Major shareholder reduction "Tesla killer" Rivian fell out of favor?

Last year, the emerging electric vehicle companies in the United States were still a thriving scene, and even new players such as Rivian and Lucid, who had not yet delivered a car at that time, also embarked on the peak of their soaring stock prices. But compared to last year's clamor, Rivian, known as the "Tesla Killer," seems to be in a mess this year. Not only is it facing the dilemma of declining production, but the shrinking stock price has also made major shareholders like Ford retreat.

Ford sold 8 million shares

With Rivian's post-IPO lock-up period ending on May 8, Ford plans to sell its 8 million shares in the self-proclaimed "Tesla Killer" electric car company, which Ford now holds about 102 million shares.

Ford's big sell-off was largely due to a sharp contraction in its Rivian stake in the first quarter, costIng Ford a $5.4 billion loss. According to Ford's first quarter 2022 earnings report, Ford Motor vehicles had revenue of $34.5 billion and adjusted EBITDA of $2.3 billion, but the sharp decline in Rivian's stock price led to an overall net loss of $3.1 billion for the quarter.

In fact, Ford's partnership with Rivian may have cracked when it went public late last year. On November 19, 2021, Ford and Rivian's plan to abandon the joint development of electric vehicles was confirmed. Previously, Ford had announced that it had canceled plans to produce Lincoln's new model with Rivian's electric vehicle chassis and hardware.

In addition to Ford, there are also a number of companies that want to sell their stakes in Rivian, including Two of Rivian's major investment institutions, Amazon and JPMorgan Chase.

As of December 31, 2021, Amazon held a total of 17.74% of Rivian Corporation. During the first-quarter earnings call, Amazon's chief financial officer said: "We reported an overall net loss of $3.8 billion in the first quarter, including a pretax valuation loss of $7.6 billion, which was also included in non-operating expenses for the common stock investment in Rivian Electric Vehicles. JPMorgan plans to sell 13 million shares to 15 million Shares of Rivian shares. Both tranches of shares will be sold at $26.90 per share.

Affected by this news, Rivian shares weakened before US stock market on Monday. As of press time, the stock was down 6.98% to $26.78 before market hours.

Capacity anxiety

Founded in 2009 as a rising star of electric vehicles in the United States, Rivian currently has two models, namely the electric pickup rivian R1T and the electric SUV Rivian R1S.

On November 10, 2021, Rivian went public at $78 per share, making it facebook's largest IPO in the U.S. since Facebook in 2012. Just three days after going public, it was valued at more than $120 billion. Since then, the stock price has risen to $179.47, and the market value has soared to $152 billion, surpassing giants such as Ford and BMW.

Ford motor, it has also benefited from holding Rivian shares. In the fourth quarter of last year, Ford earned $8.2 billion from holding Rivian stock. However, Rivian began to go high and low after entering 2022. With the release of the third quarter earnings report, the high-value "bubble" burst, and Rivian's market value fell rapidly, and it is currently only $25.9 billion after a cliff-like decline in the first quarter.

With the withdrawal of capital, Rivian's current embarrassing situation is clearly seen. Like most automakers, Rivian is battling supply chain constraints and chip shortages.

It is understood that Rivian's Normal plant in Illinois currently has an annual production capacity of about 150,000 vehicles, but the global chip shortage has brought a lot of impact on Rivian's normal production and delivery.

According to Rivian's official financial report, for the full year of 2021, it produced 1,015 cars and delivered 920 vehicles; it lost $4.7 billion in fiscal 2021. While the results were less than expected, Rivian also expected to halve planned production in 2022 from the original forecast of 50,000 units to 25,000 units due to supply chain constraints.

But even if the target is lowered, the reality is still very far behind. In the first quarter of this year, Rivian produced just 2,553 electric vehicles. For the company's stock price decline and production capacity, the Beijing Business Daily reporter contacted Rivian, but as of press time has not received a reply.

In addition, the price increase of the product has also caused Rivian to fall into controversy. In March, Rivian announced an increase in the price of two of its models, the R1T and R1S, which caused dissatisfaction among many pre-orderers. Some shareholders have even filed a lawsuit against Rivian, arguing that Rivian's price increase will damage Rivian's reputation as a trustworthy and transparent company.

The industry's woes

In the second half of 2021, electric vehicle listed companies began to be sought after by the US capital market. But in 2022, the global auto market continues to struggle with the supply chain crisis, and the days of electric vehicle companies are becoming more and more difficult, at the same time, the bubble begins to burst.

Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, said that since the epidemic, the automotive industry has been constrained by factors such as semiconductor shortages and supply chain bottlenecks, and the production capacity of major car companies has been affected to varying degrees. After the outbreak of the Russian-Ukrainian conflict, the situation of the automotive industry has become even worse.

In a document submitted to regulators, Rivian pointed out that the COVID-19 pandemic, inflation and the Russian-Ukrainian conflict have caused disruptions and delays in operations, of which the Russian-Ukrainian dispute is one of the factors contributing to the rising cost of components, including battery metals.

As a major metal producer, Russia supplies 10 percent of the world's nickel, 6 percent aluminum and about 3.5 percent copper, and at a time when global inflation is rising, a ban on Russian metals could lead to shortages, triggering further price spikes. "Prices of key metals, including lithium, nickel, aluminum and cobalt, have risen sharply in recent months and price volatility is expected to continue for the foreseeable future," Rivian said in the filing. ”

At present, Rivian orders are not in short supply, and the car cannot be delivered. In Yan Jinghui's view, as an industry rookie, Rivian can use Tesla as a reference. The key to Tesla's success was the creation of a "high degree of coordination between labor and machine" super factory, and the establishment of a high-capacity factory with a certain degree of semi-automation and manual assembly.

As for Lucid, another "Tesla killer", only 360 new cars were delivered in the first quarter, and 30,000 orders could not be built.

Beijing Business Daily reporter Tao Feng zhao Tianshu