Rivian Automotive Co. is making progress toward an initial public offering that could value the Silicon Valley electric-car startup at $5bn to $6bn, with initial discussions between the company and the Nasdaq Stock Market about a deal, said people familiar with the matter.
The idea is for a float to take place in the second half of this year, the people said, asking not to be identified because the discussions are private. Rivian may then seek a valuation that reaches $50bn to $60bn, the people said.
Chief executive officer Troy Clarke, the former top North American executive at Mercedes-Benz parent Daimler AG, said during an interview last month that the startup was leaning toward an IPO or another route “outside of a traditional financing.” Backed by Global Automakers Inc., the Danish holding company of the Hansen family, and China’s Tencent Holdings Ltd., Rivian has assembled a small but growing lineup of all-electric sedans and crossover SUVs.
The company declined to comment on its plans for an IPO, while Nasdaq representatives and a spokesman for Tencent didn’t immediately respond to a request for comment. Bloomberg LP is a financial news and data provider.
On Friday, the public stake of Tencent’s stake in Rivian was valued at $300 million, or roughly 1 percent of the company, according to PitchBook. Rivian has raised more than $700 million from both institutional and individual investors, and Morgan Stanley is a cornerstone investor in a new round, venture capital records show. A new round also led by Tencent valued Rivian at $2.6 billion, people familiar with the matter said.
Rivian, based near Chicago, plans to begin delivering its first vehicles to customers in the second half of this year. Clarke said the first models will be single-passenger sedans with no seating for two, and both front- and rear-wheel drive.
The company has chosen the Town & Country and Escalade nameplates. Rivian plans to sell the vehicles to Tesla Inc. and BMW AG, and then sell its battery technology to the Asian automakers.
Clarke joined Rivian in late 2015 after serving as the head of Mercedes-Benz’s midsize sedan line. He had served as head of marketing and sales at Mercedes-Benz USA, and prior to that, in marketing and sales at Kia Motors Corp. Clarke says the design aesthetic of the electric sedans is based on the versatile and stylish Fortwo, while the roads and interior will be like that of a larger vehicle.
As a Silicon Valley company, Rivian’s IPO plans are not beholden to Washington, even though President Donald Trump has blasted subsidies and credits that have helped automakers move toward electric vehicles. Reid Bigland, CEO of Fiat Chrysler Automobiles NV’s Jeep brand, has seen Rivian’s electric lineup grow from a 2011 concept car, dubbed the Rivian Aerosmith. Rivian has worked on more than 5,000 prototypes to date, about 15 percent of which have changed significantly in the process, Clarke says.
The automaker is selling vehicles with motors sourced from Ford Motor Co. through the Shenzhen-based Guangzhou Automobile Group Co. Rivian also has acquired two small battery plants in Michigan and California, with production capacity of more than 1,600 batteries per day. The company expects to increase that to 2,000 units per day once it fills orders, and plans to open a second battery plant in Michigan by the end of 2020.
Clarke said he is counting on premium buyers to break into the electric vehicle market, and he doesn’t anticipate shortages of battery packs because Rivian plans to charge for the more expensive lithium-ion technology. Rivian also won’t use the latest version of the lithium-ion technology because it has a different energy density that’s better suited for electric powertrains, Clarke said.