EV startup Rivian has spent most of its life shrouded in secrecy, but now that it’s going public, that protective veil is lifting. And nothing has been more revealing to date than the regulatory filing made public late Friday night, which provides new information on the startup’s relationships with its major backers, Amazon and Ford, details about how much money it has spent so far (a lot), and projections for how much it expects to spend now that its first EV is in production (a lot).
The filing, known as the Form S-1, serves as a sort of ultra-detailed pitch to the financial markets. It has a letter from Rivian founder and CEO RJ Scaringe. It outlines the company’s recent financial history and details its three launch vehicles: the R1T pickup, R1S SUV, and the Amazon delivery van. It also lays out the startup’s ambitions — both the gauzy ones, like its mission to “Keep The World Adventurous Forever,” and the more concrete, like “sell lots of electric vehicles” (not an actual quote).
Rivian’s S-1 is notable for what’s not in it, too. There are a bunch of key numbers still missing that we won’t get until the startup files subsequent amendments, including exactly how much voting power or ownership any one company or person currently has. Also absent: any unseemly self-dealing like what doomed WeWork IPO, though Scaringe did receive an equity award this year that could one day be worth hundreds of millions of dollars.
Let’s jump in.
Amazon on top
It’s no secret that Amazon is heavily invested in Rivian and has announced plans to buy up to 100,000 custom delivery vans from the startup. Rivian also disclosed in a legal filing earlier this year that Amazon (and Ford) own at least 10 percent of the startup’s shares. But the S-1 and the supporting documents filed with it offer a much greater window into this relationship.
While it’s hard to put an exact number on it until Rivian discloses more information, we now know that Amazon probably owns somewhere between a fifth and a quarter of the EV startup. Amazon purchased some 26 percent of the 576 million shares Rivian offered during its Series A through F funding rounds (which spanned from February 2019 to January 2021). It will net a few million more when Rivian lists on the Nasdaq, too, in exchange for participating in the startup’s most recent rise in July. (Instead of selling shares this time, though, Rivian essentially borrowed a total of $2.5 billion from Amazon, Ford, T. Rowe Price, and Mannheim Investments. Those debts will convert into shares in the IPO.)
Rivian doesn’t detail how many shares existed before its Series A fundraising round or how many Scaringe owns, all of which would affect the final tally. (Scaringe does have voting control, according to a few allusions made in the filing.) But Amazon owns more than any other outside firm. T. Rowe Price is second, with around 22 percent of the shares sold from the Series A round onward, and Ford comes in at about 17 percent. In total, Amazon has committed around $1.83 billion to Rivian to date.
What does all that money buy Amazon? The collaboration on the electric delivery van, for one thing. That partnership will not only help Amazon start to electrify its fleet, but it carries an almost intangible value — because, like rival shipping giants, Amazon had previously wasted a lot of time talking to other EV startups about going electric, only to run into trouble.
All that money also seems to have bought Amazon a little freedom. As part of the agreements with Rivian — redacted versions of which were filed alongside the S-1 — Amazon can develop, or tap other third-party manufacturers to develop, similar electric delivery vehicles.
In fact, until the van is ready for production and has passed all government approvals, Amazon has the right to mix up what it’s ordering from Rivian in a number of ways. It can go ahead and buy the 100,000 electric vans as advertised. Or, Amazon can just purchase Rivian’s electric drivetrains (or “skateboards”) and have another company develop matching cabins, or “top hats.” If it wants to, Amazon has the contractual right to only buy “certain Component Parts of the Skateboard (but not the full Skateboard).” And if Rivian runs into real trouble, Amazon could walk away with the tooling for the top hat it co-developed with Rivian.
Amazon gets to approve certain vendors for things like battery cells and autonomous technologies, too. It’s also possible that it may get a cut of any government incentives or credits that Rivian’s vans are eligible for — though that particular section of the agreement is redacted.
Amazon’s influence over Rivian can be found in the startup’s bottom line, too — Rivian admits in the document that a “significant portion” of the “near-term” revenue it generates will come from the conglomerate. Amazon also has exclusive rights to the vans for four years and the right of first refusal for two years after that.
Rivian’s prototypes were Built Ford Tough
Rivian and Ford were up front about collaborating when the Detroit automaker announced its initial investment in 2019, though one project — an electric Lincoln — has since been abandoned. But Rivian reveals in its S-1 that it has been getting help from Ford, as one of the automaker’s subsidiaries (Troy Design and Manufacturing Co.) developed and built all prototype and pre-production “bodies-in-white” for the R1T pickup, R1S SUV, and even the electric delivery vans for Amazon. (Body-in-white is an industry term that essentially refers to the skeletal frame that sits atop the chassis.)
Rivian paid Ford $74 million for this work through the end of 2020 while it built out its own stamping and assembly lines at its Normal, Illinois factory. The startup says it will stamp and assemble its own bodies-in-white for production vehicles, but it will continue to lean on Ford in other ways. In April of this year, the companies struck a deal where the startup will buy “certain vehicle components” from Ford, “including related engineering work and tooling,” for the entire R1 lineup of vehicles. In total, Ford has committed just shy of $1.24 billion to Rivian to date.
Rivian has raised a lot of money — but will need a lot more
It is not new information that Rivian has raised more than $10 billion to date, but Rivian takes some time in the S-1 to shed light on how it has spent — and how it plans to spend — that money. It also alludes to needing much more.
Some $2 billion has already gone to getting the factory ready in Illinois, while a much smaller sum of around $30 million has been spent on marketing. In all, Rivian says it lost $426 million in 2019, $1 billion across 2020, and $994 million in the first six months of 2021.
It will continue this pace of spending, too, as Rivian is eyeing a spot for a second factory and has other vehicles in the pipeline. The company says in the filing that, to meet those ambitions, it expects to spend $8 billion through the end of 2023. In fact, Rivian says the $3.67 billion it has in cash, the proceeds it raises from the IPO, and $750 million in pre-approved loans backed by its assets is enough to cover “at least the next 12 months” but makes no guarantees beyond that.
What’s the plan, exactly?
Rivian says in the filing that it has logged just over 48,000 preorders for the R1T pickup and R1S SUV. But it’s not as open about how quickly it plans to scale up production for those eager customers. The startup says the current version of the Illinois factory could produce as many as 150,000 vehicles annually and that, by the end of 2023, it plans to increase that to 200,000. It does not, however, provide estimates or targets for how many it actually wants to make.
In fact, this is one of the “risk factors” in the filing:
Our passion and focus on delivering a high-quality and engaging Rivian experience may not maximize short-term financial results, which may yield results that conflict with the market’s expectations and could result in our stock price being negatively affected.
It’s a cautionary approach compared to how some of Rivian’s rivals have behaved, though going through a traditional IPO process (versus a merger with a special purpose acquisition company, or SPAC) means Rivian is more restricted in how optimistic it can be when pitching investors.
Still, Scaringe told Bloomberg last year that he expected it to take two years to get through the order book his company had accumulated at that time. And on Wednesday, Bloomberg reported that the majority of the focus will be on the Amazon vans in the early going. Rivian has already had to delay the launch of the R1T and R1S due to the global chip shortage, meaning customers who placed a refundable $1,000 deposit may think twice as the wait stretches on and more electric trucks and SUVs hit the market.
Perhaps that’s why Rivian is already spending millions of dollars on marketing. Though, it is taking a page from Tesla in eschewing traditional advertising. From the filing (emphasis mine):
We generate awareness without sacrificing authenticity. The Rivian brand keeps an honest, approachable, transparent tone and is designed around adventure. We have built our brand and its expressions in-house, spanning creative, marketing, design, digital development, content production, events planning, and analytics. No agencies of record. No paid media. We rely on both shared and earned media to connect directly with our community through engaging content, rich digital experiences, and immersive events. Building awareness organically creates deeper bonds with our community and draws even more people in.
Immediately after that, Rivian writes:
Every consumer interaction comes directly from Rivian; whether it is attending an event, subscribing to our digital content, or purchasing one of our vehicles. We do not rely on third parties or franchisees to engage with our consumers. This one-to-one connection starts at the earliest stages of our relationship, allowing us to form stronger bonds and more deeply understand our consumer.
Which brings us to the last point...
Rivian plans to make lots of money off its customers
However many Rivian-branded vehicles the startup sells, it’s hoping to harvest thousands of additional dollars beyond what customers plop down at the outset. The startup says it believes the “lifetime revenue” opportunity for each vehicle from software services alone is as much as $15,500 — $10,000 for autonomous driving features (sound familiar?) and the rest for “a monthly subscription plan for infotainment, connectivity, diagnostics, and other services.”
Since Rivian wants to own the insurance and service pieces of the customer experience as well, it believes it can make $8,700 and $3,500, respectively, per vehicle from those offerings. Add in what Rivian will make on trade-ins and resales, and on charging, and it says it expects to be able to make nearly $70,000 per vehicle over its lifetime and a similar amount for its commercial vehicles.
Especially when compared to other EV startups, Rivian played a very slow hand since its founding in 2009 — but it’s one that paid off in billions of dollars of investments from some of the biggest companies and financial institutions in the world. And it’s now one of the very first to follow Tesla into the extremely challenging arena of mass-manufacturing electric vehicles.
Only one other startup has followed a similar trajectory: Lucid Motors, which is also finally going into production at the moment. Some of the beats of Lucid Motors’ story are different — it went the SPAC route instead of an IPO, for instance. But the same core question remains: what sacrifices or tradeoffs were made in order to achieve this goal?
In Lucid Motors’ case, it found salvation and the necessary funding by handing over ownership of the company to Saudi Arabia. Rivian’s S-1 doesn’t reveal the same kind of transfer of power, and common sense provided that Amazon was going to be an important part of its future. The S-1 helps describe Amazon’s gravity in this relationship — an immeasurable force that Amazon founder Jeff Bezos teased at in a rare tweet earlier this week.
“Rivian team is world class, and @RJScaringe is one of the greatest entrepreneurs I’ve ever met,” he wrote. “Now, RJ, where are our vans?!”