Stock take: Will the markets continue to back start-ups like Rivian?

Stock take: Will the markets continue to back start-ups like Rivian?

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 (£23.6bn) of revenue. Meanwhile, Ford delivered 2.84 million vehicles and brought in $91bn (£68.7bn). Tesla scored profits of $1.62bn (£1.2bn), which was impressive for a firm that has struggled to make money but still dwarfed by Ford’s $5.7bn ($4.3bn) profits over the same period.

The narrative driving stock prices for less established EV start-ups is essentially that they’re ‘the next Tesla’. But how valid are their claims?

Rivian is the EV maker that investors are betting most heavily will follow in Tesla’s footsteps. After a successful stock market flotation last November that raised about $13.5bn (£10.2bn), the Californian firm is now being promoted by financial analysts impressed by its successful roll-out of its first product, the R1T, last September.

“Rivian’s calibre as an organisation is made clear when considering it beat Tesla, Ford and GM to market with the industry’s first battery-electric pick-up truck (and an excellent one at that),” wrote analyst Ryan Brinkman for American investment bank JP Morgan in a research piece.

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.

Another analyst, George Gianarikas of investment bank Baird, started his coverage of Rivian’s stock by saying that this ‘vertical integration’ approach needs big sales to succeed and called on its founder and CEO to move fast.

“Clark Kent needs to emerge from the phone booth as Superman soon to scale Rivian and save the planet,” he wrote of bespectacled RJ Scaringe.

Rivian said in its stock prospectus published last October that it wants to move to enter Europe “in the near term”, followed by Asia, and to “localise production and supply chains in those regions”.