$700M flows to elec­tric-truck firm

In­vestors led by Ama­zon have high hopes for startup Ri­vian

Arkansas Democrat-Gazette - - BUSINESS & FARM - COM­PILED BY DEMO­CRAT-GAZETTE STAFF FROM WIRE RE­PORTS

Ri­vian, the elec­tric-truck startup, re­ceived a ma­jor boost Fri­day with the an­nounce­ment of a $700 mil­lion in­vest­ment round led by Ama­zon. Ri­vian of­fered few de­tails but said it would re­main in­de­pen­dent.

The nascent man­u­fac­turer is gear­ing up to build the ve­hi­cles at the shut­tered for­mer Mit­subishi plant in Nor­mal, Ill., be­gin­ning in 2020.

“We’re in­spired by Ri­vian’s vi­sion for the fu­ture of elec­tric trans­porta­tion,” Jeff Wilke, Ama­zon’s world­wide con­sumer CEO, said in a news re­lease. He added that Ri­vian’s Chief Ex­ec­u­tive Of­fi­cer R.J. Scaringe “has built an im­pres­sive or­ga­ni­za­tion, with a prod­uct port­fo­lio and tech­nol­ogy to match. We’re thrilled to in­vest in such an in­no­va­tive com­pany.”

On­line re­tail giant Ama­zon has been build­ing its de­liv­ery ca­pa­bil­i­ties to take more con­trol of its wide­spread ship­ping op­er­a­tions, and an­a­lysts be­lieve in­vest­ments in such cut­ting-edge tech­nolo­gies as au­ton­o­mous and all-elec­tric ve­hi­cles are part of that strat­egy.

In­dus­try an­a­lysts be­lieve Ri­vian could be­come the Tesla of trucks, cre­at­ing a niche cov­eted by con­sumers and au­tomak­ers alike. The com­pany, which had pre­vi­ously raised nearly $700 mil­lion in fund­ing, gains both ad­di­tional cap­i­tal and le­git­i­macy through the part­ner­ship while still in pre­pro­duc­tion mode.

Ri­vian first showed its truck and sport util­ity ve­hi­cle at the Los An­ge­les Auto Show in Novem­ber. The key fea­ture of each is a chas­sis that is shaped like a skate­board and in­cludes all the com­po­nents that pro­pel the ve­hi­cles — a large bat­tery pack, axles, sus­pen­sion, cool­ing sys­tem and four elec­tric mo­tors. The com­pany claims its pickup, the R1T, and its SUV, the R1S, will be able to go up to 400 miles on a full charge.

Both are ex­pected to sell for $68,000 or more. In Los An­ge­les, Scaringe de­scribed them as up­scale ve­hi­cles that can be used for off-road ad­ven­tures. They are in­tended to com­pete for mo­torists who buy pricey Land Rovers and Porsche SUVs.

Founded by Scaringe in 2009, Ri­vian em­ploys about 750 peo­ple at its head­quar­ters in Ply­mouth, Mich.; its tech­nol­ogy and en­gi­neer­ing op­er­a­tions in Cal­i­for­nia; and its plant in Nor­mal, Ill., which the com­pany bought for $16 mil­lion from a liq­ui­da­tion firm in Jan 2017.

Ri­vian re­ceived a $200 mil­lion loan last year from Stan­dard Char­tered Bank, and pre­vi­ously se­cured more than $450 mil­lion from eq­uity in­vestors in­clud­ing the Saudi com­pany Ab­dul Latif Jameel and Su­mit­omo Cor­po­ra­tion of Amer­ica.

Ama­zon is lead­ing the new $700 mil­lion in­vest­ment round, which also in­cludes par­tic­i­pa­tion from sev­eral ex­ist­ing share­hold­ers, ac­cord­ing to Ri­vian.

“This in­vest­ment is an im­por­tant mile­stone for Ri­vian and the shift to sus­tain­able mo­bil­ity,” Scaringe said in the re­lease.

“Be­yond sim­ply elim­i­nat­ing com­pro­mises that ex­ist around per­for­mance, ca­pa­bil­ity and ef­fi­ciency, we are work­ing to drive in­no­va­tion across the en­tire cus­tomer ex­pe­ri­ence.”

Ri­vian is in talks with Gen­eral Mo­tors Co. about the largest U.S. au­tomaker in­vest­ing or col­lab­o­rat­ing an­other way, peo­ple fa­mil­iar with the mat­ter said.

In ad­di­tion to $4 mil­lion in lo­cal in­cen­tives, Ri­vian is set to re­ceive $49.2 mil­lion in state tax cred­its over 15 years if it meets em­ploy­ment and in­vest­ment tar­gets for the Nor­mal fa­cil­ity. Those goals in­clude cre­at­ing 1,000 new jobs by 2024.

Michelle Krebs, a Detroit­based an­a­lyst for Au­to­trader, said the new part­ner­ship with Ama­zon makes sense for Ri­vian.

“Ama­zon is an ob­vi­ous player. For them, it’s not that much money, but it does fit into their ideas for a fu­ture com­mer­cial fleet,” Krebs said. “I’ve al­ways thought elec­tric and au­ton­o­mous make the most sense when you use them in com­mer­cial fleet, be­cause you can plan rides and charg­ing.”

Adam Jonas, an eq­uity an­a­lyst with Mor­gan Stan­ley, is­sued a bullish note on Ri­vian on Mon­day, call­ing it the “next se­ri­ous com­pe­ti­tion” to take mar­ket share from Tesla in the elec­tric-ve­hi­cle seg­ment. The com­pany “will take el­e­vated im­por­tance in in­vestors’ minds as EVs be­come the fo­cus” of au­tomak­ers’ in­vest­ment and strat­egy, he said.

In­for­ma­tion for this ar­ti­cle was con­trib­uted by Robert Chan­nick of the Chicago Tri­bune, by David Welch and Ch­ester Daw­son of Bloomberg News and by Neal E. Boudette of The New York Times.

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