Electric-car startup Rivian seeks $50bn valuation before IPO

Rivian, a Silicon Valley electric-car startup that has been seeking to raise at least $800m in an initial public offering (IPO), has asked for $50bn in the valuation of its company before going public, Fortune reported.

Founded by Rhode Island native Marc Dorion, who has led SpaceX, Alphabet Inc’s Google Ventures and PayPal Holdings Inc, the 22-year-old company has been expanding rapidly.

Although a final valuation is not known, Dorion’s plans have attracted interest from investors, venture capital firms and car companies, as well as one investment bank that has already hired the company to provide IPO research, Fortune reported.

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However, as the company begins to explore a possible IPO, other tech companies in its position are struggling. The San Francisco-based Otto drone business, another autonomous vehicle company that was previously linked to Uber, recently agreed to a deal to license the technology to BMW, albeit without an acquisition. There is no other publicly traded unmanned aerial system company worth more than $4bn.

The company’s new electric sedan, Rivian, is still in development, and the company has reported it will not be on the market until 2020.

There is not yet a regulatory framework in place for the Internet of Things, a term used to describe connected devices from IoT-enabled thermostats to smart refrigerators and smart tools. While electric cars have been touted as a strategic move for tech and automaker investors who see them as a major solution for sustainability issues and as a driver of production and sales for companies who are going electric, many of the models on the market are far off from commercially viable.

Many of the same issues that have driven vehicle prices and returns higher – lack of safety, huge logistical costs and high upfront costs – would also hold back Rivian’s electric sedan.

Tesla’s Model S electric sedan, released in 2013, costs $70,000 and commands an average of $42,000 before options, according to car research firm TrueCar.

As Tesla invests heavily in developing its semi-truck and its new semi-truck production facilities, it is faced with the prospect of developing the infrastructure needed to make these self-driving and self-service trucks a reality.

One of the founders of the electric car company Lucid Motors, which filed for an IPO last summer after funding hit $415m in its first year, said that at this early stage, electric car companies are unable to capture profits: “The game plan is to get everyone to all adopt electric, but that’s not going to happen. That’s a game of who can get the lowest cost.”

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And whether Rivian is successfully vying for investors or not, Dorion’s company isn’t just seeking additional funding to pay for its development.

The Wall Street Journal reported in June that an investor group led by Hollywood actor Ashton Kutcher had agreed to invest $95m in the company at a $1.2bn valuation.

This week, the Rivian board approved a $150m re-tweet investment from Frank Quattrone, who was the former president of Morgan Stanley.

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