Text | Joey
Venture capital, as the name suggests, is the more risky the more you invest, and never invest without risk. Put it this way, Rivian, it's too risky!
Just the day before yesterday, Ford announced that it would pass Goldman Sachs and sell its 8 million shares of Rivian shares. The reason for this is simple, these stocks are really a bit of a loss in the hand. According to Data released by Ford in the first quarter of this year, In the first quarter of this year, Ford generated a net loss of $3.1 billion due to the collapse of Rivian's stock. By market capitalization, Ford lost $5.4 billion for a single investment project, Rivian.
How is the amount of this loss calculated? According to Ford's financial figures, Ford Motor's net profit in 2021 was $17.937 billion. In the first quarter of this year alone, the loss reached nearly 1/6 of the net profit of last year. There is no doubt that such a high number of losses is unaffordable for any company.
Worse still, Rivian is dragging down more than just Ford's shareholders. According to the information available so far, Another investment company in the United States, JPMorgan Chase, is also selling 13-15 million shares for an anonymous Rivian stock holder. Amazon was also dragged down by Rivian, losing $3.8 billion in the first quarter.
Now the question is, as a star brand of American electric vehicles that once had high hopes, how did Rivian quickly fall from one of Tesla's strongest challengers to the latest and biggest capital "sinkhole" for American investors in three steps and two steps?
The reason is simple – Rivian is one step slower.
Character determines destiny
How beautiful was Rivian?
Just about half a year ago, in November 2021, Rivian had a market capitalization of $151.95 billion in the global market capitalization rankings, becoming the third largest in the world after Tesla and Toyota. Behind it, all of them are large groups that are important in the automobile industry, and even the Centennial Group.
At that time, it was believed that this brand that had sprung up and specialized in electric pickup trucks would become the biggest competitor of Tesla Cyberruck and even Tesla's entire brand in the future. But in fact, rivian more often than not, somewhat arbitrarily squandered the most precious time.
In fact, in the United States, the founder of Rivian, R. J. Scalinger is not inferior to Musk in terms of popularity, but the biggest difference between the two is the huge contrast in personality. This contrast between introvertedness and bravado, shyness and unrestrainedness, dooms the development direction between Rivian and Tesla in the future.
In fact, compared to Tesla, which started building its first car in 2006, Rivian, founded in 2009, is not too late in time. You should know that at that time, many traditional car manufacturers were still using a 4-speed automatic transmission, or a 5-speed or 6-speed configuration problem.
And at that time, R. J. Scalinger also thought about how to build a traditional sports car with a more efficient internal combustion engine. Apparently, at this point, Rivian has lost the lead. After all, although Musk wanted to build a sports car from the beginning, although Tesla's first model, the Roadster, was not a success. But in terms of energy forms, Musk never thought of taking the path of traditional energy. Electrification is its insistence that has never changed.
Until 2011, Rivian began to transform into the field of electric vehicles, and a year later found the electric pickup truck market that Tesla lacked, but had enough market potential and fans in the United States, and began to develop. But you know, the two years that were lost were too precious. In the same year that Rivian intended to transform, Tesla's god work of establishing the status of the jianghu - Model S was officially launched.
Introverted people are always slow and extremely cautious, which is also the case with R· The biggest difference between J. Scalinger and Musk. Musk, from Silicon Valley, never puts the authorities of automobile manufacturing in his eyes, and he always decides the direction of the company at his own pace, but R· J. Scalinger is different.
R· J. Scalinger would build his factory near Detroit because he wanted to be closer to the automotive supply chain; he would build the factory near Chicago because he wanted to recruit more automotive talent; he could spend years adjusting, refining, and not making any publicity in the meantime. There's no doubt that if Musk is a complete genius, then R. J. Scalinger is an engineering man in the true traditional sense. Because what he thinks is what Chinese often says - the wine is not afraid of the deep alley.
Despite the long time it took, R· J. Scalinger seems to have looked good before this year. With the wave of electrification set off by Chinese car companies, the rise of China's local market, and the follow-up of European car companies, electrification has become the most fashionable industrial change 5 years ago. The old and bulky American car companies did not seem to have a better electric entry point besides Tesla at that time. That is to say, in the era of electrification, the American car companies at that time fell behind.
In 2017, Rivian unveiled two products – the A1T five-seater pickup truck and the A1C seven-seater SUV. In 2018, after Rivian unveiled two models, R1T and R1S (electric pickup trucks and electric SUVs, respectively), they really began to gain the favor of investors.
Whether it is Amazon, the world's largest e-commerce company, or Ford, the façade of American cars, or Cox Automobile, a global car service company, they have begun to inject capital into Rivian. In 2019 alone, they raised a total of $2.85 billion in financing. After all, at that time, American companies already had an urgent need to catch up with the wave of electrification, and a science and engineering man was obviously better at talking than Iron Man.
However, great opportunities cannot always be seized by careful work and prudence.
Time determines success or failure
Time is the biggest and most precious resource, especially when an industry is just beginning.
If Rivian's launch of the product is just at the point where all electric vehicle companies are starting to accelerate, and with its own strength, it has obtained the qualification to help the US auto industry catch up with the wave of electrification, then the next thing in front of them is the problem of delivery.
In fact, Rivian's skyrocket in market capitalization stemmed from their official delivery late last year. Delivery gives the market confidence, especially after the product has been widely recognized and optimistic. But their delivery is only a small batch of internal delivery, and the delivery volume of hundreds of cars is difficult to meet the market, especially the expectations of investors.
According to last month's information, Rivian produced a total of 2,553 electric vehicles in the first quarter of this year and is expected to produce 25,000 products within this year. It is reasonable to say that for a company that has just started production, this should still be a good result.
But first, market analysts valued Rivian's production capacity at 40,000 units per year. More importantly, by the end of last year, they had already booked more than 70,000 product orders. At this rate, it will take until 2024 to digest this batch of orders. There is no doubt that this is a huge blow to market expectations, as well as user confidence.
After all, during this period of time, the market will change a lot, more car companies will continue to update, and the production of unchanged products in two years is obviously difficult to meet the appetite of consumers who are constantly pursuing freshness.
What's more, there is no shortage of products that Rivian has to offer on the market today. Whether it is a new Car brand in China or an old car brand in Europe, it is capable of producing electric SUVs and cars with excellent quality, avant-garde design and leading technology. At the same time, Tesla, which was once regarded as a fierce rival, has long been far away from it in terms of product line and production capacity scale.
Today, Tesla Model X and Model Y firmly occupy the commanding heights and running volume market of electric SUVs. Even among the niche pickup truck models in the world, Cybertruck is far ahead in terms of sound volume and market expectations.
The most critical decisive factor is that Tesla has now left Rivian in terms of production capacity. Today, in addition to Tesla's Nevada factory in the United States, the newly built Texas factory can also be produced at full capacity.
Outside the United States, the German plant and the Shanghai plant in China (which is preparing to expand the second phase) will provide them with abundant production capacity. The annual production rate of nearly one million vehicles is no longer an order of magnitude compared with the annual output of 25,000 vehicles.
Although as early as 2017, Rivian had already acquired Mitsubishi's then-Illinois plant; although today, Rivian is smoothly advancing the previously planned second assembly plant in Georgia. But looking at it at this time, time is no longer on their side.
Ford decided to go on his own
For Ford, time has allowed them to reap a huge return on investment, and then usher in a lot of losses. But for Ford, one of the world's most important automotive groups, the façade of the U.S. auto industry, their optimism about Rivian is not just a simple investment.
More often, Ford may have a greater need to use Rivian's research and development in the field of electric vehicles to produce its own electric vehicles. But it seems that such an end has not been achieved.
As early as early 2020, Ford announced that it would work with Rivian to build the first pure electric vehicle under its Group Lincoln brand. At the time, Joy Falotico, president of Lincoln Motors, said the partnership with Rivian was a key point in Lincoln's move towards pure electric vehicles. There is no doubt that this was an important purpose for Ford to invest in Rivian.
But not long ago, Ford confirmed that it would not use Rivian's electric "skateboard" chassis platform, but instead use its own technology to produce Lincoln electric vehicles. It is almost certain that from the very beginning, Lincoln, and even the Ford Group, did not put all the treasure on Theivian. The Rivian is one option for Ford electrification, but not all. Because, such a century-old giant as Ford, there is enough strength to do it themselves.
Today, within the Ford system as we know it, the electric Mustang Mach-E has a very good reputation at least in terms of vehicle manufacturing level, drivability, etc.; not long ago, Lincoln also launched its own electric concept car Lincoln Star, and the future pace of Lincoln's electrification will indisputably unfold.
What's more, it was announced on April 26 that Ford's most popular pickup truck, the Raptor F-150, will be electrified and plans to produce 150,000 units in 2023, making it the first mainstream full-size electric pickup truck in the U.S. market. According to the overall plan announced by Ford last year, in 2030, 40% of ford's auto products on sale will be electric vehicles.
Obviously, at this time, Ford did not need an electrification partner like Rivian. At the moment when its market value shrinks, choosing to reduce its shares is also a very mature and rational choice.
Of course, Ford's cooperation with Rivian is not without a turnaround. After all, according to the investment at the time, Ford held a total of 102 million shares of Rivian shares, and the 8 million shares it intended to sell this time were less than 1/10 of the total holdings. Therefore, reducing losses is one aspect, but Ford can still leave a larger margin for cooperation between the two sides.
If in the future, Rivian's boss, R. J. Scalinger, who can bring better technology with the persistence of engineering men, Ford is still likely to continue to cooperate with him to launch better products; similarly, if the Georgia plant progresses smoothly and Rivian's production capacity can be smoothly increased, then after the possible market value returns, Ford is still expected to continue to get a better return on investment. No matter how to calculate, it is a business that can continue to hold shares and wait and see.
After all, the riskier the more you invest; the more risky, the greater the return. That's true for Ford, and probably even more so for Rivian.