Start-up electric vehicle maker Rivian exceeded expectations with its IPO filing last week, with the company selling 153 million shares at $78 each and raising $11.9 billion in the process, giving it a valuation of over $100 billion. This was obviously a big win for Rivan – but it was also a major victory for General Motors’ crosstown rivals at Ford.
Rivian factory in Normal, IL
As The Wall Street Journal pointed out in a recent article, Ford had to outmaneuver GM to secure its hugely valuable 12 percent stake in Rivian. The company was already in advanced talks with GM when CEO RJ Scaringe and former Ford operations boss Joe Hinrichs met at an upscale Detroit steakhouse in March 2019. Hinrichs sensed hesitancy in Scaringe over the GM negotiations and advised him that he didn’t have to follow through with the deal if he didn’t want to. “Just because you got engaged to someone doesn’t mean you need to marry them,” The WSJ quotes Hinrichs in saying.
Hinrich’s hunch turned out to be true. Rivian executives didn’t like the terms of GM’s deal, as the company would have been unable to pursue technology-sharing and other business partnerships with outside companies, whether they were rival automakers or not. Ford, by comparison, was much more flexible with the terms of its deal, which was attractive to the more dynamic and entrepreneurial Rivian board. The two companies then held lengthy discussions over a potential investment, which stretched into the night and did not conclude until 4 a.m.
Rivian R1T pickup
Ford eventually agreed to invest $500 million in Rivian before upping the ante in later funding rounds for a total investment of $1.2 billion. Ford’s 12 percent stake in Rivian is now worth more than $10 billion.
Rivian and Ford had initially planned to jointly develop an electric Lincoln crossover and were working on other product tie-ups, but the vehicle was eventually cancelled. In a statement sent to CNBC this week, Ford spokesman T.R. Reid called the automaker’s stake in Rivian a “strategic investment,” and said the company is still “exploring potential collaborations,” with Rivian. For now, though, the two companies remain separate and have no public tech-sharing agreements.
In addition to Ford, Rivian also counts Amazon as a major backer. The online shopping giant owns about 20 percent of Rivian and has contracted the company to design, engineer and produce it a purpose-built electric delivery van, which will enter production next year. The company will also open up sales of the van to companies other than Amazon starting in 2023.
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Comments
Ford needed the jump start as GM really had no need as they were already well on the way to their own products. The Silverado E will be shown soon and we will see how much more advanced it is.
Many will speculate on these new companies and while some will pay off many will vanish as the main line MFGs come in.
Everyone want the next Apple so they are willing to spend and sit on these companies for years.
Rivian has nothing GM really needed. The money paid is just speculation since they really have yet to turn a proifit or live for a very long time in the market place. Time will tell how they turn out. Ford could end up owning them or they could end up owing Ford.
Haha! GM wanted badly to invest into Rivian, but made too many requests, and scared Rivian off, Ford just gave them the money and let Rivian be Rivian.
This is Mary Barra’s biggest miss in her career, she thought they could push Rivian around for better terms, and though she had it in the bag. After losing Rivian GM was desperate which lead to chasing Nikola and Lordstown Motors both of which were a disaster both financially and in market PR.
How’s it working out today? Ford made 8X their money, and both of GM’s investments are busted. Hmm, no way to spin this positively for GM, its a huge miss.
Let me add, there was also a time when GM could have bought Lucid for less than $1B, Had GM of bought Lucid, they would now dominate EV’s and be a leader in technology. Lucid’s drivetrain is best in class, and drive units are more powerful than GM’s and Tesla’s but also more efficient and weigh less. Instead the Saudi wealth fund bought Lucid, and has made 35X on their investment. Saudi’s win on oil, and EV. Nuts!
GM got Nicola so all’s well that ends well…lol
FORD needed the jump start let’s get serious the Mustang MACH E is a bigger hit than anything GM has on the market past and present. I’ve seen the 2023 F150 Lightning in person up close it will be a bigger hit than the MACH E, U kidding right. This was just a great business move than net FORD move buying capital
They were first but they are not the most advanced. This is a marathon not a sprint race.
You will see the stark difference in the coming Silverado E vs the Lighting.
The EV market is more about what is being worked on vs what is out.
Ford is winning most battles with GM right now, Mach E, Lightning, Bronco, and Maverick are all winners, Ford is also beating GM in investor excitement’ and returns . Year to date GM is up 52% which is great, but Ford is up 122% so far in 2021. Ford also reinstated their dividend, which puts pressure on GM to do the same.
I say Mary Barra is a good CEO, but not perfect, and she has made a few glaring misjudgments. Ford is making better judgements right now, and Ford is also doing a better job at PR, which can clearly be seen on social media.
Ford is still focused on being an exciting automaker with Bronco (modern day equivalent of 1960’s muscle) and Mach E (a much better ride than sad little Bolt). GM just keeps using C1 platform for Blazer and other ho hum rides as they get ready for the EV launch. The EV market will remain small for the next five years so The General needs a few impressive ICE offerings.
Ford stock was lower to start with, however, so on paper makes more dramatic gains. GM is still the more profitable company. Even Stellantis has a brighter future than Ford being US #4 & the only mainstream automaker to earn healthy margins in Europe. VW earns 2% and even sad Opel beats that!
Ford is looking for stock stability where ever they can find it.
Companies st risk are those usually taking the greatest risks. They are the ones with nothing to lose.
GM is in a good place and for once see not rushing out new tech before it is ready.
Automakers will get one shot here and if they fail it could cost them big. If they succeed they could leverage a major win.
Don’t be fooled by Ford marketing yo think they are winning.
They have a couple vehicles now. GM will into more EV cars in the next couple years the others will have by 2025.
GM more profitable? Dude, 10 years ago GM was bankrupt and wiped out their shareholders, and debt holders. GM got a free do over, Ford has survived… end of story on that one.
Ford was behind even after fielding EV/hybrids in the ’10, they just bought an outfit just to catch up and it payed big, honestly IMO they should had more Rivian/Ford products by ’25 than they have planned. GM has no dice with the Nikola deal but fortunately things are being done in-house anyway.
gm didn’t need rivian. they had nikola.
That is pretty funny… GM got Nikola and Lordstown instead… Ouch Mary Barra… I think Lucid would have been a better fit for GM, more cool technology at Lucid, but Rivian is a stronger business.
Lol nikola who?
As a GM fan, this one hurts fellas, If they had invensted in Rivian instead of Nokola, they would be in much better shape. I’m hoping the new Silverado will smash everyone! Also waiting to see if the new Celestiq is at least as good as the Lucid Air.
Haha! Celestiq will be a beached whale. Lots of cool tech never seen on a production car, incredibly high price, but compared to Lucid Air will have weak range, and charging, and will be a land yacht on the track.
Exactly
One things for certain, it will need a bigger screen.
People on GMauthority: EVs are dumb and they’re going to ruin cars forever. GM is going to fail for investing so heavily in them.
Same people on GMauthority: GM is dumb for not investing in Rivian. Ford is smart for investing heavily in EVs. GM is going to fail!
Fantastic.
I don’t think GM or Ford are going to fail, but I think the current GM management regime is not making as good of decisions as Ford management. Ford execs seem real, and down to earth, I tweet back and forth with Farley, GM seems like snobbery and smugness central. Ford is having meetings and telling their managers we are under attack, and need to do better. GM is all la la la la, we are the best and biggest!!! If I was inside the executive branch at GM I would be sounding the alarm, GM needs to drop the act of overconfidence (arrogance) and get to work on the future. GM needs to build a few EV’s that are best in class instead of 25 mediocre models.
as an investor, i don’t care what gm does as long as their stock price goes up. they could start breeding unicorns for all i care.
as a consumer, my next car will most likely be a hybrid and not a pure ev.
You should drive both and then decide EV or Hybrid? Ev’s are not for everybody, but they are way more fun to drive.
Ya, on investing I am the same, I do not care if the company bags chicken poop, as long as they make money and the stock goes up I am in. Rivian has been a winner, doubled my initial investment in less than a week, but unfortunately reservation holders could only buy 175 shares at the IPO price.
Umm I see the same people that like ev talking about them here. I don’t see any of the people who dislike ev saying what you are claiming.
Ford did not beat GM to any Rivian investment no matter how dark you wish Color it, Ford was “reacting” in an effort to keep from be left behind plain and simple.
GM wanted an exclusive agreement where there would be no chance Rivian (or a disgruntled employee) could share GM’s own tech with another investor, there wouldn’t be one. This was a smart move by GM, once tech has been leaked or stolen, looking at you SK Innovation, there’s no taking it back.
Fool me once, shame on you…
What GM was after was to have Rivian build the EV version of the Silverado and Sierra as to not interrupt the production of the current trucks, who knows how well the EV’s will sell after the initial public “reaction”. We have seen in the past how much assembly line changes can slow things down, Fords switch to aluminum bodied truck is just one example.
Another idea here. What does Rivian have that GM already foes not have tech wise? Why pay someone for whist you already have?
HAHA! You are joking, right? GM was after Rivian’s tech, not the other way around. Look at the date Ford signed on with Rivian, and GM’s reaction? Look at the date Hummer EV was launched and BrightDrop? Where do you think those ideas came from? GM brass saw Rivian’s business plan, and are trying to copy it. GM does not try to be the best in anything they do (other then maybe Corvette), they just try to be good enough. This is GM’s biggest problem, nothing they do is “best in class”. GM is a follower company, not a leader. There is very little innovation that comes from GM and if there is innovation in their products it is usually purchased from suppliers. I mean think about it, what Technology for 2021 has GM invented in house? Not much…
I would say you are spot on with this. I agree 100%
Rivian’s a startup business and needed to raise capitol and didn’t want a monogamous relationship, and good for them, they need the flexibility of multiple partners.
“GM brass saw Rivian’s business plan”, and reacted, ooh, so when do you think GM caught wind of Rivian and the whole EV thing. After they saw that Rivian saw Tesla who saw who, in 1996?
The Hummer EV? That’s a no brainer isn’t it, vehicles that were being torched while sitting new in dealership by environmentalist’s. You didn’t see that coming and think it was a reaction to Rivian? TFRT!
BrightDrop? Did you expect GM to replace the 26yr old Express/Savana cargo van with another traditional American sized ICE powered van?
Innovation? purchased from suppliers? Do you think the big players show their new cards early in the game, during development. It only comes out when it’s ready for market or to counter someone else’s PR.
Welcome to the global market, every industry buys and sell to and from or partners with others to cut costs or speed up development. How well did Henry Fords attempt at running his own tire division go?
The first electric car was almost 200 years ago so I guess no manufacturer “innovates” anymore.
HAHA, you are hilarious, sound just like an old GM exec in denial… BTW, Rivian Stock up another 5% this morning Fords stake now worth $16B, which is about 2 years of GM’s profit.
GM saw Rivian’s plan to build off road adventure vehicles, and last mile delivery vans, then took the idea and tried to make it theirs, but Rivian beat them to market, and to $$$.
the answer will be clear on 2040 who is still in market and who died. Now is just a chess poker
Yes Fords investment has increased from $1.2B to $10B but that is the value right now. Elon is also worth 253B but he doesn’t have that much money. What’s Rivian’s value going to be in 10-20 years. Besides the electric van what technology do they have that another automaker doesn’t have? It took them a long time to release a truck that has 315 miles and it costs $70k plus. Whether you like FORD or GM do we really think Rivian truck as presently constructed is going to be better than the Lighting or the electric Silverado? I can’t say I think so, did GM miss out on short term gains? Yes definitely but long term is the real question.
Ford owns 12% of Rivian, so today that is worth $15.3B that is pretty good return on investment, and GM got how much on the Nikola deals? And Lordstown? Ya, thats the discussion… Mary Barra nailed it on Cruise, but she has missed on EV’s Big Time.
What does Rivian have that GM doesn’t? 4 motor drive system, their own vehicle operating system, real OTA updates to all modules (same as Tesla), Hydraulic self leveling suspension tech right out of McLaren, an untarnished brand image. Most of all right now, Rivian has investors interest, and a valuation 30% higher than GM. Doubled in a week…
Now Rivian R1T I think is a 20-30K a year product, R1S is aimed right at Land rover, but will also pick up customers from Lexus, GM, Ford, Tesla, and others, I think R1S is the one to watch, then the Rivian Van, sure looks better then BrightDrop.
Where does Rivian have a business advantage on GM you ask? Money… Rivian can get all they need on very easy terms, GM has to pay big to borrow money. Last year Gm was borrowing at 7% interest, Rivian gets the cash for free, just like Tesla and Lucid. GM has debt payments due every month, slowly bleeding them out, Rivian has no debt, and $17 in cash.
Rivian 315 mile range and $70K price, compare that to other EV’s with 315 mile range? Right now it’s the cheapest EV on the market with that range outside of Tesla 3 and Y, which are close, and have economy car fitments and less power/ slower. GM is coming with HummerEv at 55% more for only 35 miles more range
“What does Rivian have that GM doesn’t? 4 motor drive system” 😯 I guess they are better at counting.
*Their own vehicle operating system, real OTA updates to all models”, and they have soo many 😃 with tons of apps (perfect for your iphone) right and yes GM’s Global B architecture isn’t just “network connected” (same as Tesla). 😋
“Hydraulic self leveling suspension tech right out of McLaren” wait, what? You mean Rivian doesn’t design every aspect of their cars, they’re buying tech, where have I heard that before? 🤢
“R1S is aimed right at Land rover”, no, according to Sam all new cars are aimed right at GM’s offering, lest they don’t have one in the category. 😮💨
1200+ total sales by end of year! 😲 Astonishing!
In the end it will be the consumer who decides the fate of electric cars. So far the government has to bribe wealthy people at the rate of 12k per car to buy them an they still arent selling that many of them.
Go try and order a Tesla and tell me how long it takes to get it and we will see if you come to the same conclusion. Demand is extremely high right now. There are a lot of cars on the road it will take time for the transition. Also what is that $12k you are talking about?
Not long if you want a model 3 or Y performance, 2 weeks, or a Plaid, Tesla has long waits for the cheaper models, but choose the higher end models you can get it much sooner. Funny since they are essentially the same cars with just different drive units. Tesla is trying to push people to order the higher end models to increase margins.
I ordered my model 3 a little over two weeks ago and its supposed to be here before the 1st of January so not too long. What I was trying to say is Tesla doesn’t have a demand problem.
Maybe you are not smart enough to understand the possibilities with 1 motor driving each wheel, do you know how traction control, and anti-lock brakes work? 4 wheel torque vectoring? In an EV where every bit of efficiency is important to harness, GM vehicles use brakes for traction control, Rivian uses the motors, which is a positive and which is a negative on efficiency?
No, GM VIP system is NOT the same as Tesla or Rivian, GM still buys all their modules from the lowest bidder, and the each supplier writes the firmware for that module. When GM wants to update engine controls, they have to go to Bosch, have them update the firmware, then recall the cars because they left those modules out of the OTA capabilities. My Tesla model Y has had several updates to the modules controlling the battery and motors in the last year, one update gave me more range, and another game me quicker acceleration, all free of charge, and done while I sleep, no dealer trips required.
On Rivian’s suspension, its a performance car technology redesigned for an off road truck, GM has nothing like this, which is why the Hummer EV look like a hobby horse when you add power or brake, Rivian has much tighter body control.
1200, How many Hummers have been sold so far? You can laugh, but the stock market has this one right, Rivian is a winner, GM is a laggard with old tech purchased from suppliers. By the way, I posted 5 minutes ago that Rivian was up 5% today, sorry, now its 7% Ford made another Billion, while I was typing.
I think one thing you need to learn is you don’t make a dime until you sell. “Ford made another billion”, that’s just not true. The stock IPOs a week ago and it’s getting pumped. Over time it will go back.