Why Rivian is still no Ford or Tesla: Morning Brief

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Monday, August 15, 2022

Today’s newsletter is by Brian Sozzi, an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

I didn’t truly understand my lack of enthusiasm for the Rivian (RIVN) story until I pulled the t-tops off my ‘91 Trans AM this past weekend for another mid-life crisis cruise to the beach.

“How did this car capture my heart?” I wondered to myself. After a few moments, I traced the love affair back to seeing Pontiac commercials on TV as a kid hawking their famous tagline: “We are driving excitement.”

Then, I was reminded how the auto industry has been built over decades by brash and bold executives such as Henry Ford, John DeLorean, Lee Iacocca, Elon Musk, and new entrant, Ford CEO Jim Farley.

I mean there was Farley, last week at a company town hall, essentially flipping the bird to Elon Musk at the end of a speech. That gets you excited about buying a Ford electric vehicle, even if you love a gas guzzling Shelby Mustang.

Of course, Farley is trying to match Musk’s bravado, which has allowed Tesla to capture of minds of consumers, and, most importantly, investors over the last decade-plus. Investors have bought into Musk’s vision for Tesla, powering losses and fueling capital raises, and the results have been plain to see for shareholders. Farley is trying to make the same thing happen at Ford, spending billions to pivot the iconic automaker to an EV future.

All of which got me thinking about Rivian’s valuation, god awful post IPO stock performance, and future as I hit the road for a gas-fueled cruise in my 30-year-old sports car.

By almost all accounts — such as this MIT profile — Rivian founder RJ Scaringe is a low key guy. Rivian has declined to make Scaringe available to Yahoo Finance for an interview several times.

CEO RJ Scaringe stands outside the startup Rivian Automotive's electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. Picture taken April 11, 2022. REUTERS/Kamil Krzaczynski — CEO RJ Scaringe stands outside the startup Rivian Automotive’s electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. Picture taken April 11, 2022. REUTERS/Kamil Krzaczynski

Scaringe has poured all of his professional life into making Rivian a reality. In a 2019 New York Times profile, Scaringe said he was spending only 5% of his time with his family. I appreciate the heart and hustle — I didn’t start a car company, I just drive ’em.

The company’s two products – the electric trucks the R1T and R1S – look nifty. Who wouldn’t want to whip out a “camp kitchen” from inside their vehicle, as our sister publication TechCrunch reviewed.

Some of those on Wall Street who have met RJ are quick to note he’s no Musk or Iacocca.

“Rivian has a unique culture and is building a special vehicle and EV vision for the future in my opinion,” Wedbush analyst Dan Ives – who has met Scaringe – tells me. “RJ is a technologist and is not promotional which is a positive in my opinion especially in this market.”

Fair enough.

The problem is, the general public has no idea who the hell he is. And by extension, they don’t know Rivian, either. The public knows Elon Musk. They are getting to know Jim Farley. My mom remembers Lee Iacocca from his Chrysler minivan commercials.

Here’s what the general public does know about Rivian:

The company has lost more than $2 billion on an operating basis year to date.
The company has fallen short on its production targets pitched during its IPO.
Despite more than $15 billion in cash, the Street isn’t truly sold another capital raise won’t be needed sometime in 2023 as Rivian ramps production.
The stock price is currently at $38. The IPO priced at $78 on November 10, 2021. The stock closed at $170.21 on November 16, 2021.
Amazon has 100,000 orders for Rivian vans and is a large investor in the company. Who knows when all of those vans will be delivered – the company thinks it can make 25,000 vehicles this year (there are skeptics on this number being hit).

If Rivian is ever going to reach its full potential as an auto company and investment, Scaringe needs to channel the ghosts of legendary auto salesman that have come before him.

No one says he has to be buffoonish like Musk, tweeting constantly, buying Twitter, trying to not buy Twitter, and so on. Scaringe may not even need to be Farley, out there pumping up an entire nation of F-150 owners to swap out 10 year old rides for the new electric version. But Scaringe should find his voice soon.

Happy Trading!

What to Watch Today

Economic calendar

8:30 a.m. ET: Empire Manufacturing, August (5.0 expected, 11.1 during prior month)
10:00 a.m. ET: NAHB Housing Market Index, August (55 expected, 55 during prior month)