Rivian Automotive, Inc.

Last modified by Md. Touhidul Islam on 2023/12/25 03:40

Contents

Summary
Brief Company Overview
Recent Developments
Recent Financing Activities
Financial Performance Highlights
- Q3 2023 Highlights
- Annual Performance Highlights
Business Overview
Company History
References

Summary

Rivian was formed for the purpose of designing, developing, manufacturing, and selling category-defining electric vehicles (“EVs”).
The American electric vehicle manufacturer and automotive technology company was founded in 2009 by R. J. Scaringe.
The Company has determined that it operates in one operating segment and one reportable segment.
In 2022, for the year ended 31 December 2022, Rivian reported an increase in revenue by $1,603 million compared to the previous year. The total revenue for 2022 amounted to $1,658 million, reflecting a 2,915% change from the $55 million reported in 2021.
As of 30 September 2023, the return on equity (ROE) and earnings per share (EPS) of Rivian are -12.95% and $-1.44, respectively. The company does not pay any dividends. The 52-week share price range is between $11.68 to $28.06. The gross margin is -35.68%, the operating margin is -107.70%, and the net margin is -102.24%.

Brief Company Overview

rivian automotive logo Rivian Automotive, Inc. (NASDAQ:RIVN) is an American electric vehicle (EV) manufacturer and automotive technology company specializing in premium EVs for adventure and outdoor enthusiasts. It produces electric vehicles such as the R1T pickup truck, the R1S SUV, and the EDV delivery van. The American electric vehicle manufacturer and automotive technology company was founded in 2009 by R. J. Scaringe. Rivian is headquartered in Irvine, California, and has its manufacturing plant in Normal, Illinois. Rivian operates in the electric vehicle market, which is expected to grow rapidly in the coming years due to environmental concerns, government incentives, and consumer preferences. Rivian’s customers include individual consumers, fleet operators, and corporate partners, such as Amazon, which ordered 100,000 EDVs from Rivian in 2019.¹ The Company’s Chief Executive Officer (“CEO”) reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The Company has determined that it operates in one operating segment and one reportable segment. However, based on the company’s products and customers, the operating segments are the consumer and commercial markets.

Rivian started with a vision to build a hybrid sports car but later pivoted to focus on electric and autonomous vehicles. Rivian has received major investments from companies like Amazon, Ford, and Cox Automotive and has delivered its first vehicles to customers in 2021. Beyond vehicles, Rivian is building a comprehensive ecosystem with the Rivian Adventure Network of fast-charging stations and a network of Rivian Service Centers. Targeting adventure enthusiasts and environmentally conscious consumers, Rivian faces intense competition from other electric vehicle makers, such as Tesla, Ford, General Motors, and Lucid Motors, as well as from traditional automakers that are transitioning to electric vehicles. However, its unique offerings place it in a competitive position against the likes of Tesla, Ford, and General Motors in the broader EV market. Rivian also launched its initial public offering (IPO) in 2021, which valued the company at approximately $100,000 million.² Rivian’s CEO is R. J. Scaringe, who holds a Ph.D. in mechanical engineering from MIT and has been the driving force behind Rivian’s vision and strategy. Rivian has 14,122 employees as of December 2022, working in various functions, such as engineering, design, manufacturing, sales, and service. In 2022, the company produced 24,337 vehicles and delivered 20,332 vehicles.

rivian auto cover photo

As of September 2023, the return on equity (ROE) and earnings per share (EPS) of Rivian are -12.95% and $-1.44, respectively. The company does not pay any dividends. As of September 2023, Rivian Co. has 952 million shares outstanding. As of September 29, 2023, Rivian Co. had 902 institutional shareholders. The top 10 institutional shareholders held 45.25% of the total shares, with Amazon being the largest shareholder with 158,363,834 shares. The 52-week share price range is between $11.68 to $28.06. The gross margin is -35.68%, the operating margin is -107.70%, and the net margin is -102.24%, considering the net income from interest.

Recent Developments

On June 15, 2023, Rivian launched Spaces, a collection of temporary and permanent retail and experiential centers, starting with a space in New York City’s Meatpacking District.³
On June 20, 2023, Rivian signed an agreement with Tesla to provide Rivian drivers access to Tesla’s Supercharger network across the United States and Canada.⁴
On September 1, 2023, Rivian appointed Dr. Kjell Gruner as its Chief Commercial Officer and President of Business Growth, who is joining Rivian from Porsche Cars North America, Inc. (PCNA), where he was most recently President and CEO.⁵
On November 7, 2023, Rivian announced that it would enable other companies to purchase its custom-designed Rivian Commercial Van.⁶
On December 14, 2023, Rivian and AT&T signed an agreement to purchase Rivian electric vehicles (EVs) for AT&T’s fleet through a pilot program aimed at cutting transport emissions.⁷

Recent Financing Activities

In March 2023, Rivian issued a $1,300 million convertible green bond to support the launch of its smaller R2 vehicle family.⁸
In 2021, Rivian completed a $2.5 billion private funding round, which was led by Amazon’s Climate Pledge Fund, D1 Capital Partners, Ford Motor Company, and funds and accounts advised by T. Rowe Price Associates, Inc.⁹

Financial Performance Highlights

Q3 2023 Highlights

As of 30 September 2023, Total revenue for the third quarter of 2023 was $1,337 million, and for the third quarter of 2022, it was $536 million, resulting in a 149% increase in revenue, primarily driven by the delivery of 15,564 vehicles in 2023 compared to 6,584 delivery in 2022. Rivian generated a negative gross profit of ($477) million for the third quarter of 2023 as compared to ($917) million for the third quarter of 2022, resulting in a gross margin of -35.68% and -171.08% in 2023 and 2022, respectively. Gross profit improvement of 48% was primarily driven by ramping production and continued efforts to drive material cost reductions through commercial negotiations and engineering design changes. The third quarter of 2023 was impacted by a charge for LCNRV write-downs on inventory and losses on firm purchase commitments. The ending inventory balance included LCNRV write-downs of $292 million, while liabilities for losses on firm purchase commitments were $160 million, for a total of $452 million at the end of the third quarter of 2023. Total operating expenses in the third quarter of 2023 grew to $963 million, as compared to $857 million in the same period last year. In the third quarter of 2023, Rivian recognized a non-cash, stock-based compensation expense within operating expenses of $219 million as compared to $268 million in the third quarter of 2022 and depreciation and amortization expense within operating expenses of $80 million as compared to $52 million in the third quarter of 2022.

Research and development (“R&D”) expenses in the third quarter of 2023 were $529 million compared to $452 million in the same period last year. The increase was primarily due to a $52 million increase in engineering, design, and development costs for future technologies and other related project costs and a $19 million increase in depreciation and amortization expenses. Selling, general, and administrative (“SG&A”) expenses in the third quarter of 2023 were $434 million, as compared to $405 million in the same period last year. The increase was primarily due to a $52 million increase in payroll and related expenses due to an increase in headcount and other miscellaneous operating expenses to support commercial go-to-market operations. The operating loss of Rivian in the Q3 of 2023 and 2022 was equal to $1,440 million and $1,774 million, resulting in an operating margin of -107.70% and -330.97% in 2023 and 2022, respectively. The net loss for the third quarter of 2023 was ($1,367) million as compared to ($1,724) million for the same period last year. Net cash used in operating activities for the third quarter of 2023 was ($877) million, as compared to ($1,368) million for the same period last year. Capital expenditures for the third quarter of 2023 were ($190) million compared to ($298) million for the same period last year. The prior year’s values were higher due to elevated equipment and construction spending in the early stages of the production ramp. Basic and diluted loss per share were $1.44 and $1.88 in Q3 of 2023 and Q3 of 2022, respectively, based on 952 million and 918 million shares outstanding, respectively. The company does not pay any dividends.

Annual Performance Highlights

In 2022, for the year ended 31 December 2022, Rivian reported an increase in revenue by $1,603 million compared to the previous year. The total revenue for 2022 amounted to $1,658 million, reflecting a 2,915% change from the $55 million reported in 2021. The gross loss for 2022 stood at ($3,123) million, resulting in a 572% increase in loss from the ($465) million recorded in 2021. The gross margin, calculated as a percentage of revenue, increased from 845.45% in 2021 to 188.36% in 2022. The net loss for 2022 was $6,748 million, indicating a 44% increase in loss from the $4,688 million net loss reported in 2021. This change can be attributed to an increase in the cost of sales, research and development expenses, and selling and administration expenses. The operating loss in 2022 reached $6,856 million, with a 62% increase from the $4,220 million reported in 2021. The operating margin improved from a (-7672.73%) loss margin in 2021 to a (-413.51%) loss margin in 2022. The net margin for 2022, calculated as the ratio of net profit to

Revenue was (21.27%), compared to (2.24%) in 2021. The earnings per share was equal to ($7.4) in 2022 and ($22.98) in 2021. Rivian has not declared and paid dividends as yet.

The cash flow statement reveals negative trends in cash flows during the year ended 31 December 2022. Operating, investing, and financing activities experienced notable changes. The net cash used in operating activities was $5,052 million and $2,622 million in 2022 and 2021, respectively. The net cash used in investing activities was $1,369 million and $1,794 million in 2022 and 2021, respectively. The net cash received from financing activities was $99 million and $19,828 million in 2022 and 2021, respectively. The depreciation and amortization of Goodwill were higher in 2022 compared to 2021. The inventory write-downs were higher in 2022 compared to 2021; the share-based compensation was higher in 2022. The capital expenditures declined in 2022. During 2021, there have been $13,530 in proceeds from the issuance of initial public offering, $2,500 proceeds from the issuance of convertible notes, $1,226 million in proceeds from the issuance of long-term debt, whereas there were no proceeds from these sources in 2022.

Production lines designed for higher volumes, the company has and will continue to experience negative gross profit driven by labor, depreciation, and overhead costs. Overall, the operating expenses in 2022 remained flat from $3,733 million as compared to $3,755 million in 2021 driven by a $663 million non-cash expense in the fourth quarter of 2021 of 8 million shares of Class A common stock and $20 million of cash donated to Forever by Rivian, Inc. in conjunction with the initial public offering and decreased engineering, design, and development costs related to higher product development activities in the early stages of the production ramp offset by an increase in payroll and related expenses and an increase in stock-based compensation expense.

Business Overview

Rivian Automotive, Inc. was incorporated as a Delaware corporation on March 26, 2015. Rivian was formed for the purpose of designing, developing, manufacturing, and selling category-defining electric vehicles (“EVs”), accessories, and related services directly to customers in the consumer and commercial markets. The nature of the Company’s operations during the years ended December 31, 2020, and 2021 was primarily research and development activities related to vehicle development and its related technologies and pre-production activities related to manufacturing and sales. The nature of the Company’s operations during the year ended December 31, 2022, was primarily the production and sale of EVs in the United States of America (“United States”). Rivian Automotive is an electric vehicle (EV) manufacturer carving its niche in the market with a focus on premium, adventure-ready vehicles and a commitment to sustainability. Founded in 2009, Rivian has quickly gained traction for its innovative approach and ambitious vision, making it a key player to watch in the rapidly evolving EV landscape. Rivian's ambition extends beyond just building EVs. They're creating a comprehensive ecosystem that supports the adventure lifestyle, including the Rivian Adventure Network of fast-charging stations, curated gear and accessories, and dedicated service centers.

Segmental Analysis

The Company’s Chief Executive Officer (“CEO”) reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance; the Company has determined that it operates in one operating segment and one reportable segment. Rivian exists to create products and services that help the planet transition. The company designs, develops, and manufactures category-defining EVs and accessories and sells them directly to customers in the consumer and commercial markets. Rivian complements its vehicles with a full suite of proprietary, value-added services that address the entire lifecycle of the vehicle and deepen its customer relationships. In the consumer market, the company launched the R1 platform with the first generation of consumer vehicles: the R1T, a two-row, five-passenger pickup truck, and the R1S, a three-row, seven-passenger SUV. In the commercial market, the company launched the RCV platform. The first vehicle on this platform is the EDV, designed and engineered by Rivian in collaboration with Amazon, its first commercial customer. Amazon has placed an initial order of 100,000 EDVs, subject to modification. During the year ended December 31, 2022, the company produced 24,337 vehicles and delivered 20,332 vehicles. Rivian is an electric vehicle manufacturer that has a diverse customer base, ranging from individual consumers to corporate partners. Rivian’s customers include adventure and outdoor enthusiasts who want to enjoy nature with sustainable and high-performance vehicles. Rivian offers them the R1T pickup truck and the R1S SUV, which have features such as a large battery range, off-road capability, spacious storage, and modular accessories. Rivian also provides them with a network of charging stations and service centers across North America. Customers include fleet operators who want to reduce their carbon footprint and operational costs with electric vehicles. Rivian produces the EDV delivery van, a custom-built vehicle for Amazon, which ordered 100,000 units from Rivian in 2019. Rivian also provides them with software and services to support their fleet management, such as charging infrastructure, driver assistance, and data analytics. Customers include automakers who want to leverage Rivian’s advanced electric skateboard platform for their own electric vehicles. Rivian sells its platform to other companies, such as Ford, which plans to use it for its upcoming electric F-150 truck. Rivian also collaborates with them on technology development and innovation.

rivian car

Vehicle production and deliveries of Rivian began in September 2021.¹⁰ The majority of its revenues are derived from sales of consumer and commercial vehicles. The majority of its cost of revenues is driven by direct parts, material and labor costs, manufacturing overhead (e.g., depreciation of machinery and tooling), shipping and logistics costs, and reserves, including estimated warranty costs related to the production of consumer and commercial vehicles, adjustments to write down the carrying value of inventory when it exceeds its estimated net realizable value (“NRV”), losses on firm purchase commitments, and to adjust for excess and obsolete inventory based upon expectations of forecasted demand. Revenues increased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to increased deliveries of 19,412 vehicles. For the year ended December 31, 2022, the company incurred cost of revenues of $4,781 million, including $475 million of depreciation and amortization expenses. Cost of revenues increased compared to the year ended December 31, 2021, as a result of the increased production and delivery of 23,322 and 19,412 vehicles, respectively. Additionally, Rivian had a $920 million charge to reflect the lower cost or net realizable value (“LCNRV”) of inventory and losses on firm purchase commitments as of December 31, 2022, compared to a $95 million as of December 31, 2021, for an increase of $825 million, increased depreciation and amortization expense by $371 million, and increased stock-based compensation expense by $44 million. For the year ended December 31, 2022, the company incurred R&D expenses of $1,944 million, including $95 million of depreciation and amortization expense. R&D expenses increased compared to the year ended December 31, 2021, primarily due to a $228 million increase in payroll and related expenses, a $160 million increase in stock-based compensation expense, a $43 million increase in depreciation and amortization, and a $33 million increase in software expenses partially offset by a $362 million decrease in engineering, design, and development costs. The primary drivers for these higher expenses were higher headcount and personnel costs related to investing in its R1 and RCV programs, as well as investments related to other advanced product development activities, including early development of its R2 platform, future propulsion platforms, and its updated vehicle network architecture. The decrease in engineering, design, and development costs was related to higher product development activities in the lead-up to the start of production for the R1 and RCV platforms in the prior period.

Rivian has generated significant losses from operations, as reflected in the accumulated deficit of $6.4 billion and $13.1 billion as of December 31, 2021 and 2022, respectively. Additionally, the company has generated significant negative cash flows from operations and investing activities as it continues to support the growth of the business. Rivian anticipates continuing to make significant capital investments over the next several years to focus on ramping up production as it strategically expands infrastructure, including additional manufacturing capacity both domestically and internationally. The company also anticipates continuing to make significant investments in future growth objectives, including vehicle and other technology and software, tooling for current vehicle platforms, future vehicle manufacturing lines, battery technology, and supply, and the service network.

Other Information

Rivian is an electric vehicle manufacturer that faces competition from other companies in the same market, such as Tesla, Lucid, Canoo, Foxconn, Lordstown, FF, Uniti, Earth, Rimac, Xpeng, BYTON and Fisker. However, Rivian has the competitive advantage to survive in the market. Rivian focuses on electric adventure vehicles that are designed for outdoor recreation and off-road capability, which is a unique niche in the electric vehicle market. Rivian has secured major partnerships with companies like Amazon, which ordered 100,000 electric delivery vans from Rivian, and Ford, which plans to use Rivian’s electric skateboard platform for its own electric vehicles. Rivian has a strong brand identity and customer loyalty, as it offers a fully digital and interactive purchase experience, a network of charging stations and service centers, and a new automotive retail concept called ‘Spaces’. Rivian has a high valuation and solid financial backing, as it raised $11.9 billion in its initial public offering (IPO) in 2021 and has received investments from companies like Amazon, Ford, and Cox Automotive. Rivian has a talented and visionary leadership team led by its founder and CEO, R. J. Scaringe, who holds a Ph.D. in mechanical engineering from MIT and has been the driving force behind Rivian’s vision and strategy. While the broader EV market boasts fierce competition from established players like Tesla, Ford, and General Motors, Rivian occupies a unique niche defined by its off-road capabilities and adventure-focused branding. This targeted approach allows Rivian to attract a specific customer segment, mitigating direct competition with mainstream EV manufacturers. Beyond its core vehicles, Rivian is constructing a comprehensive ecosystem aimed at enhancing the adventure experience. This includes the development of the Rivian Adventure Network, a strategically planned network of fast-charging stations designed to facilitate long-distance travel. Additionally, Rivian offers curated gear and accessories specifically designed for its vehicles, allowing for a seamless transition from urban environments to outdoor pursuits. This holistic approach sets Rivian apart from traditional car manufacturers, offering a complete package for the adventurous consumer.

Rivian is an electric vehicle manufacturer that has a direct-to-consumer distribution model, which means that it sells its products and services directly to its customers through its website and mobile app without relying on traditional dealerships or intermediaries. Rivian also has a network of experience centers, service centers, and charging stations across North America, where customers can interact with Rivian’s products and staff, receive maintenance and support, and access Rivian’s fast-charging infrastructure. Rivian’s distribution model is designed to provide a fully digital and interactive purchase experience, a transparent and competitive pricing strategy, and a convenient and personalized delivery and ownership journey. Rivian’s distribution model also enables it to have a closer relationship with its customers, collect valuable feedback and data, and offer more customized and innovative solutions.

Company History

Rivian was founded in Rockledge, Florida, in 2009 by Robert “RJ” Scaringe, an MIT graduate who had a passion for engineering and the environment. The company was initially called Mainstream Motors and aimed to build a hybrid sports car. In 2011, the company changed its name to Avera Automotive and then to Rivian Automotive, inspired by the Indian River in Florida, where Scaringe grew up. The company also shifted its focus to autonomous and electric vehicles and unveiled a prototype of a mid-engine hybrid coupe. However, the project was scrapped as Rivian decided to pursue a larger impact on the automotive industry. In 2015, Rivian received a large investment and expanded its research facilities in Michigan and California. The company began working on electric and autonomous vehicles that were designed for adventure and outdoor recreation. Rivian also started to build a network of related products and services, such as charging infrastructure, fleet management, and driver assistance. In 2017, Rivian bought a former Mitsubishi plant in Normal, Illinois, where it established its manufacturing base. The company also completed its two alpha prototypes of its electric adventure vehicles: the R1T pickup truck and the R1S SUV. In 2018, Rivian unveiled its R1T and R1S at the LA Auto Show, receiving positive reviews and attention from the media and the public. The vehicles offered features such as a large battery range, off-road capability, spacious storage, and modular accessories. Rivian also announced that it would start production and deliveries in 2020. In 2019, Rivian secured major partnerships and investments from companies like Amazon, Ford, and Cox Automotive. Amazon ordered 100,000 electric delivery vans from Rivian, which became known as the EDV. Ford planned to use Rivian’s electric skateboard platform for its own electric vehicles. Cox Automotive invested in Rivian and collaborated on service operations. Rivian also received funding from other investors, such as T. Rowe Price and BlackRock. In 2020, Rivian faced challenges and delays due to the COVID-19 pandemic, which affected its supply chain and production. The company also faced lawsuits from Tesla, which accused Rivian of stealing trade secrets and poaching employees. Rivian denied the allegations and defended itself in court. Despite the difficulties, Rivian continued to develop and test its vehicles, and prepared for its launch. In 2021, Rivian delivered its first vehicles to customers, starting with the R1T in September and followed by the R1S in December. The company also launched its initial public offering (IPO) in November, which valued the company at over $100 billion and raised $11.9 billion in capital. Rivian also announced plans to build a second manufacturing plant in Georgia, as well as a battery factory and a European production site.

In March 2022, Rivian made it to TIME's List of 100 Most Influential Companies of the year 2022.¹¹ On July 27, 2022, Rivian announced it would reduce its workforce by 6% in response to high inflation, rising interest rates, and an increase in parts prices. In August 2022, regulatory filings revealed that investor George Soros sold roughly 8.5 million shares of the company while buying Tesla and Ford at the same time. In September 2022, Rivian signed an MoU with Mercedes-Benz Group to establish a joint venture to invest in and operate a factory in Europe, producing large commercial electric vans starting in a "few years." The facility will have a common assembly line to produce a different design for each company. The New York Times characterized the move as "a rare example of cooperation between a traditional carmaker and a new challenger" and noted that Mercedes' extensive experience in manufacturing may allow Rivian to overcome its own issues. In 2023, Rivian increased its production and sales, delivering 24,337 vehicles and generating $1.66 billion in revenue. The company also improved its profitability and efficiency, reducing its net loss to $6.7 billion. Rivian also expanded its product portfolio and its global presence, launching new models and entering new markets. Rivian also signed the Climate Pledge to reach net-zero carbon emissions by 2040 and committed to using 100% renewable energy for its operations by 2023.