Next Tesla? Investors bet big on EV start-up

PLYMOUTH (Michigan) • It is hard to imagine any company matching Tesla's rocket-like rise but if an electric car start-up could aspire to be the "next Tesla", it would be Rivian.

Founded in 2009, Rivian is preparing to produce an electric pickup and a sport utility vehicle (SUV) by mid-year. It is also developing electric trucks for Amazon.

What distinguishes Rivian is its extraordinary roster of investors. Amazon is not just a customer; other backers include BlackRock, Fidelity and Ford Motor, which plans to introduce a vehicle based on Rivian's technology.

The latest injection of capital was revealed on Tuesday, when Rivian said it had raised US$2.65 billion (S$3.5 billion), which values the firm at more than US$27 billion.

A hefty war chest is no guarantee of success, and producing a new car from scratch is a monumental task for established carmakers, let alone a start-up.

"The process... is anything but simple," said Rivian's founder and chief executive R. J. Scaringe.

"It's a complex orchestra, several thousand parts coming from several hundred suppliers. It's definitely far more complex... than I thought it would be."

Rivian hopes to cash in on the same opportunity Tesla has - the electrification of transport.

In the past five years, Tesla has gone from making 50,000 cars annually to making 10 times that many last year. General Motors (GM), Ford, Volkswagen and others are investing billions to develop electric vehicles (EVs) that eventually will begin supplanting fossil fuel models.

"In my lifetime, we are going to go from a world where electric vehicles are a tiny subset of the market to where electric vehicles represent 100 per cent of the market," Mr Scaringe said. "Some existing players will be able to make that transition, but it also creates opportunities for new companies."

Another big trend is autonomous cars. Cruise, a unit of GM, announced on Tuesday that it had raised US$2 billion from Microsoft, GM, Honda and other investors.

Rivian and Tesla are also working on automated-driving technology.

Rivian is different from Tesla in several respects.

Tesla so far has grown by selling sporty sedans, a type of vehicle that is falling out of favour with consumers. Tesla intends to begin making an oddly angular, futuristic pickup, the Cybertruck, this year.

But it has not yet put heavy focus on the trucks and SUVs that make up 75 per cent of the passenger vehicle market in the United States.

Rivian, on the other hand, is focused on producing "adventure" vehicles that owners can take off-road, so it will not often compete head-to-head with Tesla.

"There's a perception that this is winner takes all, and that's just wrong," Mr Scaringe said. "Consumers need to have different brands. Our success is not at all mutually exclusive to others' success."

Rivian's truck and SUV, which start at US$67,500, look more conventional, as if they could have been designed by Land Rover.

Tesla chief executive Elon Musk is a disruptive force unlike anything the car industry had seen in decades, perhaps not since Henry Ford. He has powered his company to stock market heights while attracting an army of fans.

But he has also courted controversy, calling government efforts to curb the coronavirus "fascist". His Twitter posts have led him and Tesla into legal jams.

Mr Scaringe, by contrast, is a bookish engineer, with a doctorate from the Massachusetts Institute of Technology (MIT). He once tried to slash his personal carbon footprint at MIT by getting around by foot and bike, taking cold showers and doing his laundry by hand.

Rivian hopes to start producing its Amazon delivery van in large numbers later this year. Amazon, which is already testing prototypes on the road, has ordered 10,000 to be delivered by the end of next year.

Gartner analyst Michael Ramsey said he was eager to see if Rivian could avoid the production mistakes that hurt Tesla a few years ago.

"Is Rivian going to be a giant future competitor to Ford and GM? I don't know," Mr Ramsey said. "But they have all these mega-investments. They have a strategic partner in Ford. They have contracts with Amazon. Of all the EV start-ups, they seem to have the best chance of making it."

NYTIMES