Rivian: Expect a great start… but also a low ceiling
We thought it would be timely to share the preliminary work we did on Rivian, with the IPO approaching. We summarized our work over 10 slides and provide a balanced perspective to the debate: On one hand, we are very comfortable about the near-term success of the Brand. Rivian has a strong product, a strong positioning, and the supply & demand balance will be favorable to them for the next few years. On the other hand, we see a natural ceiling to their success. Beyond 3-400k units, Rivian will need to expand into lower price points to continue to grow, and this will mean abandoning a comfortable umbrella pricing Tesla offers in the high end, to fight in a segment with thinner margins and where Tesla’s 10x superior scale and 10-year lead on manufacturing efficiency will be difficult to deal with.Tesla designs, develops, manufactures, sells and leases electric vehicles and energy generation and storage systems, and provides services related to its products. The company operates as two reportable segments: automotive, which includes the design, development, manufacturing, sales, and leasing of electric vehicles as well as sales of automotive regulatory credits; and energy generation and storage, which includes the design, manufacture, installation, sales, and leasing of solar energy generation and energy storage products, services related to such products, and sales of solar energy system incentives.
Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.
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