EV maker Rivian rides ‘next Tesla’ hype to $100B valuation despite almost no sales

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Rivian Automotive, a company that has given most employees about 150 electric pickup trucks, has overtaken General Motors as the second most valuable American car company.

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The California company’s market valuation exceeded that of Ford’s first day as a public company Wednesday. Its shares rose more than 30 per cent on Thursday to push the company above the US$100 billion valuation. That’s more than GM of Detroit, one of the world’s largest automakers, sold more than 6.8 million vehicles globally last year.

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Rivian aims to produce 1,000 electric vehicles this year. The company launched its first vehicle, the R1T electric truck, in September and is planning to launch its electric SUV, the R1S, next month.

Ford is one of Rivian’s high-profile backers, which invested half a billion dollars in the company in 2019. The second is Amazon, which had a 20 percent stake in Rivian prior to its initial public offering. Amazon is not only a supporter of the company, but it is also poised to become its biggest customer, as the e-commerce giant looks to roll out Rivian vehicles for use in its delivery fleet.

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Instead of focusing on the number of vehicles sold, investors are anticipating huge potential for Rivian with a growing appetite for electric vehicles.

While the $100 billion valuation is no small feat, it still falls short of that of electric vehicle maker Tesla, which is most often compared, which is currently valued at more than $1 trillion. Tesla has sold about 627,300 vehicles so far this year.

Some in the investment community say that like Tesla’s rally to become the most valuable car company on earth, the value of the Rivian is also a sign that valuations have gotten out of hand.

“Despite the popularity of the electric vehicle market and the huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares,” investment research firm New Constructs said of the company ahead of the IPO.

The firm notes that when Tesla went public in 2010, it was valued at US$1.7 billion, and was at least already delivering the vehicle to paying customers, and was on track to sell 1,500 that first year. . That’s more than Rivian says, which it will now do despite being worth about 50 times what Tesla is worth.

“It may take a handful of cars consistently to buy the stock at such a high price before the company shows up,” New Constructs said. “Investors shouldn’t buy a stock just because it’s in a hot zone.”

Tesla has amassed a market value of over $1 trillion. So far this year it has sold around 627,300 vehicles.

Tesla CEO Elon Musk has been in the news this week for selling a large stake in his company based on the results of a Twitter poll, and also because he could face a bigger tax bill next year.

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