Rivian's progress - high likelihood of meeting 2021/2022 goals?

CommodoreAmiga

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This is true, however there aren’t all that many other places to go for chips should one of the manufacturers get fed up with their chip supply. Supply chains have gotten so complex and dependent with JIT manufacturing that even missing 5% of chips in a shipment could mean the production line is impacted.
Hypothetically, if they had a 2MM order from Ford and a 100k order from Rivian but only 1.5MM chips available then it absolutely makes sense to fulfill Rivian.

If they give Ford all their stock, they still fall short. Now Ford and Rivian are upset and both contracts are in breach.

If they give Ford 1.4MM units and fulfill all 100k for Rivian, then they’re still short on Ford but they satisfied one contract and made Rivian happy. And although Ford got less, it’s not that much less, relative to their whole order.

So in a bad situation, fulfilling small orders in full and large orders in partial may net vendors the best result/outcome.





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SANZC02

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Whataboykie!

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I just hope that the fact that Rivian is trying to IPO this year with very serious investors behind them to this point means they thought long and hard about setting an achievable goal of June deliveries start when they delayed last year on COVID. I really hope they don't end up like Lucid, IPO'd through a shady SPAC process in Jan, and delays deliveries by 9 months in February. Rivian is in the big leagues with their investors T Rowe Price, Amazon, etc., they'll do a normal IPO with Goldman Sachs and be a more typical beat and raise story for their new investors in the IPO.. hopefully..
Just wondering, Rivian already owes investors more than $8 Billion I believe, and has not sold a single vehicle yet. So the IPO will just create more debt? Not sure how all this works, but I for one will not be buying. This will make Scaringe an even wealthier Billionaire than he already is.
 
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johnbro23

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Just wondering, Rivian already owes investors more than $8 Billion I believe, and has not sold a single vehicle yet. So the IPO will just create more debt? Not sure how all this works, but I for one will not be buying. This will make Scaringe an even wealthier Billionaire than he already is.
Investors gave them money at a $25bn valuation in the latest round, expecting this company to be worth $50bn+ someday. You only get to that valuation if Rivian is profitably producing in the 500k units/year range in 5 years, about 20% of TSLA. The company is being run with that being the ultimate goal, so this 40k/year luxury truck/SUV is really just a baby step. And the IPO is just another way to raise money to ensure they get good access to capital to make sure they can reach that goal. Like TSLA until just recently, Rivian will lose a ton of money in the next few years before they can eventually turn a solid profit. So they need money to fund it. And an IPO is a very public way to be promising public investors that you'll achieve X amount of deliveries, etc - so you want to have credibility as a company so your access to capital remains open.
 

whyasky

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Just wondering, Rivian already owes investors more than $8 Billion I believe, and has not sold a single vehicle yet. So the IPO will just create more debt? Not sure how all this works, but I for one will not be buying. This will make Scaringe an even wealthier Billionaire than he already is.
To avoid confusion, these investors (Amazon, T Rowe, Ford, Cox, etc) made equity investments in Rivian. These are not loans so Rivian doesn't owe them anything, per se. The investors now own a percentage of Rivian's equity and if Rivian ever pays dividends, they will receive their share. This means that Rivian can't go bankrupt from not making payments to these investors. Similarly, IPOs are a further sale of equity by the company, not debt.

You may recall that Tesla had taken on debt to fund some of its expansion for the model x and model 3. Tesla owed those lenders money at specific intervals and if they didn't pay it back, the lenders could have eventually taken the company from its owners (equity holders). Fortunately for Tesla, Elon pulled some rabbits out of some hats and raised more money to get through that. And here they are, valued at some $675BN despite middling performance since January and profits based entirely on environmental credits rather than cars (not that there's anything wrong with that as I'm sure it's part of the strategy).

To this point, Rivian has not put itself in this situation by using only equity to fund its facility and product development. Debt is a useful financial tool and once Rivian has more steady cash flow from the existing production lines in Normal, I'm sure they'll get around to using it.
 

cwoodcox

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Debt is a useful financial tool and once Rivian has more steady cash flow from the existing production lines in Normal, I'm sure they'll get around to using it.
I would be very surprised if Rivian had 0 debt. Debt is typically quite a bit cheaper than equity. The advantages are smaller in the startup phase since you have to pay interest with your investment capital, and you don’t get the tax benefits of debt since you don’t pay taxes anyway. Still, I’m sure their capital structure includes SOME debt, even if it pales in comparison.
 

jjwolf120

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I would be very surprised if Rivian had 0 debt. Debt is typically quite a bit cheaper than equity.
It is very difficult to borrow money when you have no revenue. I would not be surprised if they don't have any debt.
 

CommodoreAmiga

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It is very difficult to borrow money when you have no revenue. I would not be surprised if they don't have any debt.
This is outside my area of expertise... But it was my understanding that startups typically only take debt when they can't get VC terms -- the investors don't have as much faith in the people/idea, but still want to get some action so they offer debt, instead.

Rivian has had no problem courting top-tier investments.
 

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