George Soros’ multi-billion US-dollar investment in Rivian shows EV growth remains driven by the private sector despite new government funding. By Christopher Dyer
Once briefly considered the third most valuable electric vehicle (EV) brand on the market, Rivian’s recent stock price slump highlights the increasing pressure on the industry to deliver vehicles and infrastructure on its own. Further investment in the industry by private equity firms and individual investors demonstrates the need for better government support globally. Multi-billionaire George Soros’ investment of US$2bn into Rivian is one example of this, with emerging automakers struggling to keep afloat after the pandemic.
Rivian’s focus is the SUV and off-road luxury segment. Coming to prominence in 2018, it garnered significant financial backing from investors with its R1-T electric luxury pick up utility vehicle. This area of the industry remains profitable, with JATO Dynamics noting that 44% of current internal combustion engine (ICE) sales are SUVs. However, the brand’s need to diversify for survival has led to it developing a presence in electric delivery vans and charging infrastructure. Despite this, the move may become increasingly profitable. As more drivers make the shift towards EVs, many will look for familiarity in the brands they see, ultimately influencing the vehicles they buy.
Rivian garnered significant financial backing from investors with its R1-T electric luxury pick up utility vehicle
Private investment remains integral to many brand’s market survival. While the new federal investment bill has committed the US government to enhance greater EV infrastructure development, its sluggish execution has deepened manufacturer’s dependency on private investment. Despite this, California have quickly adopted this legislation, forcing automakers to abide to a more stringent greenhouse bill and now face bans on selling new ICEs by 2035. Rivian will remain at the centre of these developments as California illustrates the positive impact political and financial measures can have, supporting better infrastructure and higher EV adoption rates.
Current competition
Rivian’s interest in utility EVs has stemmed in part from increasing legislative clampdowns on ICEs from governments looking to reduce their carbon emissions. With EVs seen as another important step to combating climate change, tackling the most polluting ICEs found traditionally in big SUVs, pick-up trucks and off-road vehicles has become a priority.
Stricter vehicle emissions regulations are forcing some manufacturers to refocus their research and development into electric alternatives. Jaguar Land Rover, for instance, released an electric version of its new Defender model in 2021, hoping to convert its current driver base to EVs. Similarly, Volvo has released its purely plug-in electric model, the XC40 Recharge. With recognisable brands looking to shift their market capital, it’s only natural that indigenous EV brands are looking to do the same.
Volvo’s pure electric model, the XC40 Recharge, competes with Rivian’s R1T
Market leader Tesla has declared its intentions for the utility EV segment with the introduction of its Cybertruck, now touted for release by 2023 following prolonged production issues. A direct competitor to Rivian, Tesla’s interest in this market area illustrates how competitive it could become. Studies undertaken by the International Energy Agency on EV adoption between 2014 and 2020 showed in 2020 that 55% of all electric vehicles released in Europe, China and North America were SUVs. The study also highlights that while China has witnessed the most EV adoption on average, Europe’s share of electric SUVs is higher than the overall global market share. Furthermore, the US market, where Rivian is looking to capitalise on, lags behind other markets. While the study projects a further 20% growth of electric SUVs in the next five years, it shows that without increasing investment the gap will continue to grow.
Industry investment
George Soros’ investment forms part of a convergence in the relationship between EV development and private investment. Gareth Lewis, Survey Director for Growing Trends at PwC, suggests that new financial backing from individual and group investors has diversified the brands coming to the industry and ensured the latency of government finance required for better EV infrastructure has decreased. He says that before the pandemic, “investment activity had been focused on the consumer side and public charging networks,” with the volatility of the market exposing investors to “unpredictable consumer demands.”
Rivian struggles here on both financial and resource levels. The brand recently committed to building a better market share in both areas, with current plans to roll out its own charging network across the US. This is part of a growing trend of manufacturers across Europe, Asia and the US investing into charging infrastructure, though the US is lagging behind: Society of Motor Manufacturers and Traders figures note that the US’s charging station ration of 1:54 ranks it far behind the UK (1:32), Japan (1:17) and China (1:11).
Rivian’s future
By the end of 2023, Rivian aims to have at least 3,500 smart chargers across its current US and Canada market territories, with further hopes of expanding its Waypoint charging facilities to accommodate up to 10,000 11.5 KW AC chargers in high-traffic areas such as shopping centres and restaurants. Tesla has operated a similar scheme since 2015.
Rivian aims to have at least 3,500 smart chargers across the US and Canada by 2023
The successful delivery of Rivian’s charging network will depend on accessibility. Tesla recently announced it would look to open its network up to non-Tesla EVs in the US and Europe. A spokesperson from Rivian said that while Rivian charge points “would be exclusive for Rivian owners initially,” their charge sites would be opened up to other EVs in the future, adding that “Rivian members would receive special rates” for their use. While prioritising its own vehicles, the confirmation that other EVs could use the network is a response to the limited charging options and growing EV population across the US.
Providing sufficient financial support to facilitate better infrastructure and democratise EV ownership is paramount not only to Rivian’s success but the EV industry as a whole. The US government has committed its domestic EV industry to a trillion-dollar bipartisan spending bill aimed at enhancing sustainability and EV adoption. US$2.7bn of this would fund better infrastructure investment and encourage government-funded companies to build charge stations across the US. However, Richard Peberdy, KPMG UK’s Head of Automotive, stresses that EV infrastructure investment isn’t a simple resolution. He says that “the quality of infrastructure matters,” suggesting that investing in standards around charging also remains important. He concludes that EV uptake “remains dependent on the availability and attractiveness of chargers at an EV’s disposal and how the EV fits into the overall ecosystem.”
Keyword: EV industry’s dependency on private investment continues