What distinguishes the Rivian from the Tesla boss?

Start-up founder Robert J. Scaringe made the largest IPO in electric car history on Wall Street. He takes on even more risk than the Tesla boss - but becomes less “rich” as a result.

Actually, back in the days, Robert J. Scaringe tried to convince its “donors” to build a sports car. "I did build a prototype, a thing that did look real in a video, but was only 0.1% real," the Rivian founder recently told an American car magazine. There was not a single component that came from a supplier. It was really a hacked together car." Ten years ago, he rejected the idea - and focused on an electric pick-up model and an SUV. Which should shape the image of the brand.

A clever move, because Scaringe was able to set himself apart from almost all other competitors in the booming e-car business - and fuel the imagination of investors. Although he produced only 189 cars by the end of October, he made a successful IPO on the Nasdaq technology exchange on Tuesday. The potential Tesla rival placed 153 million shares at $78 each piece, bringing the market valuation to $11.9 billion, making Rivian the largest IPO to date this year. At the same time, Rivian is already worth more than established car manufacturers such as BMW or Stellantis.

Of course, the comparison with Elon Musk, who pushed Tesla rocket-like to be by far the most valuable car company in the world, is pretty obvious. And in fact, there are parallels: Like Tesla, Rivian relies entirely on electric. Like Tesla, Rivian will sell its cars directly to customers without a dealer network. And like Tesla, Rivian wants to build its own charging station network. But there are differences.

That starts with the person. Unlike rocket boy Musk with his aggro management, Scaringe is a rather quiet, book-averse engineer with a doctorate from the Massachusetts Institute of Technology (MIT). He once tried to reduce his personal carbon footprint by traveling exclusively on foot and by bike, taking cold showers and washing his laundry by hand.

According to the Wall Street Journal, a first attempt by the car manufacturer Ford to join his start-up failed, after the Ford men invited the vegan Scaringe to a steakhouse (side note always do your homework). And when he gave a speech in September to the staff on the occasion of the first Rivian produced, his voice failed.

Measured by social media power, Scaringe is more than 1300 times smaller than Musk. On his Twitter account (about 48,300 followers), he occasionally posts a video from the Rivian factory in Normal (US state of Illinois - and one gotta love that city name). Musk, on the other hand, roars and fuels his approximately 63 million followers several times a day, is considered a hero in the Reddit forums and uses meme allusions, which brought him several times trouble with the stock market supervisory authority and the law.

Nevertheless, Scaringe is a high-risk entrepreneur. Compared to Musk, he aspires to the stock exchange with Rivian at a much earlier stage. Tesla was still four years younger than Rivian today at the 2010 IPO, but already had more than 100 million dollars in sales that year.

According to SEC documents, Rivian has so far generated zero sales, but has probably accumulated around two billion dollars in loss since the beginning of 2020. "We do not expect us to achieve profitability in the foreseeable future, and we cannot assure that we will ever make it," Rivian writes in the documents.

The fact that companies dare to go to a regular IPO in such an early phase without sales is otherwise almost only known from the biotechnology sector. Most other electric car manufacturers, such as Nikola, Lordstown, Faraday or Lucid, who recently aspired to the floor with sometimes shaky business figures, chose the less strictly regulated path through the merger with an already listed stock exchange shell (SPAC). Only the IPO of the Chinese provider Nio in 2018 is comparable to Rivian.

As Musk, who knows how to play virtuously with the enthusiasm of his (fan) shareholders, Scaringe also wants to take advantage of the current hype around electric car stocks. In the expected rain of money, he even exceeds Musk more than significantly: Tesla redeemed around 230 million dollars during its IPO in 2010 - the Rivian boss has collected more than 40 times this amount.

Unlike Musk once did, Scaringe also relies on a model range. Tesla only had the Roadster on offer at the time of the IPO; the Model S existed only as a vision. Rivian, on the other hand, presents two off-roaders who are supposed to be "brand-defining like a halo". The pick-up R1T, of which only 180 were produced by the end of October (most delivered to employees); Scaringe wants to have a 1000 built by the end of the year. And the SUV R1S, whose production is to start in December, with a production target until the end of December of 15 units.

Above all, Rivian will build the EDV electric vans for Amazon - which reveals another difference to Tesla. While Musk relies fully on private customers and only targets business customers directly with his electric truck Semi from next year, Scaringe will do its mass business with Amazon - by 2025 he wants to deliver 100,000 EDVs.

Unlike Tesla, Rivian has two major strategic investors, Amazon and Ford. Amazon founder Jeff Bezos supports the company to the best of his ability. After flying into space in the summer with the rocket of his space company Blue Origin, he got into a Rivian. A calculated PR blow against his arch-rival Elon Musk.

Like Musk at Tesla, Scaringe will remain the all-important figure at Rivian. "We are highly dependent on the work and reputation of our founder and CEO," the company warns future investors. Thanks to the usual split into Class A and Class B shares, he will at least win 9.5 percent of the votes and thus remain the most powerful individual shareholder, although he will hold only 1.1 percent of the shares. According to SEC data, his salary was $1.3 million in 2020 - but he was assigned stock options that could be worth around two billion dollars after a successful IPO.

Compared to Musk, this is nothing, but time will tell what will be.