Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Behind the biggest IPO since Facebook
Dubbed the “Tesla challenger,” electric vehicle (EV) manufacturer Rivian (NASDAQ:RIVN) made a successful debut on the NASDAQ last week. From a US$78 listing price, shares hit a high of $119.46 (+53%) before closing at $100.73 (+29%). At the time of writing, shares are up another 22% at $122.99 (+58%). Valued at more than US$100 billion ($137 billion), Rivian just become the world’s largest IPO of 2021, and more importantly, the second most valuable US automaker after Tesla (NASDAQ:TSLA).
Sure, there is a huge gap between Tesla’s US$1 trillion ($1.4 trillion) and Rivian’s $100 billion market capitalisation, but the newly listed carmaker has instantly leapfrogged ahead of iconic automakers such as General Motors (US$85 billion) and Ford Motors (US$77 billion).
What is all the fuss about Rivian?
Well for starters, it’s the only other American all-electric automotive company after Tesla that has successfully produced an EV for regular US customers. Rivian’s first pickup truck rolled off its assembly line last week, and the first deliveries are coming soon. Secondly, the company is backed by none other than Amazon’s Jeff Bezos. He holds a 22% stake in the company and has ordered some 100,000 delivery vans. It’s the Elon Musk v Jeff Bezos rivalry of the world’s richest men that injects confidence behind the company’s brand. Not to mention, other big-hitting asset managers also include Blackrock and T.Rowe Price on its register.
Strictly speaking, Rivian produces battery-powered pickups, SUVs and delivery trucks. Tesla has its focus on sedans and coupes, despite releasing its version of a pickup, the Cybertruck. But taking into consideration vehicle sales in just the EV market, and the fact that there are only two main manufacturers, you could say Tesla and Rivian will go head-to-head in producing EVs for the mass market with next to no outside competition.
The bigger picture here is so much more than just two EV companies competing. If Rivian thrives, it will provide a massive boost to the entire electric vehicle movement and sector as a whole. Not only does it help EVs go mainstream, but it suddenly forces industry heavyweights such as Volkswagen, Ford and BMW to get with the program. Suddenly the big boys are paying attention. As Tesla has done, Rivian could easily disrupt the status quo in the pickup truck sector and threaten the livelihood of well-known automakers who are yet to even release an electrified pickup. Ford has earmarked 2022 when it will roll out its F-150, GM has truck electrification plans and Fiat Chrysler hasn’t unveiled any plans yet.
Does it matter if Rivian is ahead of the game?
It matters, the reason being all major markets including the UK, Japan, France and Germany will ban combustion engine sales between 2025 and 2030, and provide funding to encourage motorists to buy electric vehicles. That’s only three years away. With Rivian releasing the R1T and Tesla soon to release the Cybertruck, both will be first to market with their electric pickup trucks and leagues ahead, by the time competition arrives. That’s a big deal, in a country where pickup trucks are by far the most popular vehicles. According to the company website, the Rivian’s R1T pickup starts at around US$67,500: it will soon be chased by two electric competitors: the Cybertruck from Tesla and sometime later the F-150 Lightning from Ford. For now, Rivian has the entire field to itself.
