THE PROFILE
It’s 8 o’clock on a January morning, and the temperature in Normal, Illinois, just a few hours south of Chicago, is well below freezing. The small pond in front of Rivian Automotive's assembly plant has turned to ice, the grass is covered with frost and there is snow in the forecast. It's not much warmer inside the plant. Nearly the entire 2.6-million-square-foot facility is a construction zone, undergoing a massive $750 million renovation to prepare for the end of the year, when it expects to start rolling out battery-powered trucks, vans and SUVs. So minor details like heat are not exactly a top priority.
The only finished area—a second floor at the front of the building that overlooks the factory—is where the plant's previous owner, Mitsubishi, had its executive offices. Back then, access to this floor was restricted to the suits. Now it's a giant open workspace, accessible to all, with a cafeteria, polished concrete floors and lots of natural light, just like the floor plan at Rivian's research and design center in Plymouth, Michigan. The concept for both offices was to merge industrial and outdoor aesthetics that mirror the company's brand—an automaker that builds sustainable vehicles usable in off-road settings. Rivian, which was founded in 2009 but is finally releasing its first vehicle this year, also has operations in San Jose and Irvine, California, where it develops its technology and batteries.
“When we're done cleaning, painting and installing the equipment,” says Rivian's 37-yearold founder and CEO, Robert Joseph Scaringe (better known as just “R.J.”), “we will eventually be able to produce 250,000 vehicles per year by mid-decade.”
Starting an independent car company is not easy. Among the roadkill in automotive history are Preston Tucker, who challenged Detroit in the late 1940s, and John DeLorean, who failed to take the Motor City back to the future in the early 1980s. Producing a line of mass-market vehicles in the 21st century is even more difficult than it was for Tucker and DeLorean, and considerably more perilous in the EV category.
With the emergence of Rivian, the electric vehicle market is no longer a one-horselesscarriage race. Indeed, the 2020s are gearing up to be the decade of the EV. According to research at Oppenheimer, EVs and plug-in electric hybrids accounted for a mere 2.2 percent of all U.S. vehicles sold in the last quarter of 2019. And only a third of those were purely electric. But that is changing rapidly. While only 5.1 million electric cars were sold worldwide in 2018, that figure is expected to surge throughout the decade—21 million units are projected to be sold in 2020, 98 million in 2025 and 253 million in 2030.
Building a new EV, however, requires investing in cutting-edge research into components like battery packs and powertrains. The only company that has been remotely successful is, of course, Tesla—and even it's had a rough go of it.
“We spent a lot of time looking at and understanding how different [automakers] were built,” Scaringe says. “And we spent a lot of time understanding the risks associated with how to build and scale a business, and the working capital that's [required].” Over the past 13 months, he and his team have raised $2.85 billion to fund Rivian's future. First Amazon (and others) invested $700 million in February 2019. Then Ford ponied up $500 million two months later.
Cox Automotive, whose brands include Autotrader and Kelley Blue Book, came through with another $350 million in September. And if that weren't enough to turbocharge Scaringe's outsize ambitions, just before Christmas Eve, money management behemoth T. Rowe Price led yet another investment round worth more than $1.3 billion.
That early infusion of capital—on top of investments of nearly $500 million, including from JIMCO, the investment arm of Abdul Latif Jameel, a Saudi corporation that has bet big on energy and mobility— has given Rivian a valuation just north of $5.5 billion. Scaringe is estimated to own slightly more than 20% of the company, making him the latest automotive billionaire. The funding has also allowed Scaringe to nearly triple the size of Rivian's workforce, from around 700 in 2018 to more than 2,000 today, which is how he can scale production this year.
The question is: Even with $3 billion, does Rivian have enough to realize Scaringe's electric dreams?
Until now, it's been a far smoother road than the one Elon Musk faced with his first vehicle. Tesla raised around $100 million between 2003 and 2008 to produce the Roadster, which was soon abandoned in favor of the Model S, and the Model S required more than $350 million in funding (including a 2010 IPO that valued the company at $1.7 billion). The journey of the Model 3 was particularly rocky. Supply-chain issues and Musk's desire to completely disrupt the manufacturing process led to a two yearplus delay delivering cars to customers and a slew of quality-control issues. The fallout from these problems reportedly cost the EV maker hundreds of millions of dollars. (Tesla did not respond to multiple requests for comment.) The company then took on estimated billions in debt as it scaled its production for the mass market.
So if the mighty Tesla has faced so many detours and potholes, what makes Scaringe think that Rivian, which hasn't made a single car, can have a smooth ride? He doesn't. “Things will go wrong,” admits the young CEO. And Scaringe, who comes across like a mild-mannered Clark Kent type compared to Musk's manic Tony Stark, is confident he can overcome any perils or roadblocks. After all, Rivian is built for treacherous terrain.
R.J. Scaringe first dreamed of starting his own car company when he was in high school. But unlike most teenage gearheads with the same ambition, Scaringe backed it up by studying engineering. His vision changed in 2007 while he was attending MIT's prestigious Sloan Automotive Lab, where he attained a doctorate in mechanical engineering and the skills he would need to build the vehicle he imagined in his head. “As I became increasingly aware of how many problems were born out of the automobile—geopolitical, climate, air quality and more—it became a huge source of internal conflict for me,” he recalls. So he scrapped his plan for a gas-powered sports car for one that was battery-powered, much like Tesla's original Roadster.
After graduating with his doctorate in 2009, Scaringe returned home to Melbourne, Florida, where he founded the company that became Rivian. He and his team spent four years developing a speedster-like EV before Scaringe found what he thought was an obvious gap in electric vehicles and one that spoke to his outdoorsy interests—a truck and a luxury SUV.
Scaringe also spent nearly a decade developing its innovative skateboard platform—a chassis that contains the battery pack, suspension, electric motors for propulsion and a computer to control it all. Finally, in November 2018, Rivian unveiled its two prototypes at the Los Angeles Auto Show: The R1S, an electric SUV that seats seven, and the R1T, an electric pickup truck. The so-called “adventure vehicles” look like the love children of a Range Rover—rugged, capable and luxurious—and are packed with the latest amenities such as internet connectivity and a host of driver-assist safety features.
The company expects to deliver an ambitious 20,000 units (combined truck and SUV) in 2021 and 40,000 in 2022, which could translate to approximately $1.4 billion and $2.8 billion, respectively, if all goes according to plan. By comparison, Tesla sold 25,000 units of the Model X in 2016, its first full year of release.
Beyond its first two releases, Scaringe says there will be three more vehicles in the Rivian
portfolio by 2024. Though he is cautious about providing details, Scaringe admits that one will be smaller in size and all will be considerably lower in price. It's a strategy akin to what Land Rover does with its Defender and top-of-theline Range Rovers—i.e., the same base model with fewer amenities. And if Scaringe can truly keep the price below $50,000, it will cause far worse headaches for Musk than a broken shatterproof window on his Franken-vehicle, the Cybertruck.
Tesla, of course, now dominates the EV market—by one estimate it represents nearly 80% of sales in the United States—and Rivian will face stiff competition in the luxury battery-powered SUV segment from other automakers. The R1S SUV will enter a market in the fall that includes the Mercedes-Benz EQC (starting at $67,900); the Audi e-tron SUV ($74,800); the Jaguar i-Pace ($69,500); and, of course, the Tesla Model X ($84,990). Other automakers such as Hyundai and Kia will offer more affordable options, such as the Kona EV and Niro EV, starting at $37,190 and $38,500, respectively.
Rivian should be without real competition in the truck category, however. Despite Tesla's highly public debut of the Cybertruck, it's not expected to be produced until 2022. And both Ford and General Motors have promised to release electric pickups in the next few years.
“The opportunities [in the EV market] are pretty substantial,” says Ed Kim, a market analyst for AutoPacific, an automotive research and consulting firm based in California. If Rivian becomes a threat to Tesla dominance, it could energize the category and set up a true EV rivalry. “Some experts have been predicting this for a while, and I think there are a few key factors happening now that [are leading to further] penetration of the EV,” says Steven Low, a professor of computer science and electrical engineering at Caltech. One is that vehicle range is expanding. Another is the availability of more charging facilities. And the third element is price.
Rivian claims its R1S and R1T will offer outstanding performance, including a range of just over 400 miles, or nearly 75 miles more than any other existing EV. Both will be able to sprint from zero to 60 mph in about three seconds. Above all, Rivian promises genuine off-road capability. Try driving your Tesla on the beach or into the woods.
The company also plans to build out a charging infrastructure, much like Tesla's Superchargers. “We are developing them in parallel,” Scaringe says. As for the cost, Rivian's pickup will have a base price around $69,000, the SUV $72,500 (and both come with a federal tax incentive). Scaringe hints that these prices will come down closer to release but wouldn't reveal a precise figure
Much will depend on Rivian's new deep-pocketed partners.
Having built a $3 billion war chest from Amazon, Ford and Cox in a short time is certainly an impressive start for Scaringe, but if Tesla's history is an example, that won't be enough funding to scale production to compete with Musk. Then again, those brands see opportunity in Rivian that Tesla could never provide.
The partnerships Scaringe forged weren't just about the cash. In Ford's case, the two companies will also build an electric vehicle together. “We're providing the platform,” Scaringe says. “They will provide the body and the interior.” Although Scaringe is reticent in talking about the project, the vehicle will be a luxury SUV with Ford's Lincoln brand.
Rivian hopes the Ford alliance will allow the company to grow beyond its own consumer electric vehicle offerings. For its part, Ford is seemingly doing it to keep the company's options open, as it often does, to pursue the best option with which to achieve its electrification goals: 40 electric vehicle models by the end of 2022. Besides the Lincoln with Rivian, Ford is working on the electric Mustang-inspired Mach-E SUV and both a hybrid and allelectric version of the Ford F-150, America's bestselling vehicle. Ford is also working with Volkswagen to develop EVs on its new EV platform.
Amazon, meanwhile, is looking to Rivian to develop a battery-powered delivery van as part of its pledge to be net-zero carbon across all its businesses by 2040 and use 100% renewable energy to power those businesses by 2030. Consequently, Amazon ordered 100,000 vans from Rivian. At least 10,000 should be on the road by late 2022, and all are expected to be operating in Amazon's fleet by 2024. The vans will presumably become part of an end-to-end logistics network that Amazon has been working on since 2015. If so, expect more Rivian orders to come down the road.
But it's the Cox partnership that could prove the most troubling for Musk. While Tesla has more than 100 service centers in 30 states, Cox handled more than 55 million service appointments in 2019 at its sprawling network of commercial and dealer partner service centers across the United States. If something goes wrong with an R1T or R1S, the idea, presumably, is that a customer will be able to take the vehicle to a Cox service center like Pivet to have it repaired correctly and in a timely fashion, something that Tesla has struggled with since its inception.
Cox is also playing the long game with Rivian—as more vehicles come to market, it wants to control secondary sales. “My hope is with the skills that we have,” says Cox president Sandy Schwartz, “and with all the things that we're learning, that we'll be the chief wholesale remarketer for all Rivians someday.”
Now they just have to build some.
The name of the Illinois town that Rivian calls home is the perfect adjective to describe Scaringe himself and differentiate him from Musk: Normal. Whereas Tesla's cofounder is all bravado and showmanship—he has weaponized his Twitter account and turned it into a de facto marketing division—Scaringe is soft-spoken and low-key. While Musk is photographed with models and pop stars, Scaringe is a family man, even if he rarely sees his family lately. These days, he lives out of a suitcase, spending five days a week traveling among the company's four offices to make sure things are on schedule. His wife, Meagan, and their three boys (all under 5) see him from Friday night to Sunday evening in their unassuming three-bedroom house near Irvine, California. On Sunday evening, he boards a plane to Michigan and repeats the process to ensure that his larger vision is being realized: thinking globally and acting locally.
When the Mitsubishi plant closed in July 2015, for example, the mood in Normal was decidedly funereal. “It hurt,” says Mayor Chris Koos. “It left over 1,000 people out of work, which causes a ripple effect throughout the community.”
Even after the plant was sold to Rivian for $16 million in 2017, residents remained skeptical. That negative sentiment soon changed, however. “Rivian showed interest in the lifestyle of the community, the quality of education, affordable housing and access to transportation,” Mayor Koos says. The company even had a preview day in Normal last summer to answer any questions from local residents. It made a big impact on Normal's perception of Rivian and, not surprisingly, proved valuable when it came to recruiting employees.
With the town onboard, Scaringe is now on a mission to lead Rivian through its first production cycle and expand its line. Though it's too early to tell who will win the EV wars, Rivian is one of just a couple of companies that has a strong chance not only to survive, but also thrive, according to Navigant's Sam Abuelsamid. He thinks Rivian might even be in a better position going forward than Tesla: “If you're talking about who's going to have potentially the most volume, getting more vehicles to market in the near- to mid-term, [I'd say] probably Tesla.” But from an actual business standpoint, Rivian is “in the better position to succeed because of the nature of the products they have.”
But first, the rubber has to hit the road.
KRISTIN STOLLER
JEFF SCIORTINO FOR FORBES
Northfield, Illinois-based Medline makes medical masks, biohazard bags, hand sanitizer, surgical gowns and drapes. In normal times it's pretty pedestrian stuff, but these are far from normal times.
Almost overnight, Medline's employees began working around the clock. They quickly ramped up production of bleach products, disinfecting wipes and, yes, toilet paper. The company's billionaire owners – the Mills family – started spending tens of millions of dollars to air freight vital supplies, including face masks and surgical gowns, from factories in China. They moved to reconfigure factories in Wisconsin and Connecticut to make hand sanitizer, with a goal of making 150,000 bottles a week by mid-April.
And all of that was before President Trump announced he is invoking the Defense Production Act to ease medical supply shortages, which will make things even more frantic.
“The volume is off the charts. I get emails and phone calls from acquaintances in the industry, from active customers, non-customers. I literally can't go an hour without getting some kind of request in my mailbox,” says Medline's 58-year-old
president Andy Mills. “Our executive team...is literally getting thousands of requests a day.”
It's crazy times for the family-owned firm, which has been quietly making basic medical supplies, from baby blankets to bandages, for over 100 years. Now, the company which has annual sales of $13.9 billion and is 100% owned by the Mills family, finds itself on the front lines of a global pandemic, forced to ramp up production of the medical supplies that only make up a small percentage of their 550,000-product business.
“We are only concerned right now about our employees' safety and taking care of our customers. We are not worried about sales or profits or anything. We need to get through this and everybody needs to be safe. And if we do that, we will worry about the next 50 years later,” says Mills.
The campus-like headquarters of Medline are in former Kraft Heinz offices, nineteen miles north of Chicago, set back among the strip malls and chain restaurants of Northfield, Illinois. The sprawling campus is nondescript from the outside but inside it is bustling with activity. The largest privately held medical supplies company in the U.S., its customers include hundreds of nursing homes, pharmacies and 45% of the top 150 hospital systems in the U.S.
Starting in early February, Medline employees began receiving desperate calls and emails from all sorts of would-be customers. "We are getting random calls and emails – anyone from a local dentist to people looking to export 20 million masks to China," says Mills.
It hasn't been easy. To meet demand, in January the company applied for tariff relief from the U.S. government – a lot of Medline's products are made in China and had been ensnared in Trump's trade war. The majority of the requests were denied. (Unsurprisingly, a couple of months and a few thousand global deaths later, those requests have largely been granted).
Expanding production of the face masks is also proving challenging. Medline sources its single-use masks from the Hubei province of China, where the virus originated, and factories are just starting to open back up this week. But due to shortages, reusable masks are now in great demand. There is good news there: Medline manufactures its reusable gowns and masks in Latin America, which so far hasn't been greatly affected by the pandemic.
Longtime customers such as Mayo Clinic and St. Louis-based Ascension, which operates 150 hospitals and 50 senior living facilities, get first dibs on all supplies, says Medline, which has turned down orders from potential new customers to meet the needs of its existing ones first. For now customers are able to order supplies “on allocation,” meaning they can only order quantities equal to their traditional orders. One exception: Medlinesupplied nursing homes who, historically, have never needed to order face masks and isolation gowns will be allowed to order them.
“I feel a great sense of responsibility to serve our industry and help the nation during a true crisis,” says Mills.
Medline has been at the front lines of disasters before. When Hurricane Harvey hit Texas in August 2017, the company jumped into action to make sure its customers got the medical supplies they needed. Medline bought high water vehicles and boats to distribute its products to nursing homes around Houston, where elderly patients were unable to be evacuated. Twelve years earlier, when Hurricane Katrina ravaged New Orleans, Medline dropped emergency medical supplies via helicopter on top of the parking garage of a hospital that couldn't evacuate its ICU patients.
Medline's roots go back to 1910, the year A.L. Mills moved from a small town in Arkansas to Chicago. He sold handmade butchers' aprons that he sewed together for workers in the city's vast meatpacking district. Soon after, a nun who worked as a seamstress at a local hospital asked Mills if he could make and sell them hospital garments.
“At that time, a butcher's apron and a surgeon's gown were the same exact material, except one had sleeves and one didn't,” Andy Mills recounts. “He decided it was a lot nicer to call on nuns and hospitals than guys slaughtering animals in the meatpacking district.” Thus, Mills Hospital Supplies was born in 1912. Twelve years later, his son Irving Mills took over the business.
The family invented the first surgeon's gown with 360-degree coverage and were among the first to commercialize blue and green fabrics in the operating room that cut down on glare from operating room lights. It also was the first to introduce the now ubiquitous pink
and blue striped blankets for newborns.
Inspired by Sears, Irving created a medical supply catalog and expanded the company's product line from textiles to gloves, medical equipment and surgical instruments. What they didn't make in-house, they resold.
In 1961, Irving sold the company to Cenco Instruments, a now-defunct laboratory equipment company based in Chicago. His sons Jon and Jim started Medline five years later, with a $500,000 (about $4 million in today's dollars) investment from Irving. Within the first year, they had 19 employees, many who had worked at Irving's company, and $1 million in revenue, mostly selling sheets, gowns and towels.
The current generation – consisting of Andy, his cousin Charlie, who is CEO and Andy's brother-in-law and Medline COO Jim Abrams — took over in 1997 when sales were already more than half a billion. The trio took over during a tough time. New software troubles caused the company to have difficulties tracking orders. It was the only year that Medline didn't see double digit sales growth. Employees were asked to work Saturdays. “I thought that would crush people, but it had the opposite effect. Employees appreciated that we shared what our predicament was,” Andy says.
Nearly a quarter of a century later, the Mills family still owns the entire business, which Forbes estimates is worth at least $3 billion.
Eventually – although no one knows when – the pandemic will end, and Medline is preparing for that future with a raft of new products.
One of the most promising: a hand-held, skin-graft device. Traditionally skin-grafts require painful surgery and take a long-time to heal. Medline's new device, which was developed by Harvard and MIT scientists, uses 316 microscopic needles to pierce healthy skin and graft it onto burns or wounds. The treatment can be done in 15 minutes in a doctor's office.
Though it hasn’t yet cleared clinical trials, Andy is hopeful the product will launch later this year or in early 2021. “The market opportunity is hundreds of millions [of dollars] worldwide. It's giant,” he says. “It's really the only device like that that's been created and thoroughly patent protected.”
Despite plenty of innovations like this over the years, there is a reason that the Mills family and the company aren't better known. “For a long time, I thought it was good that Medline flew under the radar screen. It's nice being a private company. There's a level of modesty in the company that we don't walk around with any swagger,” says COO Abrams.
Adds Mills, “I wish the additional attention to Medline did not come as a result of a worldwide pandemic. I am extremely thankful to our employees for continuing to work tirelessly to deliver product as quickly as possible, and we're even more grateful for the healthcare workers who are on the front lines fighting COVID-19.”