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RIVN is going public next week

Goldhedge

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Goldhedge

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Rivian and The EV Revolution​

Updated: Oct 3

Proverbs Chapter 29 verse 25 states, "Fear of man will prove to be a snare, but whoever trusts in the Lord is kept safe."

This is no more true today than it has always been. Although time seems to make moments seem difficult or challenging, there is nothing that has not already been faced before. I find myself relying on this verse when I consider today's climate with respect to political pressures and attacks on freedom. If I am to be bold and stand my ground, I must trust in the Lord.

For investing this is also very true. In order to be a successful investor for the long haul, one needs to stand their ground definitively. This all the while other major players attempt to control narratives, and institute their games through manipulation.

What a way to start the month of October! Rivian Automotive, Inc. (RIVN) just filed its initial S-1 statement so let's get right to it. I'm not going to spend a lot of time here talking about all the risks, issues, opportunities, etc. for Rivian. Instead I'm going to focus on Rivian's quick bits and financial model I've built, and then I'm going to give my perspective on the EV revolution and what it means for companies like Tesla, Inc. (TSLA), Lucid Group (LCID), and Rivian versus SPACs and traditional players like Ford Motor Co. (F) and General Motors (GM). If there is one thing for certain, it is that traditional automotive OEMs are not the clear future winners - the race is on!

Rivian Quick Bits​


I think what is on most people's minds is how can a company like Rivian be valued pre-IPO from $70-80 billion? It's a great question and the answer is not simple. Tesla is currently valued at just below $760 billion, while Lucid is valued at $35 billion, so Rivian will likely find itself somewhere in the middle. The complexity of valuing new EV entrants like Tesla, Lucid and Rivian are twofold - 1) there is the simple fact that a company going from little to no Revenue to $50 billion over a short period of time merits a premium; 2) the robo-taxi/autonomous vehicle technology race is also another area to afford a premium.

Tesla's Model S/X and 3/Y production is nearing one million deliveries in 2021 globally. Lucid is anticipating 20,000 Lucid Airs delivered next year, and including Gravity and other models, growing to 250,000 deliveries by 2026. Rivian doesn't have public growth forecasts for the mid-term, but it does have 150,000 orders for both consumer and commercial deliveries. Looking out to 2023, and Lucid will have two makes in production, while Rivian will have two as well, one on the consumer side with multiple models, the other being commercial and also with multiple models. While I'm not here to determine a perfect valuation for Rivian, somewhere in the middle of Tesla and Lucid makes some good sense as we think about production and deliveries.

For those not aware, Rivian has one consumer make including two models, the R1T (pick-up truck) and the R1S (SUV).

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Additionally, Rivian has an exclusive contract with Amazon, Inc. (AMZN) to develop Amazon's Electric Delivery Van, EDV. The EDV includes three models, the EDV 500, 700, and 900 based on payload capacity.

Additionally, Rivian has an exclusive contract with Amazon, Inc. (AMZN) to develop Amazon's Electric Delivery Van, EDV. The EDV includes three models, the EDV 500, 700, and 900 based on payload capacity.

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Combined, Rivian has a total of five models to be produced, and based on my initial read and projections, I am expecting four of them to be in production next year. This in my mind is the justification for Rivian to be trading at a premium to Lucid.

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Irons

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Company I work at makes parts for Rivian.


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