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Comment by jakelazaroff | Hacker News Reader

> On Monday, Rivian announced it had raised $1.3 billion in its fourth funding round of the year, led by T. Rowe Price, bringing its total for 2019 to nearly $2.9 billion.

> Rivian has been quietly developing vehicles for a decade, but it seized the industry’s attention in late 2018, when it unveiled a pair of eye-catching, high-end electric trucks.

Rivian raised $2.9 billion over four funding rounds in the span of one year? And it's been around for a full decade without ever releasing a product?

Does this not set off alarm bells?

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> Rivian raised $2.9 billion over four funding rounds in the span of one year? And it's been around for a full decade without ever releasing a product? Does this not set off alarm bells?

Not necessarily. They just signed some huge deals with Ford and Amazon, both of whom invested. What likely happened is that Rivian needed a lot of money for cap ex an inventory and wanted the customer to prepay. Those customers had a lot of power and so likely said, "Sure, but we'll take equity thank you very much."

I've bootrapped companies by having the customer underwrite the development cost but the sums have been so small (hundreds of $K, once a few million) that they weren't worth the customers (megacorps) worrying about this kind of thing. But when the sums needed are in the hundreds of millions, the CFO's office, if not the CEO, is gonna try to get something back.

I agree, but I would guess the deals looked something like equity, first right of refusal on acquisition, some level of access to IP, and maybe something like timed or category exclusivity in exchange for investment.

I'd also guess that the money is going to mostly CapEx for infrastructure (facilities, automation, tooling, etc) and OpEx for headcount and sub-supplier NRE rather than to inventory. There are "cheaper" ways to finance something short term like inventory than giving up equity.

I've stopped paying attention to all these auto manufactures like Rivian, VW, etc. All they do is keep announcing how they are going to take the industry by storm but yet never release a product or are working on it. Meanwhile Tesla pumps out a few thousand vehicles a month and the media makes it sound like it in big trouble. Ford, GM, VW are junk.I wouldn't buy any of their vehicles ICE or Electric. I worked for Ford 20 or so years ago and bought a Toyota (2000 4Runneris still going @ 300k + miles).

Although I'm glad they're pursuing electrification, it's all B.S until I see mass production.

If I were a betting man, all my money would be on the one horse that actually showed up for the race.

Not sure what you are talking about.

VW Group has already released a car which is in the hands of customers today i.e. Porsche Taycan. And there are plenty of EV cars today from the big auto manufacturers e.g. Audi, BMW, Mercedes. Some of which even outsell all Tesla cars in a country or two.

And it's hilarious to see you go on about car companies pre-announcing products when Tesla did exactly the same with the Cybertruck, Model Y, Roadster, Semi.

The Taycan is also the least efficient EV on the market... https://www.caranddriver.com/news/a30199684/porsche-taycan-e...

The VW group EVs are mostly junk and don't even compete with 8 year old Tesla's. That's tosay nothing about their pitiful charging network or substandard pilot assistance applications.

I am a German car fanatic and would love to own a German EV. The reality is they still have a long way to go.

> Some of which even outsell all Tesla cars in a country or two.

Which cars, where? Not being snarky, I'm actually curious.

Well, let's look at the world's top two car markets: China and Europe.

The Audi e-tron and the Jaguar I-Pace outsell the Tesla Model X in Europe. The Mercedes EQC will probably also outsell the Model X next year. The VW e-Golf does well in Europe so the Volkswagen ID.3 might outsell the Model 3 in 2020 or maybe 2021: https://ev-sales.blogspot.com/2019/12/europe-november-2019.h...

The Model 3 is outsold by a number of models in China. The Model S and Model X don't make the top 20. Maybe the Chinese built Model 3s will do better next year: https://ev-sales.blogspot.com/2019/12/china-november-2019-up...

The Taycan is not yet released, and not slated to until "Spring/Summer 2020". And since that's a lot of time till then, it might slip more.

https://insideevs.com/news/383171/porsche-taycan-delivery-de...

Here's one: https://electrek.co/2019/12/21/first-us-porsche-taycan-owner...

Here's another one: https://www.taycanforum.com/threads/drove-home-my-taycan-tur...

There are Taycans driving around in LA right now...

There are also Cybertrucks driving around LA. Doesn't mean its released yet.

No, there is a Cyber Truck being driven around by Elon Musk in LA.

There are multiple Taycans being driven around LA by people who don't work for Porsche.

The Taycan is a dreadful EV. Inferior to the Model S in nearly every way and at double the cost.

> Does this not set off alarm bells?

Not really... the automotive business is capital intensive, especially when the plan is to start with (relatively) high volumes of production.

Tesla is much farther along, but it also took billions to get there.

Sound familiar?

> Tesla was founded in 2003

https://www.tesla.com/about

> By January 2009, Tesla had raised US$187 million and delivered 147 cars.

https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.

Still better than 2900 million and 0 cars tho?

Not to mention that at this same point 10 years into Tesla’s existence the Model S was in full production of 1,000 cars a week and Motor Trend Car of the Year.

Tesla had the advantage of being the only car company which was 100% committed to electric at that time.

1000 a year is pretty good for luxury eco friendly car in 2009.

Rivian cannot sit in the same place. They have to carve out some market segment that loves electric but hates Tesla or get enough funding to stick around for 10 years when Tesla may be vulnerable to competition.

Why do you think Tesla would be more vulnerable to competition in ten years than they are now? I am seriously curious

Size and lack of growth. If they are a 2 trillion dollar company they will not be able to grow nearly as much on a percentage basis at that point. Also it is harder to make big changes at large stable companies to respond to threats and large companies are more likely to ignore much smaller companies.

Global sales of the Model S are 250,000 to date, so Tesla definitely wasn't making 1000 of them back in 2013, when it was their only model.

It took them 2.5 years to go from making 2 dozen cars per week to 1000 per week.

Amazon’s large investment and order for delivery vehicles seem to be a strong signal to other investors that there is a lot of upside.

Can you point out comparable US-based car company startups that developed faster and by raising less? There's only one other example, so it's hard to draw any conclusions.

It is yet another effort (fuel cell, Nikola, lucid, workhorse) by the existing industry to divert attention and money away from the few players (mainly Tesla) that are actually delivering battery electric vehicles. /tinfoil

Until recently, the existing industry was shipping more battery electric vehicles than Tesla. Nissan Leaf sells very well, as do BMW, Chevy, and several other OEMs.

https://www.eei.org/issuesandpolicy/electrictransportation/D...

Few players ?

There are are dozens and dozens of companies delivering EV vehicles including big players like VW, BMW, Porsche, Jaguar, Audi, Volvo etc. Could be even hundreds based on what what little we know from all of the skunkwork projects.

In the US, besides Tesla, the LEAF, and the Bolt, everything is a compliance car. https://insideevs.com/news/343998/monthly-plug-in-ev-sales-s...

Half the companies you listed are the same company.

What's strange about this? When it doesn't have anything to show investors shy away. Prove its chops with some impressive prototypes and investors rush in.

The strange thing is running a business for a decade without bringing a product to market.

Prototypes be damned, they aren’t revenue.

It's manufacturing, not software. While one can produce one million copies of a binary for cheap and no lead time, producing one million physical objects requires setting up production lines, quality control checks, rework stations, warehousing, supply chains and controls, and so on.

Yes, but before you produce one million physical objects it's good to do a test run with one to see how strong the market demand is. It's not a foregone conclusion that their product will sell at high enough margins and quantity to be successful. You don't automate something before you validate it. Even Tesla made this mistake - they tried to automate their assembly line before they had the assembly line figured out. It's one of the few things Elon Musk did that he later admitted was stupid on his part.

Tesla didn't start with a mass-market vehicle. They started with an extremely high margin, low volume sports car. They then transitioned to a not-quite-as-high margin, not-quite-as-low volume luxury car. They are currently trying to make moderate margin, high volume sedans with the Model 3, but it's uncertain they can currently sell those profitably.

Not to mention all of the regulatory requirements at the state and federal levels across many countries.

Selling a car isn't far off trying to sell a medical device.

Not even close. Having worked at a Medical ultrasound startup and now at a Gene Sequencing Company that also sells diagnostics equipment, there is More documentation burden involved with bringing medical devices to market, more verification and validation than Auto. Just compare what Apple had to go through to v&v Series 5 EKG Vs the Tesla Auto summon which was literally regression tested by hapless customers at Target/Walmart parking lots. It’s really a day and night difference.

You can do a lot to get going with couple billion dollars though. I agree that it sounds like vaporware.

I work in hardware currently.

Failing to bring a product to market in a decade is a failure. Even for autos, you need to ship product eventually.

You clearly don't work in automobiles, where it can take almost a decade for a model to go from inspiration to design to production.

Tesla tried to rush things, and they're still trying to fix all the bugs and problems from rushing into production.

I am skeptical that Rivian has "proven its chops". Consider Magic Leap, a company with a some impressive prototypes that used its $2.6 billion of funding to… sell 6,000 headsets, out of a goal of one million.

https://techcrunch.com/2019/12/06/report-magic-leaps-early-d...

Well... Magic Leap has no market, it literally has to invent one out of thin air. There is a gigantic market for trucks, and the market price for trucks is well established.

In one people invested in something that was unproven with an unknown market, the other people are investing in something the market already has show demand for... Seems pretty damn different to me /shrug

You really think Amazon and Ford would place such large orders for vehicles if Rivian hadn't "proven its chops".

And Rivian is a variation on a proven technology. Magic Leap is a completely new one. Not comparable in the slightest.

Neither company loses much if rivian disappears.

For amazon the equity investment fell under corporate social responsibility, the alternative would be something like carbon offsets which are a pure loss.

For ford it just means one less competitor, and they might be able to salvage some IP in the fire sale.

If rivian is just a variation on a proven technology whats their competitive advantage? They have zero manufacturing scale, zero experience selling cars, and with the “platform” model no way to differentiate the cars over any other EV (no vertical integration).

If they only sell the platform then they are at the bottom of the value chain. Nobody is going to say "I want Rivian in my EV".

Trying to solve manufacturing while inevitable improvements to battery chemistries and electric motors proceed, is a viable strategy. They’re not inventing a new magic box nor disrupting the art of office leasing, they’re building electric vehicles.

They actually do have lots of sales. Rivian is making a “skate” that is everything but the body of the car. Bolt on the body and you have an EV. Amazon and Ford have made large orders.

Hardware heavy startups aren't like launching an app.

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