Amazon has pledged to convert all of its delivery fleet to renewable energy by 2030. That will be up from 40 percent today.
“UPS and FDX have made promising initial moves toward electrification, but converting their delivery fleet to renewable energy could be another driver of higher capital expenditure spending at UPS/FDX/DHL in the coming years,” Shanker said.
With blue-chip backers, a refurbished factory and a high-volume order, Rivian also is getting a look from Fitch.
MAJOR LEAGUE INVESTORS
Earlier this year, Amazon led a $700 million Rivian investment round, and Ford put in another $500 million. Amazon founder and CEO Jeff Bezos said Amazon’s investment amounted to $440 million. Earlier this month, Rivian landed a $350 million investment from Cox Automotive, the owner of Autotrader and Kelley Blue Book.
Fitch says the investments in Rivian are strategic.
“We have always held the belief that Amazon’s investment in Rivian, which came after the company initially addressed its carbon-neutral policy, was made with the intention of using the Rivian skateboard platform as a basis for electrifying its light commercial vehicle fleet,” said Joshua Cobb, auto analyst at Fitch Solutions Macro Research.
It’s unlikely Rivian and Ford would merge, Cobb said. But he believes Ford’s drive to electrify its flagship F-150 pickup truck would utilize Rivian’s skateboard platform. It’s flexible enough to fit existing F-150 models with minimal changes, he said.
“Ford’s knowledge and experience with vehicle production will come in very handy when Rivian starts ramping up production,” Cobb said.
The Cox Automotive investment provides insight into how Rivian plans to sell its vehicles.
Cox Automotive’s experience in servicing, logistics and retail technology will allow Rivian to expand internationally relatively quickly. It also will help the startup overcome the growing pains that Tesla faced initially with its after-sale services, Cobb said
“We see Rivian leading the race in the electric light commercial vehicle segment as it already has a large order from Amazon, and we see Ford utilizing its platform in its F-150 range,” Cobb said. “If Rivian manages to get all its investors to play ball, it would have a much smoother mass-market launch when compared to Tesla.”