'Rivian', an electric vehicle startup chosen by Amazon and GM

 

Rivian, an electric vehicle automaker company:

Recently, news of start-up acquisitions and investments by Amazon are coming out one after another.

Amazon's startup shopping isn't yesterday's business. These days, investment in mobility startups such as autonomous driving and electric vehicles stands out.

Next-generation mobility is expected to be actively used in logistics and delivery.

By outsourcing technology through investment in startups, Amazon is also likely to increase delivery efficiency and achieve its goal of zero carbon emissions.

 

[caption id="attachment_4917" align="aligncenter" width="389"] Rivian[/caption]

 

Among the startups that recently opened up Amazon's wallet, there is a place that attracted attention by attracting large amounts of investment.

It is an electric vehicle startup 'Rivian'. It received a $700 million equity investment led by Amazon.

GM was also involved. Rivian has been attracting attention as an electric vehicle maker that will check Tesla apart from investing in Amazon.

Even before Amazon invested in it, it received an investment of about $500 million from major global companies such as Saudi Arabia, Japan, and the United Kingdom.

I wonder what kind of charm Rivian, who had been in stealth mode for 10 years after the company was founded, induced a billion-dollar bet.

We looked at the company's strengths through the past growth process and business model.

Robert RJ Scaringe:

Why was the 26-year-old from MIT obsessed with electric cars?

Rivian CEO Robert RJ Scaringe founded the company in 2009 at the age of 26.

He was born on January 19, 1983 and graduated from Lanceller Institute of Technology and MIT. He has a master's degree in mechanical engineering from MIT.

The company's name was changed from the spelling of 'Indian River' in Florida, where Scaringe grew up. The name was not Rivian from the beginning, and it is said that he changed it several times.

[caption id="attachment_4921" align="alignleft" width="304"] Robert RJ Scaringe[/caption]

In an interview with Forbes, Scar Lindsey revealed that from a young age he loved moving things.

He helped a neighbor rebuild a Porsche 356 in his garage in Melbourne, Florida.

It is said that during his high school days, he dreamed of creating his own tea brand.

He said he felt frustrated that the car he loved was not only polluting the air, but also causing all sorts of problems, including geopolitical conflicts, smog and climate change.

It was a factor that made him focus on the development of eco-friendly electric vehicles.

Main portfolio of 'Rivian':

His business started in his hometown of Florida. June 2009, when the company was founded, was the worst time to start an automobile business.

The world is being hit hard by the global financial crisis in the aftermath of the Wall Street sub-prime mortgage crisis.

It was also between May and June 2009 that GM and Chrysler filed for bankruptcy protection.

Currently, the company's main portfolio is pickup trucks and SUVs (sport utility vehicles).

Prepare a 2+2 sports car with original batteries. It's like a Tesla Roadster.

 

[caption id="attachment_4922" align="aligncenter" width="468"] Rivian's Pickup truck[/caption]

 

However, after thinking about the future of the automobile industry, it was abandoned in 2011 and the business direction was completely revised.

I think we need something different from the products on the existing market.

Therefore, we are redefining our mission in relation to future mobility. Correcting the track with a luxury utility car.

"We haven't been able to successfully answer the question, 'Why does the world need another tea company?'"
“This forced us to put our sports car plans on hold and take the remaining capital to quickly re-examine the business.”

“The biggest challenge when starting a car business without any preparation was designing a business that would work in today’s world.”
“It’s like a world ruled by car ownership, a world dominated by people driving.”
“But I decided that the world of the future would not be dominated by ownership, and cars would be automated to a much higher degree.”
“I thought that our tea business should also prosper for decades in a world like this.”

Investments in Rivian from Amazon and Abdul Latif Jameel:

Business overhaul, factory takeover... 10 years of preparation

Rivian raised $450 million in investment before receiving an Amazon investment this year.

Saudi conglomerate Abdul Latif Jameel, Japan's Sumitomo Group's US branch, and London's Standard Chartered Bank are investing

Most of the investment came from Abdul Latif Jameel. Chairman Mohammad here and the MIT graduate had something in common.

MIT recommendations also help. After several meetings around a European hotel, the passion was recognized and the investment was made

 

[caption id="attachment_4923" align="alignleft" width="331"] Rivian's amazon delivery van[/caption]

The company's headquarters then moved from Florida to Michigan. There are a lot of talented and skilled workers in this area.

The company has grown to about 700 employees.

We also operate technology centers and factories in various parts of the United States.

There's an engineer center in Plymouth, Michigan. Engineers also work in Silicon Valley and Irvine, California.

In particular, in San Jose, we are developing cloud computing and autonomous driving technologies.

Irvine researches electric vehicle propulsion systems. It also has a production plant in Normal, Illinois. We also have offices in the UK.

 

The company was founded 10 years ago, but nearly 10 years have passed since the prototype was released in November of last year.

Rivian's electric vehicle lineup:

After overturning the previously planned sports car plan, we spend time developing technology, establishing business plans, building organizations, and establishing supply chains and manufacturing systems.

[caption id="attachment_4924" align="alignright" width="300"] Rivian S1 SUV[/caption]

In particular, it was a great achievement to establish our own production facility during this period.

In 2017, it acquired the 2.6 million square meter factory operated by Mitsubishi for $16 million.

The plant was used by Mitsubishi until 2016, so the facility is quite modern.

The skilled workers who were working at the time also remained in the area.

For the company, it was an opportunity to acquire good facilities and manpower at once.

Pickup truck fills Tesla gap with SUV

After securing its own production plant, Rivian drew attention by unveiling its electric vehicle lineup at the LA Auto Show last November.

The products are a 5-seater pickup truck (R1T) and a 7-seater SUV (R1S). In the existing industry, where there are many passenger cars, we differentiated ourselves by putting pickup trucks and SUVs as our core products.

The R1T Battery model:

Tesla, the No. 1 electric car industry, has mostly passenger cars.

In the meantime, the automotive industry predicted that the market for electric pickup trucks would be low unless battery technology was significantly improved.

In the midst of this, Rivian introduced a product that would be a turning point.

[caption id="attachment_4925" align="alignleft" width="357"] Rivian R1T[/caption]

Rivian has improved battery performance compared to existing products. The R1T battery models are 105 kWh, 135 kWh and 180 kWh.

The 180kWh battery pack is said to have the largest capacity in the world. Equipped with this battery, the range is over 400 miles.

In addition, it has a three-level autonomous driving function. The digital architecture also supports fully autonomous driving.

In addition, Rivian uses artificial intelligence (AI) technology to observe how the user drives and charges the car, and then adjusts several parameters to maximize battery life.

 

Combining pickup trucks and SUVs, it is expected to reach 20,000 units in 2021, 40,000 units in 2022 and 50,000 units in 2025.

B2B technology sales and targeting the subscription model:

In fact, Rivian is aiming for profit through technology B2B sales and subscription services rather than car sales.

The company's core technology, the skateboard platform and battery, is a promising B2B transaction.

[caption id="attachment_4926" align="alignright" width="373"] Rivian Stocks[/caption]

The skateboard platform can be adapted for jet skis and snow cars.

Sales can be expected in various fields beyond mobility companies.

The subscription service is intended to be used as a distribution channel as well as offline stores.

It seems to reflect the reality of the automobile industry, which is required to transform into a service provider in addition to selling finished cars.

According to Forbes report, car subscription programs in the US and Europe are expected to account for about 10% of all new car sales between 2025 and 2026.

Rivian plans weekly, monthly and yearly subscriptions.

The idea is to increase profits through services such as renting cars to consumers who go on weekend trips.

Rivian contributing to eco-friendly transportation: 

In an interview with design magazine Cool Hunting, Scaringe also revealed her wish, "I hope that consumers will choose Rivian when they go skiing in 2035."

“Rivian will help consumers meet their diverse mobility needs without having to own a Rivian car.”

An emerging divinity threat is

Tesla has 80-90% of the EV market. Faraday Future, NIO, and Lucid Motor were also inspired by Tesla, so their symbolism as an electric vehicle company does not collapse.

Rivian also appreciates Tesla's trajectory. But there are also aspirations to go beyond Tesla.

 

Just like Tesla broke the stereotype that electric cars are slow, boring and uninteresting. He also wants to challenge prejudice against electric vehicles and contribute to eco-friendly transportation.

What Scaringe said in an interview with the Chicago Tribune:

"We make pickup trucks and SUVs premium"
"Our goal is to give buyers an adventurous spirit"
"We're going to get rid of emissions, and we'll come up with some great technology, including updates for cars."
"Tesla has done a great job"
“They drew customers from luxury cars, even the Toyota Prius.”
“In the future, you will see us pulling people out of Land Rover, BMW, Subaru and Tesla.”