Jeff Bezos vs. Elon Musk: the electric car company in which the owner of Amazon invests became the second most valuable automaker in the US

Elon Musk with his signature Tesla reigns today in the electric car market. With a fifth of Rivian, Jeff Bezos wants to go out to compete with him

The new electric vehicle company Rivian is now the second most valuable automaker in the United States after its IPO. The firm, which has so far only delivered 150 vehicles, after its surge after the IPO, despite having delivered only about 150 cars. Amazon, the billionaire’s giant Jeff Bezos, owns 20% of the share package, which positions the tycoon as a direct competitor of Elon Musk and its flagship carmaker Tesla.

Rivian’s stock has soared since its IPO at $ 78 a share on Wednesday, when it made one of the largest stock market debuts in history, raising $ 11.9 billion.

The electric car maker is now worth neither more nor less than $ 107.4 billion after finishing at $ 122.99 a share on Thursday., according to data from Bloomberg. Counting options, Rivian’s value can be estimated at up to $ 120.5 billion.

A Rivian pickup on the outskirts of the Nasdaq, in New York, before the company's IPO. REUTERS / Brendan McDermid
A Rivian pickup on the outskirts of the Nasdaq, in New York, before the company’s IPO. REUTERS / Brendan McDermid

The stock exchange transaction transformed the founder of the company R.J. Scaringe in a heavyweight among the great riches of the world at 38 years old. His stake in Rivian is now worth $ 2.2 billion.

But he’s not the only heavyweight involved. Amazon owns 20% of the stock package. That puts Bezos on the list of winners for the startup’s initial success and, at the same time, allows him to set foot in the electric vehicle market that today is dominated by his rival in the race for the world’s greatest wealth, the CEO. and Tesla founder Elon Musk.

As of September 30, Amazon had equity investments “including preferred shares of Rivian Automotive, Inc. representing a stake of approximately 20%”, with a book value of $ 3.8 billion, up from $ 2.7 billion at the end of 2020, Amazon reported in its latest filing. Now, the value of those shares has skyrocketed.

As a result of the initial public offering Rivian fell only below Tesla in market value on the list of most valuable American automakers. Tesla is worth $ 1.07 trillion. Rivian is worth more than General Motors, which has a market capitalization of $ 89.8 billion, and Ford, with a market value of $ 78.1 billion.

But the differences between the companies are remarkable. Rivian was founded in 2009, but has only delivered 156 cars, according to its IPO prospectus. It suffered losses of USD 994 million in the first half of the year, as it made large investments.

Conversely, Tesla delivered more than 600,000 vehicles in 2021 and had more than $ 20 billion in revenue in the first half. General Motors and Ford sell millions of cars a year. General Motors had more than $ 65 billion in revenue in the first half, and Ford posted more than $ 62 billion in the same period.

Elon Musk is the founder and CEO of America's most valuable automaker. REUTERS / Stephen Lam / File Photo
Elon Musk is the founder and CEO of America’s most valuable automaker. REUTERS / Stephen Lam / File Photo

So far, Rivian has 55,400 pre-orders for its R1T truck and R1S SUV, which it expects to fulfill by 2023.

However, investors are betting that Rivian may be the new Tesla and that it will prosper as countries focus on climate change and electric vehicles.

Scaringe is one of the biggest winners from Rivian’s public offering, retaining 9.5% voting control in the company through class B shares.

The board of directors also awarded this MIT Ph.D. a time-based stock award of 6.8 million shares and a performance-based option to buy up to 20.4 million shares, meaning it could dramatically increase your heritage.

Development of a new sector

Many investors, with the influx of environmentally conscious customers, seek to put their money in “green” companies.

The sector is still tiny. Electric vehicles represent just 3% of sales today in the United States, and has yet to verify its viability. But it looks attractive.

Jeff Bezos, founder of Amazon, already competes with Elon Musk in the space travel business. Now he also has interests in the electric car market. Photo: REUTERS / Jason Redmond
Jeff Bezos, founder of Amazon, already competes with Elon Musk in the space travel business. Now he also has interests in the electric car market. Photo: REUTERS / Jason Redmond

“When General Motors says that by 2035 all its cars will be electric, the hope for a rapid electrification of the sector is enormous,” he highlights Gregori Volokhine, Meeschaert Financial Services portfolio manager quoted by AFP.

In the United States, the authorities plan to invest billions to strengthen the network of charging stations or encourage the population to abandon combustion vehicles.

According Mary Barra, the head of GM, the astronomical valuation of young companies, startups in the sector that in some cases have not sold anything, shows that her group, which plans to invest more than 35,000 million dollars in electric motorization by 2025, is “completely undervalued” .

Although the giants of the field began a transition to electric motors, the change will not be instantaneous. With Rivian, “investors have access to a purely electric player,” says Volokhine.

The group also differs from other startups with a more hypothetical future, Karl Brauer, an analyst at the specialized site iseecars.com, told AFP.

Its founder, Scaringe, a passionate about cars who has formed the company since the end of his studies, “wisely chose his environment”, with great connoisseurs of the automotive sector, said the expert.

RJ Scaringe, 38-year-old CEO of Rivian, at the time of introducing two new company models. Photo: REUTERS / Mike Blake / File Photo
RJ Scaringe, 38-year-old CEO of Rivian, at the time of introducing two new company models. Photo: REUTERS / Mike Blake / File Photo

From interior design to innovative options, their products are compelling, considers this analyst who was able to test the group’s R1T pickup. Its high price, of at least USD 67,500, will not prevent it from finding a public, like Tesla that knew how to target a high-end market.

Above all, Brauer adds, Rivian managed to make major deals with Amazon and Ford.

In addition to owning about a fifth of the company, Amazon has placed a massive order for 100,000 delivery vans between now and 2030.

Ford, for its part, owns 12% of Rivian’s shares and wants them to bear fruit.

“It is possible that Ford will decide, in two months or two years, to make its dealer network available to Rivian customers,” Brauer said, noting that after-sales service is a weak point for new automotive companies.

For Jay Ritter, a specialist in IPO operations at the University of Florida, the enthusiasm of investors capable of placing so much in a company that has yet to prove itself in a sector that requires high-media is “surprising.”

With the money raised, Rivian will be able to “hire engineers, speed up production” and quickly develop, he estimates.

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Jeff Bezos vs. Elon Musk: the electric car company in which the owner of Amazon invests became the second most valuable automaker in the US