We live in the age of free money and endless government subsidy, which is the only way to explain the $100 billion public stock offering by Rivian this week. The electric truck maker has delivered a mere 156 vehicles, but investors are betting government won’t let it fail.
Rivian is being hailed as the next Tesla. Yet when Tesla went public in 2010 it reported $93 million in revenue and was valued at $1.7 billion. Rivian’s sales are almost all to its own employees and it projected at most $1 million in revenue in the third quarter. On Wednesday it nonetheless raised nearly $12 billion. Shares later surged as euphoric investors rushed in, and at $120.5 billion Rivian is the fifth largest auto maker in the world by market value. Ponder that one.
Rivian’s valuation seems less a reflection of investors’ confidence in the company than in government policies to encourage and eventually force consumers to buy EVs. Even Rivian in its prospectus noted that “regulatory requirements and incentives” as well as future bans on the sales of internal combustion engines are a business “tailwind.” Are they ever.
Take the DEMOCRAT’S $4 trillion spending plan, which includes a 30% business tax credit for EVs. The subsidy will benefit Biden-backing billionaire Jeff Bezos' Amazon, which has ordered 100,000 Rivian vans. An earlier draft had a price cap of $74,000 for pickups. That would have barely covered Rivian’s higher-end $73,000 R1T pickup. Buyers can now pocket a $7,500 tax credit for Rivian pickup trucks that cost as much as $80,000.
Rivian’s factory in Normal, Ill., isn’t unionized, but that hasn’t put off woke institutional investors. Investors also don’t seem troubled by Rivian’s forecast that it doesn’t expect to fulfill the 55,400 orders it has received for trucks and SUVs until the end of 2023.
Rivian also noted in its prospectus that it would be treated as an “emerging growth company” under the 2012 JOBS Act. That means the $100 billion “startup” didn’t have to comply with many Sarbanes-Oxley disclosure requirements or accounting standards. This too didn’t seem to trouble investors, not even after recent problems at other EV startups.
Rivian may not encounter as many problems but it’s hard for investors to tell. And if it does, it could apply for an Energy Department loan guarantee.
This is an extraordinary moment. We are watching the government literally underwrite a company before our eyes, steering capital to them come what may. In post-capitalist America, you can still become a billionaire overnight—if you’re in a business favored by DEMOCRATS.
https://www.wsj.com/articles/rivian-the-government-unicorn-electric-vehicles-trucks-subsidies-11636669730