Ten highlights from Rivian’s S-1

 

1) Rivian is each in on perpendicular integration: 

 The S-1 highlights that Rivian’s strategy entails high situations of perpendicular integration, only battled by companies like Tesla and Apple. From the development of vehicle technology (e.g., custom battery pack/ module) to manufacturing (e.g., insourced stamping) to operations (e.g., charging structure, insurance), you can find perpendicular integration in nearly every hand of their business. While this strategy carries fresh prosecution threat and capital requirements, Rivian is laying that perpendicular integration will lead to (i) a lower cost structure, (ii) faster pace of invention, (iii) reduced force chain threat, and (iv) exceptional client experience. 

( 2) Rivian is throwing the conventional automotive business model out the window:

 Like Tesla, Rivian is shifting the assiduity down from the model of “# of buses vended per time x average selling price.” Rather, Rivian is using “ Rivian Cloud” and its personal data and analytics platform to offer a host of value- added services including telematics- grounded insurance, data- driven resale, FleetOS for marketable guests, etc. We were interested to learn that> 50 of Rivian’s estimated request is driven by services profit over the continuance of the client. In effect, Rivian has created the foundation for a SaaS-suchlike business model which, if successful, could fully transfigure how investors look at the automotive assiduity. 

( 3) Rivian is concentrated on a largely seductive vehicle member:

 Exchanges and SUVs comprise> 70 of new vehicle deals in theU.S. and represent the most profitable member for peremptory automakers. According to Morgan Stanley Research, the Ford F-150 (America’s best- dealing auto) accounts for the maturity of Ford’s profit. Exchanges and SUVs are also less energy-effective than cruisers, meaning that Rivian stands to have a significant impact on climate change by fastening its electrification sweats on these parts. 

( 4) Marketable agreements give Rivian a running launch: 

 Rivian has contracted an estimated$2.5 B * in earnings across line operation and charging for their vehicle order from Amazon. The scale of this contracted value sluice gives Rivian a leg up in developing a robust charging network over other arising OEMs. The Supercharger network has given Tesla a long- term culvert that's delicate for arising consumer- concentrated OEMs to replicate, and Amazon’s contract across both vehicles and services gives Rivian a truly unique running launch on the structure side. 

( 5) The consumer business still matters — a lot:

 Rivian’s Electric Delivery Van (EDV) order with Amazon gives it line of sight to$ 3 – 5B of marketable profit by 2025. Amazon is mentioned 81 times in the S-1, emphasizing the significance of them as a client (and investor) to Rivian. Still, exclusivity clauses with Amazon help them from working with other marketable guests, and so at this valuation their story is largely rested on them erecting a pious consumer base for their volley and SUV products. 

( 6) Rivian is n’t taking any chances — they ’ve erected a war casket to go the distance:

 Since its commencement, Rivian has raised$11.2 B, and they ’ll likely raise another$ 8B as part of the IPO. After it completes its IPO, Rivian will have raised further capital than the following new EV OEM entrants combined Lucid, Appearance, Lordstown, Nikola, Fisker, Faraday Future, and Canoo. This is n’t just out of an cornucopia of caution Tesla had to spend nearly$ 10B to reach positive free cash inflow (which took 16 times), and Rivian recognizes that it may have to suffer a analogous path. We'd argue that prospects for Rivian are much advanced as compared to Tesla post its 2010 IPO — Rivian is in a position where it needs to transport multiple products contemporaneously whereas Tesla developed products substantially in a serial order, learned, and also raised further capital. 

( 7) Anticipate the gift war to toast up:

 Rivian has come a attraction for gift with an estimated 10 of their hand base coming from Tesla and another 4 from Apple. Rivian’s gift pool extends beyond automotive engineering and includes moxie from data wisdom, semiconductor design, and software engineering fields. It'll be instigative to watch the inflow of gift to and from enterprises like Rivian as the EV wars escalate over the coming 5 – 10 times. In particular, Rivian’s capability to retain and retain top software gift will be critical as they essay a paradigm shift in business model. 

(8) Battery tech is far from becoming a commodity:

 Given range, performance, safety, and price implications, getting the battery system right is of paramount importance to Rivian. As a result, the company has developed a lot of core IP relating to the battery system and has opted to develop in-house capabilities across the entire value chain including battery module and pack, battery management system (BMS), and even cell chemistry and characterization. Unlike traditional internal gas-powered vehicle components (e.g., engines, turbochargers, transmissions, etc.), we think battery technology is far from becoming commoditized and will remain a source of technological differentiation amongst OEMs and suppliers for many years to come.

( 9) Rivian’s commitment to climate runs deep: 

 As part of the forthcoming IPO, Rivian has created a humanitarian association called “ Ever” which will concentrate on high- impact climate enterprise and conservingbio-diverse land. Ever will be funded with shares of Rivian’s Class A common stock equal to 1 of Rivian’s outstanding equity incontinently antedating the completion of this immolation. In substance, the “ natural world” will come a shareholder in Rivian. 

( 10) RJ Scaringe is sermonizing a new outlook for the earth — one of stopgap:

 the charge statement of the company, “ Keep the world audacious ever,” is innately hopeful and auspicious, and a discrepancy to Elon Musk’s messaging of “ transition to EVs — or corrupt.” While Musk’s celebrity has been erected on a point of view that we will need to populate space in order to survive as a species, Scaringe has taken a more earth-centric approach in both the company’s messaging and philanthropy.