As One of the World's Richest Persons, Can Jeff Bezos Help Make Amazon-backed Rivian Bigger Than Tesla?
Electric truck maker Rivian is one of the most talked about startups since electric vehicle pioneer Tesla went public in June 2010. At the time, Tesla was still a niche California startup working on the Model S sedan.
But over the past decade, Tesla has released three more vehicles, which include the Model X, Model Y and Model 3 sedan. The four EVs have helped Tesla to become the world's most valuable automaker by far, with a market cap topping $800 billion.
Tesla's rapid rise as the world's most valuable car company coincided with ecommerce giant Amazon's own journey to become one of the world's biggest companies. Amazon reported a net income of $21.3 billion on more than $386 billion in sales in 2020 alone.
Amazon is now worth roughly $1.7 trillion, which has made its founder Jeff Bezos, along with Tesla Chief Executive Elon Musk, the two richest people on the planet. Each has a net worth of $200+ billion.
With their new multi-billion dollar fortunes, both Bezos and Musk branched out to launch other ventures, including private aerospace companies SpaceX and Blue Origin. But one of Bezos's other big bets is in electric truck startup Rivian.
Amazon invested in Rivian through its Climate Pledge Fund, a new $2 billion venture capital fund that invests in companies developing "sustainable and decarbonizing technologies", which is exactly the type of company Rivian is.
"The Climate Pledge Fund invests in visionary companies whose products and services can empower a low carbon economy," said Bezos when the fund launched in 2020.
Most recently, Amazon led another $2.5 billion investment round in Rivian over the summer. The e-commerce company is also one of Rivian biggest (and first) customers. In addition to backing Rivian via its Climate Pledge Fund, Amazon ordered 100,000 electric vans from the electric truck startup to add to its delivery fleet. The battery-powered vans were custom built to Amazon's specifications.
But it's Rivian's electric passenger vehicles, which include the fully electric R1T pickup and R1S companion SUV, that are poised to become a huge hit with consumers, based on the number of preorders the company has received for the R1T pickup. The two battery-powered models are designed to be rugged and are capable of handling off-road driving or highway cruising. Rivian is marketing its two electric trucks as "adventure vehicles."
With the buzz surrounding the first deliveries of the R1T electric pickup later this month, Amazon-backed Rivian could soon find itself a major player in the electric vehicle space. In addition, the company owns an auto factory in Normal, Illinois where it is building its electric vehicles. The site was a former Mitsubishi Motors plant. Rivian is also looking for a site for a second EV factory in the U.S.
Rivian's electric vehicles also appeal to a big group of potential buyers. Unlike Tesla with its luxury-focused EVs like the Model S and Model Y, Rivian is targeting the U.S. truck market, which is currently dominated by full-size models from Ford, General Motors and Stellantis brand Ram.
The Ford-150 has been the best selling pickup in the U.S. for over 40 consecutive years, so Rivian will have to fight for market share. But Rivian says its state-of-the-art electric powertrain technology gives the R1T pickup a competitive advantage over Ford's gas-powered F-150 and other trucks.
It's safe to say that Tesla and Rivian are both prompting other automakers to introduce their own fully electric models. Ford expedited the development of the fully-electric F-150 Lightning, which arrives in various forms next spring, including a commercial version called the Lightning Pro which starts at $40,000.
Despite the arrival of the F-150 Lightning next spring, it's Rivian that won the race to be the first automaker to introduce a fully-electric pickup truck in the U.S. market.
But now that Amazon-backed Rivian and other automakers are competing in space, Tesla's place as the world's top EV manufacturer could be short-lived, especially if Bezos ever decides to make additional investments in Rivian through its Climate Pledge Fund to help make the company a leading producer of EVs.
With the backing of Amazon, Rivian could also harness the power of Amazon's Web Services (AWS) technology, which includes powerful machine learning AI technology, as well as cloud data services to support its fleet of connected electric vehicles, including for future autonomous driving technology.
With a net worth of nearly $200 billion, Bezos certainly has the means to help beef up Amazon's investment in Rivian to help the company better take on Tesla and others. But whether he will choose to do so remains unclear.
Regardless, Rivian plans to raise up to $8 billion in its upcoming IPO later this year, which is shaping up to be one of the biggest Wall Street debuts in recent years.
Rivian is seeking a massive valuation of about $80 billion in its IPO. The $80 billion figure would make Rivian more valuable than Ford Motor Co, which has a market cap of $63 billion, and almost as valuable as General Motors, with a $83.7 billion market cap.
If Rivian manages to raise its goal of $8 billion, which is looking more likely as investors continue to pour money into electric vehicle companies and related stocks, the company will have launched one of the biggest IPOs since Facebook went public in 2012.
But more importantly, Rivian already has the financial backing of Amazon and other top venture capital firms that can help the company succeed in the competitive auto industry that's quickly moving towards electrification.
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