At the moment when the auto industry is entering the era of electrification, the value of auto companies has been redefined – even start-up auto companies that are not profitable and have few deliveries can be highly favored by investors. Even better traditional car companies “challenge”.
In the current global auto market, Tesla has been sitting in the position of “the world’s largest car company by market value” for about a year and a half. On November 10, 2021, Eastern Time, Rivian, an electric car manufacturer known as the “Tesla Killer”, was born, ranking third among global car companies by market value within five days of its listing.
However, as of January 6, 2022, Eastern Time, Rivian’s stock price has fallen by 51.34% from its highest point, with a market value of US$78.6 billion (about 500.957 billion yuan), which is still higher than the combined market value of the two SAIC groups. You know, so far, Rivian has only delivered a few hundred vehicles, and the third-quarter earnings report has fallen into a huge loss.
Behind the discussion on why capital is willing to give Rivian a high valuation, what is more worthy of attention is, in the era of electrification, can Rivian, known as the “Tesla killer”, swept the global auto market like Tesla? In the Chinese market, how is the development of electric pickups? Is it possible to have a “Chinese Rivian”?
For now, Rivian’s upswing storm is ferocious, but it’s also cooling down quickly.
On November 10, 2021, Eastern Time, Rivian officially landed on the Nasdaq market, attracting a lot of capital. At that time, Rivian’s IPO financing scale was as high as 12 billion US dollars, which was the largest IPO in the US stock market since Alibaba Group in 2014. Its shareholders included not only Amazon, but also the old car giant Ford.
On the first day of listing, Rivian’s stock price rose by more than 50%, and its market value once exceeded the $100 billion mark. It closed at $100.73 that day, an increase of 29.14%, with a market value of $85.908 billion, surpassing its shareholder Ford and approaching GM.
By November 16, 2021, Rivian’s stock price on the fifth trading day of listing has reached a high of $179.47, with a market value of $161.523 billion, ranking among the top three car companies in the world by market value. The enthusiasm of capital for Rivian is evident.
“Rivian has a strong momentum after its listing, because it has good potential for electric vehicles in the future, and it is scarce as an electric pickup manufacturer, and it is blessed by major shareholders such as Amazon and Ford, which not only has financial assistance, but also gives a large number of orders. There is a certain guarantee in terms of sales.” Wu Mingyi (pseudonym), an investor in Beijing who is concerned about the new energy track, analyzed “Bullet Finance”.
However, just after the fifth trading day of listing, Rivian’s skyrocketing rally came to an end, and the stock price began to decline.
After the U.S. stock market on December 16, 2021, that is, one month after Rivian went public, its third-quarter earnings report, which announced a huge loss, gave the stock price a heavy blow. On December 17, Rivian’s stock price fell as much as 10.26%. On the 20th, Rivian’s stock price fell to an all-time low of $88.4.
According to data from Futu Niuniu, as of the close of trading on January 6, 2022, Eastern Time, Rivian’s stock price was US$87.33, down 51.34% from the highest point of US$179.47. One hundred million U.S. dollars.
Regarding the drop in Rivian’s stock price, Wu Mingyi told “Bullet Finance”: “In fact, near the end of 2021, the US stock Tesla and China’s new energy sector including CATL and BYD have experienced corrections, so Rivian’s stock price is inevitable. Affected by the overall market conditions, however, its performance, production capacity, and delivery volume are really ugly, which is also a big negative.”
Rivian’s financial report shows that in the third quarter of 2021, its revenue was only $1 million, and this was the only revenue in the first nine months of 2021. The increase came as Rivian delivered 11 R1T pickups to its first customers.
In addition, in the third quarter of 2021, Rivian’s net loss was as high as $1.233 billion, which widened sharply compared to the loss of $288 million in the same period last year. From January to September 2021, Rivian’s net loss was as high as $2.227 billion, which was also significantly higher than the $665 million loss in the same period in 2020.
Compared with previous years, Rivian’s losses have risen at an equally astonishing rate. Its prospectus shows that the loss in 2019 was 426 million US dollars, and the loss in 2020 expanded to 1.018 billion US dollars.
Under the pullback of the sector and its own huge losses, the beautiful capital story of Rivian’s stock price skyrocketing can only come to an abrupt end.
too many tests
In fact, behind the huge losses in performance, Rivian, as an emerging car manufacturer, faces the big problem of “poor production capacity” like all new car-making forces. The ability to deliver is also put to the test.
In the consumer market, Rivian launched the R1 platform. In September 2021, Rivian launched its first model, the R1T electric pickup, and began deliveries of another model, the R1S electric SUV, in December 2021. Rivian’s financial report shows that as of September 30, 2021, it has produced 12 R1T electric pickups and delivered 11. As of December 15, 2021, Rivian has produced a total of 652 units and delivered 386 R1 vehicles.
And as the vehicles are delivered, Rivian’s costs have risen sharply. In the third quarter of 2021, Rivian’s R&D expenses were $441 million, an increase of $221 million year-on-year; from January to September, its R&D expenses increased by $613 million year-on-year.
At present, judging from the order situation, Rivian should have no shortage of sales.
Rivian noted in its earnings report that as of December 15, 2021, it had received approximately 71,000 R1 pre-orders in the U.S. and Canada, with each of these customers paying a $1,000 cancelable and fully refundable deposit.
In addition, in the commercial market, Rivian will launch an electric van EDV designed in cooperation with Amazon, and Amazon has placed the first order of 100,000 EDVs. For any automaker, this is a huge order.
However, at a time when Rivian’s production capacity is limited, current product production is a problem, and the global shortage of cores is spreading, this can only be a “promising story”.
In December 2021, Rivian said externally that due to severe constraints in the supply chain, it may not be able to meet its own production target for 2021; it is expected to deliver several hundred vehicles in 2021, instead of the previously planned 1,200.
In the financial report, Rivian also bluntly stated that it relies on third parties to manufacture and supply key semiconductor chip components required for vehicles, and has not signed long-term agreements with all semiconductor chip manufacturers and suppliers. If the manufacturer or supplier is unwilling or unable to provide Sufficient semiconductor chips, it may not be able to find alternative sources in time, and business will be adversely affected.
Rivian’s rival Tesla has also fallen into “capacity hell”. From the current point of view, Rivian may inevitably repeat the road Tesla has taken. But the new question is: Can Rivian take the global auto market like Tesla in the future?
In the eyes of analysts, the limited market for pickup trucks is destined to make it difficult for Rivian to become the next Tesla.
“Capital is willing to give Tesla a high valuation, not only because new energy is the future of the auto industry, but also its products are more universal. On the other hand, Rivian, which is currently mainly doing electric pickups and electric SUVs. At present, capital’s pursuit of Rivian may be more about the scarcity of electric pickups than electric SUVs.” Wu Mingyi told Bullet Finance.
Wu Mingyi further pointed out that although pickup trucks have a large market in the United States, they belong to a small market in countries with dense population and well-established infrastructure like China, which determines that its expansion scope may not be as good as Tesla, and electric SUVs In the field, there are already many competitors and many models have been launched. It faces huge competitive pressure, and it has to be discounted when estimating its future value.
Huang Ping (pseudonym), an auto analyst who once worked in a well-known analysis agency, also believes that due to audience issues, Rivian may not be able to replicate Tesla’s success.
“Although pickup trucks have a large market in the United States, in other countries and regions, the audience is far less than Tesla’s. And Tesla’s success is not only supported by the U.S. market. It can be seen that Tesla There are also good sales in the Chinese market. However, pickups have limited popularity in the Chinese auto market, not to mention electric pickups.” Huang Ping said bluntly to “Bullet Finance”.
The missing Chinese story
The story of electric pickup trucks on the other side of the ocean is in full swing, but in contrast to the Chinese market, it is slightly quieter.
In recent years, the global auto industry has ushered in drastic changes. BYD and Tesla, NIO, Xiaopeng, Ideal, Weimar and other new car-making forces have become representative companies in the electrified era, and traditional car companies that are unwilling to lag behind have also started Chase.
Today, the battle of new energy vehicles has swept the Chinese passenger car and commercial vehicle market, with representative products such as pure electric cars, SUVs and even electric buses. However, this does not include pure electric pickups.
In the U.S. auto market, pickups are well-deserved “big sellers”.
Relevant data show that in 2020, the sales of pickup truck models will account for 20.2% of the U.S. auto market. According to the data of Good Car Bad Car, an automobile sales research institute, pickup trucks will rank among the top three in U.S. sales in 2021. Most of the vehicles entering the top 20 are pickup trucks and SUVs, of which there are only 4 sedans. In addition, statistics show that in 2021, the annual sales of the pickup truck market in the United States will reach 2,842,500 units.
However, in China, affected by the policy, pickup trucks face the problem of “difficulty in entering the city”. At the user level, affordable vans such as Wuling Hongguang bear the demand of domestic consumers to carry people and pull goods. Under the influence of various factors, pickups still belong to the niche market.
According to data from the China Association of Automobile Manufacturers, in 2020, the cumulative sales of domestic pickups was 491,000 units, a year-on-year increase of 8.58%. In the same period, the total sales volume of automobiles in my country was 25.311 million units. Based on this calculation, domestic pickup sales only account for 1.94% of the overall car market.
In China’s pickup truck market, Great Wall Motors “has been the leader for many years”. According to the 2021 semi-annual report of Great Wall Motors, Great Wall pickups have been off the assembly line in 1996 and have sold nearly 2 million units globally, ranking first in domestic and export sales for 23 consecutive years. In the first half of 2021, the cumulative sales of Great Wall pickups reached 114,400 units, a year-on-year increase of 12.3%, and their market share in the Chinese market reached nearly 50%. Among them, the “Great Wall Cannon” sold more than 10,000 units in 13 months, ranking as the sales champion.
The Great Wall Motors production and sales express report shows that in 2021, the cumulative sales of Great Wall pickups were 233,000 units, a year-on-year increase of 3.56%; the output was 223,100 units, a year-on-year decrease of 0.18%.
Under the trend of electrification, domestic automakers are also gradually developing the electric pickup track.
For example, in September 2020, Great Wall launched the electric version of the Great Wall Cannon “Denso Cannon”. According to Cui Xiaohui, the then general manager of Great Wall Pickup Brand Company, this car can realize L4-level automatic assisted driving in fixed scenarios, such as smart airport guidance vehicles and unmanned driving in smart logistics parks.
According to recent media reports, Geely’s pickup business has become independent and is in the internal incubation stage. It plans to transform into an independent high-end and electrified brand with the goal of benchmarking against Rivian.
But at present, compared with other models, the amount of sound made by domestic automakers on electric pickups is extremely limited. Pickup players like Great Wall Motors have not yet made great achievements in the field of new energy vehicles, and electric pickups are also in their infancy.
The staff of Great Wall Motor’s securities department told the author that Great Wall’s electric pickup trucks do not have separate sales statistics, “because the current volume is basically small, so there is no separate calculation.”
“At present, the company does wholesale of pure electric pickup trucks, such as Fengjun 7 EV and Denso Cannon. The technologies and products corresponding to pure electric pickup truck models are also available, but as far as the domestic market is concerned, the pickup truck itself is still A relatively niche market. At present, the mainstream pickup products are still based on traditional fuel power, but in the future, with the development of ‘carbon peaking and carbon neutrality’, whether it is a pure electric pickup or a fuel cell pickup, there are huge development space,” said the above-mentioned person.
In fact, China’s pickup truck market has ushered in a new development opportunity in recent years: the restriction that “pickup trucks are difficult to enter the city” has been gradually loosened.
At the beginning of 2021, the Ministry of Commerce proposed to “accelerate the removal of restrictions on pickup trucks entering cities and promote pickup trucks to go to the countryside”. Subsequently, major consumer markets for pickup trucks such as Anhui, Guangxi, Hunan, Fujian, Guiyang, etc., issued notices to relax the entry of pickup trucks into cities, taking the first step of “lifting the ban on pickup trucks”.
However, this does not mean that electric pickups can have a better development.
The aforementioned staff from the Securities Department of Great Wall Motors pointed out that pickups are mainly for commercial use in terms of positioning, and may have higher requirements for cost-effectiveness, and mainly tool models with a price of less than 100,000 yuan. If you have to install a lot of batteries, it will increase the cost of the pickup and the price will be higher.
“If there is a mandatory policy that only pure electric pickups can enter the urban area, the driving force for market development will be stronger, but if both fuel pickups and electric pickups can enter, it may be more cost-effective. That is to say, It is mainly based on traditional powered pickups,” the staff member said.
At present, all electric vehicles, including electric pickup trucks, are facing the problem of difficult and slow charging. To establish and improve a nationwide charging network requires strong infrastructure and huge costs, which is difficult to achieve in the short term.
According to the report of Zhiyan Consulting, the sales area of China’s pickup truck market is mainly in the southwest, and the demand for pickup trucks in the western region is relatively large. In 2020, pickup truck sales in Southwest China accounted for 23.3% of the country’s total pickup truck sales, and Northwest China accounted for 18.7%. The power infrastructure in these two major regions is relatively backward, and due to geographical constraints, infrastructure construction is extremely difficult.
The huge user base in the United States is the source of the popularity of Rivian’s capital story, but in the Chinese market, it is difficult to tell the story of the electric pickup due to various factors. In the future, this will also become the predicament of Rivian’s global development.
In today’s capital market, the value of car companies is no longer measured by sales and performance, and people are turning more attention to the future – new car-making forces such as Tesla and Wei Xiaoli are compared with traditional car companies. In terms of sales volume and performance, it is still difficult to match, but the capital market has given extremely high prices.
As a new force in the pickup market, Rivian has attracted the attention of many capitals, but its business is still in its infancy, and its products have certain limitations. Whether it can trigger a global trend like Tesla remains to be seen.
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