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Many battles over climate policy have been raging basically unbroken for 40 years. But something that sets this Except for a subset of people who are interested in climate change and have started businesses to combat it, they become extremely wealthy.
The electric car start-up Rivian applied for an IPO on Friday. If you’re unfamiliar, Rivian makes electric trucks that look sleek, friendly, and attentive, almost like Pixarian. His first customers, however, are more from the Gucci set than from the Wall-E to adjust. Its entry-level truck, the R1T, starts at $ 67,500; the maximum trim is more than $ 73,000. Even though Americans now regularly pay $ 40,000 for luxury family vans that look Like pickup trucks, Rivian’s cars are upscale. (It is said that more affordable models will come in a few years, after refining its tech to luxury offerings. Tesla went the same way.)
The startup hopes to raise $ 8 billion in an IPO around Thanksgiving, which would estimate the company at $ 80 billion. If successful, the electric vehicle maker would enjoy one of the largest IPOs in the US market in the last decade, bringing in roughly the same amount Uber did it in 2019.
Another historical comparison is also the raising of the eyebrows. In 2010 General Motors emerged from bankruptcy and has $ 20 billion in an IPO. By that time, GM had sold hundreds of millions of vehicles in its 102-year history. Rivian is 12 years old and claims to have delivered the first vehicles to customers last month. But if Rivian has its way, the stock market will value both companies at around $ 80 billion by the end of the year.
Without getting excited, Rivian represents President Joe Biden’s ideal of business. It has a technical founder. It actually does something useful, a physical asset that you can drive and touch. Its manufacturing facility is not only located in the Midwest, but in a city that is literally called Normal. It goes public via a traditional IPO, not a trendier and more founder-friendly special purpose vehicle or SPAC deal, because it needs money quickly.
At the same time, Rivian is clearly some kind of technology company and has learned from the modern giants of the west coast. Like Apple, it wants to be vertically integrated: Similar to buying a new iPhone, you buy a new one device buy directly from Rivian, purchase Rivian intangible services through this device’s software, and take the device to a Rivian store if it breaks. The physical device is designed by in-house Rivian engineers and optimized to run the Rivian software. The only difference is that the device is a four-ton truck, not a phone.
And Rivian got his current position with the help of two giants of the US economy. Amazon owns at least 5 percent of Rivian’s stock and has placed an order with the company for 100,000 delivery vehicles, making it the largest single EV purchase ever; the name of the mega-dealer appears in Rivian’s IPO filing more than 80 times. Ford also owns a large stake in the company. (The old school automaker and Rivian originally planned to collaborate on an electric SUV, but the deal fell through.)
Before the pandemic, that was a truism in financial journalism Private markets had supplanted the public markets– That there was so much cheap money floating around in the 2010s that the world’s Ubers and Airbnbs could run on the backs of private equity and venture capital firms with undetermined losses without facing an IPO exam . It’s unclear whether this preference for private markets will survive the pandemic rebound, but you can see how Rivian did Power went this way. The IPO filing shows the company is losing money – it has lost more than $ 1 billion since the beginning of the year and plans to spend billions more in the next few years – but so was Uber; In 2019, the year of the IPO, the car pool agency lost $ 8.5 billion. (There’s another way of looking at it, too: it’s so expensive to start a new car factory from scratch and ramp up a global production line that it came from the same order of magnitude than subsidize more than 6 billion ride-hailing trips.)
But one sector in which the public markets are clearly superior, at least from the founders’ point of view, is the electric car industry. And here, with apologies to Grimes, we have Elon Musk to thank. Musk has successfully lured private investors – people who don’t work in finance, who are openly at home with Robinhood or E-Trade – to finance the high costs of the energy transition. As of August 2019, Tesla’s valuation has risen from about $ 43 billion to $ 784 billion – in other words: 1,700 percent Growth. Tesla who sells almost 500,000 cars last year is now more than twice as valuable as Toyota, who have sold more than 9.5 million. The share price has risen so much that it has become too expensive to short the stock, and the company’s doubters gave up everything.
Musk proved that the public promote a certain part of the energy transition, the switch from internal combustion engines to electric cars. That being said, I would call that an invaluable achievement it personally added $ 100 billion to Musk. EV component, charger, and battery manufacturers are now going public so frequently that if you don’t pay close attention to financial markets, you’re likely to overlook them. The electric charging company Wallbox went public as part of a SPAC deal yesterday; Polestar, Volvo’s EV spin-off, went public last week. The EV market is now getting so foamy that climate advocates should perhaps be concerned: Is Tesla really almost ten times more valuable than General Motors? And if not, can the EV industry as a whole survive the bursting of Tesla’s bubble?
Wannabe decarbonizers may not have a choice. Venture capitalist William Janeway has argued that there are some types of financial bubbles are good because a capitalist society “can mobilize sufficient resources to invest in the technologies of the future”. Maybe we’ll see that at Rivian now.
Emphasis possibly. I write about Rivian because the energy transition is so far advanced that individual companies to participate in it important now. The window for new EV companies is closing. And that means that the story of Rivian is written – and society decides how to interpret its cultural policy.
In his filing, Rivian announced that there had been 1 percent of its equity to a new philanthropic initiative called Forever that supports environmental and conservation purposes. This is similar to the outfitter Patagonia, which has committed 1 percent of its own profit to nature conservation. And you see it as a crux for the automaker, a decision that is not entirely in his hands. Rivian could become Apple, a hugely profitable company that blends engineering and sophisticated design to bring new high-tech and a particular cultural aesthetic into the mainstream. Or it could resemble Patagonia, an upscale brand that stands for expedition quality, yes, but appeals to a smaller, more cosmopolitan segment of society. His and our choices will help determine the role electric vehicles will play in decarbonizing America over the next few decades.