- Overview of the growing electric vehicle market
- Emergence of Rivian
- Future outlook for Rivian and electric vehicles
The global sales of passenger electric vehicle (EV) including both all-electric (BEV) and plug-in hybrids (PHEV) reached 2.1 million in 2018 and registered 64% higher sales than the previous year. According to the BNEF’s report, the outlook for the EV sales is highly positive, with the passenger EV sales expected to rise from the current 2.1 million worldwide (2018) to 28 million by 2030 and 56 million by 2040. There are several reasons for this growth, but the main catalyst for the EV market’s growth is the monetary and non-monetary subsidies by governments.
In the midst of the growing EV market, Rivian, which is a US-based electric car company has operated in stealth mode since 2009, it stayed out of the spotlight until the end of 2018 when it wowed the world with its fully electric off-road pickup truck and SUV prototype vehicles at the Los Angeles Auto Show in the United States. While, the company stayed out of public eyes for the most part of its existence, the decade-old company already has a sizeable number of employee strength of about 750 people and production plants of its own, which is a former production plant of Mitsubishi that was bought by the company in 2016 in Illinois, the United States. The ‘staying out of limelight’ status changed for Rivian as soon as it announced two concept vehicles, the R1T pickup truck and R1S SUV. The all-electric truck and SUV of Rivian is the new dream truck and SUV for adventurers, and the cost is stated to be between $60,000-$90,000 depending upon the variant and the package.
Moreover, so far the company has raised finances in the range of $1.5 billion to $2 billion from investments, with the latest and the major investment from an Amazon led funding to the tune of $700 million (2019). Additionally, in 2019 Rivian received a $500 million investment round from Ford in a strategic move by Ford Motor Co. to shore up its electrification efforts. Further, with this investment Ford secures another ally as it braces to build and develop a battery EV using Rivian’s technology and to get ahead in the super competitive space of EVs, where it has so far lagged from its competitors. Besides, the company has also received investments from many high-profile investors including the likes of Saudi and UAE based conglomerate Abdul Latif Jameel chain for an undisclosed amount in the earlier stages, which deals all over the automotive supply. Secondly, Sumitomo Corporation of America, an American subsidiary of one of Japan’s biggest goods and services conglomerate for an undisclosed amount in 2017; and a $200 million debt financing from Standard Chartered Bank in 2018. Rivian also had an early investment in the form of state funding for $3.5 million, this included finances from Florida’s aerospace economic development organization, which invested approximately $1.5 million in return for stock warrants. The company has not disclosed its current valuation, but the market experts are currently valuing the company between $5 billion to $7 billion.
Interestingly, Rivian has not shared its preorder figures yet, but the company is expected to deliver around 20,000 units (includes both trucks and SUVs) in 2021 and 40,000 in 2022, which when combined with the sale price will translate to approximately $1.4 billion and $2.8 billion for annual sales, once the deliveries start rolling. A comparison of the delivery units, with that of Tesla on its initial launch of Model S and Model X in the debut year shows that it sold 22,000 units of Model S and around 25,000 units of Model X. Rivian’s production goals as per the reports from multiple sources state that the company will aim to produce roughly 50,000 cars per year, this number is much lesser than Tesla’s Model 3 sedan, which reportedly produced 61,394 units of Model 3 in the Q4 2018. Furthermore, with respect to the performance of the range, Rivian has claimed that its most powerful version of its electric vehicle will be able to cover a distance of more than 400 miles on a single charge (nearly 75 miles more than any other current EV on the road or in the pipeline for the next two years), this in comparison with Tesla, which has advertised that its Model 3 sedan can travel 310 miles on a single charge is way more. Although a direct comparison between the two cars is not feasible and would not be fair, considering the segment of cars both the companies offer is different. In addition, there are still a few years before one can make reliable and realistic comparisons between the two vehicle manufactures when it comes to their performance, functionality and metrics.
During the New York Auto Show in early 2019, Rivian’s founder R.J. Scaringe spoke about the future of the company and stated that by 2025 they will be adding six products (which might not necessarily be an automobile) on its offering and in the present situation sedan is not part of the plan. Scaringe said that Rivian would be focusing on large vehicles since trucks and SUVs burn more fuel than smaller cars. There were doubts from the auto industry experts and officials, who stated that electric pickups will not have a sizeable sales volume unless the battery technology vastly improves in terms of the driving range and cost. This same concern stands true for Rivian trucks (which will be launched before the SUV) in terms of the costs, its trucks will offer a payload of 1,760 lbs and a towing capacity of 11,000 lbs, these attributes are more comparable to the mid-sized trucks, but with costs which are towards the large trucks, it will put Rivian’s trucks in a tough situation. But Rivian’s trucks might not be the largest with the best storage space, the company has been very innovative by adding new additional storage space called a ‘gear tunnel’ for outdoor activity gears. While there are various other promising electric vehicle brands that are present with an array of electric vehicle offerings from small cars to trucks and SUVs, Rivian’s technology seems to be putting its products ahead of its competitors, garnering attention and partnering with industry’s biggest car maker and technology giants.