There are several electric-vehicle start-ups looking to follow the path blazed by Tesla -- but Michigan-based electric-truck start-up Rivian Automotive LLC might be about to jump to the head of the class.
Reuters reported late on Tuesday that Rivian is in talks with General Motors (NYSE:GM) and Amazon.com (NASDAQ:AMZN) about an investment that would give the company a valuation between $1 billion and $2 billion.
If the deal closes, the heavy-hitting duo could give Rivian advantages over most of its rivals -- while getting some advantages in return. Here's what we know.
Details about the potential deal
We don't know a lot about the potential deal, but a few key points have been reported by Reuters and others since the initial story broke:
- Amazon and GM would get minority stakes in Rivian.
- The deal values Rivian at between $1 billion and $2 billion.
- If it happens, the deal could close very soon -- possibly by the end of this week.
What we don't yet know:
- How much money GM and Amazon will invest.
- Whether this funding round will include other investors.
- What Rivian plans to do with the capital.
Who is Rivian?
Rivian, based in Plymouth, Michigan, has designed two innovative electric vehicles -- a pickup truck and an SUV -- that will be built on a "skateboard" platform that incorporates batteries, suspension, and motors in a single unit. The company owns a factory -- a former Mitsubishi automotive plant in Normal, Illinois -- and is aiming to begin production by the end of next year.
On paper at least, Rivian's two vehicles are impressive. The R1T pickup and R1S SUV have four electric motors, one at each wheel, to maximize off-road ability and on-road acceleration. They'll be offered with three battery-pack options, with a maximum range of about 400 miles in the pickup and a little more in the SUV. (Base models will have 230 miles of range.) The pickup will start at $69,000, and the SUV will start at $72,500 (before tax incentives).
Rivian's current backers include Saudi conglomerate Abdul Latif Jameel, which (among other things) is Toyota's sole distributor in Saudi Arabia; a U.S.-based subsidiary of Sumitomo Corporation; and London-based Standard Chartered Bank. Rivian is believed to have raised about $450 million to date via a mix of equity and debt offerings.
What would Amazon gain by investing in Rivian?
What might Amazon get out of this? It's not obvious, but what is clear is that vehicle technology has been on the e-commerce giant's mind. We know that Amazon has been working to develop its own parcel-delivery services. We also know that self-driving start-up Aurora announced last week that Amazon was one of several investors in its recent $530 million funding round.
It's possible that Amazon sees Rivian as a potential provider of electric commercial vehicles tailored to its specific needs. If that's right, it's easy to see what Rivian gets in return: A big customer.
What would GM gain by investing in Rivian?
It's pretty clear what Rivian might gain from a relationship with GM, in addition to an infusion of capital and a boost in visibility. For starters, GM could offer help with manufacturing -- a fiendishly complex discipline that Tesla has struggled to master -- and access to its huge global parts-supply network.
But what would GM get in return? GM doesn't need Rivian's electric-vehicle technology. But it might benefit from an association with the Rivian brand, if the company's products turn out to be hits, and some pooling of resources might help GM get its own electric pickups to market more quickly.
That latter point could be especially important to GM, given that archrival Ford Motor recently confirmed that it has begun work on its own electric pickup.
If the deal happens, we'll know more soon.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Rosevear owns shares of Amazon, Ford, and General Motors. The Motley Fool owns shares of and recommends Amazon and TSLA. The Motley Fool recommends F and STAN. The Motley Fool has a disclosure policy.