Rivian plunges below IPO price on mounting EV competition

Friday, 7 January 2022

Rivian Automotive Inc., the electric pickup maker backed by Amazon.com Inc., briefly tumbled below its November IPO price as the industry darling faces growing competition in the EV market.

The move extends a drop from Wednesday after Amazon announced a deal with Stellantis to buy electric delivery vans. While Rivian and Amazon said their partnership is unchanged, the deal follows the startup's own plan to build E-vans for the e-commerce giant and could increase competition for future Amazon orders.

Irvine, California-based Rivian is a leading member in a large pack of EV startups chasing market incumbent Tesla. The company has been closely followed and its products highly anticipated, in part because of the investment and backing from Amazon, which has an order for 100,000 delivery vans due by the end of the decade.

A Rivian R1T electric pickup truck during the company's IPO outside the Nasdaq MarketSite in New York.

Rivian's initial public offering in November was the sixth biggest in U.S. history and the largest of 2021. After a listing price of US$78, the stock climbed as high as US$172.01, giving the company a market value of more than US$100 billion -- making it more valuable than both Ford Motor Co., also an investor, and General Motors Co.

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Rivian's shares fell as much as 17 per cent Thursday to US$75.13 in New York before paring the loss. They were down 6.9 per cent as of 11 a.m.

Under the terms of Amazon's deal with Rivian, the e-commerce giant has exclusive rights to the vans for four years, from the point of delivery of the first unit, according to an Oct. 1 regulatory filing.

Deliveries were due to start in December. Amazon has right of first refusal to any vans built for an additional two years after that.

But Amazon is also free to work with other automakers. The Stellantis deal 'highlights Rivian's vulnerability to rising competition and its reliance in the early days on a nonexclusive contract that is skewed in favour of the online retailer,' Kevin Tynan, an automotive analyst with Bloomberg Intelligence, said in a note.

Since listing in November, Rivian has made limited progress on its debut consumer EV, a battery-electric pickup called the R1T. In December, the company revealed in its first quarterly earnings a slower-than-expected ramp in production which it attributed to supply chain challenges.

Rivian said then that it would fall 'a few hundred vehicles short' of its full-year goal to produce 1,200 EVs in 2021.

However, the company has made progress in other areas. As of Dec. 15, preorders for the company's two consumer models, also including the R1S SUV, had risen to 71,000, from 55,400 at the end of October. Rivian also announced a new US$5 billion plant in Georgia to help support growth and boost its long-term output.