Stock take: Will the markets continue to back start-ups like Rivian? We take an in-depth look
Tesla, however, has a long way to go before it will match the physical size of ‘legacy’ car makers. For example, in the third quarter this year, it delivered 627,572 vehicles and generated $31.3bn of revenue. Meanwhile, Ford delivered 2.84 million vehicles and brought in $91bn . Tesla scored profits of $1.62bn , which was impressive for a firm that has struggled to make money but still dwarfed by Ford’s $5.7bn profits over the same period.
Rivian is cash-rich, capable and in possession of an order for 100,000 vans from retail giant Amazon, which is also a major shareholder. But it also has a mountain to climb as it follows Tesla’s lead to do much of the work itself – for example creating a network of chargers, rather than outsourcing. Rivian admitted this in its prospectus, saying that “initially and for the foreseeable future, we will depend on revenue generated from a limited number of models” and that “historically, automobile customers have come to expect a variety of vehicle models”.
The spac process allowed the likes of Arrival, Canoo, Faraday Future, Lordstown and many others to jump from the fringes of the automotive industry into the consciousness of American investors looking for the next Tesla in one of the frothiest stock markets in history.However, the disparity between revenue generated and market valuation has also caused many to bet against the start-ups using so-callled short-selling methods.