Why would Ford invest in Rivian when it hurts it's core business?

[pointillistic]

Why would Ford invest in Rivian when it hurts it's core business?
https://www.wsj.com/articles/rivians-60-billion-ev-challenge-to-detroit-11635860079

"Ford’s potential $6 billion windfall as a result of its early investment in Rivian is little compared with what it stands to lose if the startup lives up to its promise."

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[djd3]

Ford is rumored to have a 14.4% stake in Rivian via their $1.2B in investment over time. That alone is of value to Ford if they own 14.4% of a $61B company.

Rivian was going to build a Lincoln EV but that was cancelled, instead Ford will build their own. Ford will use Rivian for co-development or sharing of technology or platforms in the future

Rivian is valued closely to Ford because investors worry that Ford is trapped by its dealership model and agreements, along with stranded assets and pension related costs

 

[olderbudwiser]

Ford did't want anyone to out woke them.

Plus any responsibility to shareholders is non-existent.

 

[pointillistic]

Ford is rumored to have a 14.4% stake in Rivian via their $1.2B in investment over time. That alone is of value to Ford if they own 1% of a $61B company.

Rivian was going to build a Lincoln EV but that was cancelled, instead Ford will build their own. Ford will use Rivian for co-development or sharing of technology or platforms in the future

Rivian is valued closely to Ford because investors worry that Ford is trapped by its dealership model and agreements, along with stranded assets and pension related costs

Rivian is valued much higher than Ford. 80 vs 60 bil

 

[JASmith]

Rivian is valued closely to Ford because investors worry that Ford is trapped by its dealership model and agreements, along with stranded assets and pension related costs

UAW and their inability to bypass the middle-man is a huge issue.

 

[djd3]

Rivian is valued much higher than Ford. 80 vs 60 bil

Ford's market cap is $71.6B as of this afternoon

Rivian is targeting a valuation as high as $53B for their upcoming IPO https://www.ft.com/content/e123d71e-8644-410c-9b4e-69a25914d867


$71.6 > $53B

 

[djd3]

UAW and their inability to bypass the middle-man is a huge issue.

Thanks for adding that. Agree.

I know that legislators (not making a political statement here) are/have considered changing the EV tax credit to only be applicable to manufacturers that use unionized labor. https://www.autoweek.com/news/green-cars/a37575537/ev-credit-union-made-cars/


Tesla was found guilty of union busting https://www.vox.com/identities/2019/9/30/20891314/elon-musk-tesla-labor-violation-nlrb

There will likely continue to be challenges for manufacturers using non unionized labor in the US. Even with all the automation, a large amount of human labor is still required

 

[pointillistic]

Ford's market cap is $71.6B as of this afternoon

Rivian is targeting a valuation as high as $53B for their upcoming IPO https://www.ft.com/content/e123d71e-8644-410c-9b4e-69a25914d867


$71.6 > $53B

I stand corrected

 

[medgar]

The answer is Ford is in a position to earn 7 billion dollars today from Rivian IPO

Plus more revenue as the company grows and share in technology advancements

Ford outbid GM for a 12% stake in the company

 

[pointillistic]

The answer is Ford is in a position to earn 7 billion dollars today from Rivian IPO

Plus more revenue as the company grows and share in technology advancements

Ford outbid GM for a 12% stake in the company

Jim Farley, current CEO would not have done it, probably previous CEO who was clueless in regards to direct competition and existential threat.

 

[OldSoulNewMaverick]

Ford's market cap is $71.6B as of this afternoon

Rivian is targeting a valuation as high as $53B for their upcoming IPO https://www.ft.com/content/e123d71e-8644-410c-9b4e-69a25914d867


$71.6 > $53B

Good discussion about the valuations on CNBC this morning. If Rivian gets to $80, it will be the same valuation as Ford. If Rivian gets to $100, it will be the same valuation as GM. The one I don't get at all is Tesla. I know they're the top Electric brand right now (by far) and there's value to the technology......but the current market cap of Tesla is nearly 1 TRILLION.... that's bigger than Ford, GM, Honda, Toyota, and Stellantis (jeep/chrysler) COMBINED!!!!!

 

[pointillistic]

Good discussion about the valuations on CNBC this morning. If Rivian gets to $80, it will be the same valuation as Ford. If Rivian gets to $100, it will be the same valuation as GM. The one I don't get at all is Tesla. I know they're the top Electric brand right now (by far) and there's value to the technology......but the current market cap of Tesla is nearly 1 TRILLION.... that's bigger than Ford, GM, Honda, Toyota, and Stellantis (jeep/chrysler) COMBINED!!!!!

Will see how Rivian pans out and yes it was stupid for Ford to invest no matter the windfall. Rivian is an existential threat and like Tesla, Rivian is not weighted down by ICE, Dealers and all the legacy grifters in between. See my post here https://www.mavericktruckclub.com/forum/threads/ford-ceo-speaks-about-tesla.4670/

 

[OldSoulNewMaverick]

Will see how Rivian pans out and yes it was stupid for Ford to invest no matter the windfall. Rivian is an existential threat and like Tesla, Rivian is not weighted down by ICE, Dealers and all the legacy grifters in between. See my post here https://www.mavericktruckclub.com/forum/threads/ford-ceo-speaks-about-tesla.4670/

But how fast do you think the conversion to electric vehicles will be? There's gonna be a shortage of battery manufacturing capacity (and possibly minerals), and the power grid is nowhere near ready to support a quick conversion. Not to mention on the trucking side there are still no real possibilities. Tesla keeps pushing back the semi, and until they figure out a faster charging option there will always be a need for ICE engines. I think Ford hit the sweet spot with the Mav Hybrid. Hybrid engines will really shine over the next decade as more and more people want switch to something more eco-friendly, and the value of the Hybrid maverick is off the charts IMHO. Until the prices drop and the other issues are figured out, I don't see EV numbers getting anywhere close to 50% of the auto market for many, many years.

 

[pointillistic]

But how fast do you think the conversion to electric vehicles will be? There's gonna be a shortage of battery manufacturing capacity (and possibly minerals), and the power grid is nowhere near ready to support a quick conversion. Not to mention on the trucking side there are still no real possibilities. Tesla keeps pushing back the semi, and until they figure out a faster charging option there will always be a need for ICE engines. I think Ford hit the sweet spot with the Mav Hybrid. Hybrid engines will really shine over the next decade as more and more people want switch to something more eco-friendly, and the value of the Hybrid maverick is off the charts IMHO. Until the prices drop and the other issues are figured out, I don't see EV numbers getting anywhere close to 50% of the auto market for many, many years.

All I know is that Jim Farley placed ALL his chips on EV, rightfully so. I don't not know if Ford legacy dealerships, etc. will let him crash Tesla (and Rivian).

 

[OldSoulNewMaverick]

All I know is that Jim Farley placed ALL his chips on EV, rightfully so. I don't not know if Ford legacy dealerships, etc. will let him crash Tesla (and Rivian).

One of the CNBC analysts said that the best thing Ford could do is to sell off the Rivian stake (as it likely jumps up in the near term), and use that windfall towards building the announced EV/Battery expansion. That's the best idea I've heard.
As someone who has owned Ford stock for a while, I follow the news and production numbers. Right now Ford is in a really good place. The Mav Hybrid is nearly sold out for 2022. The E-Transit is sold out for 2022. The electric crate engine is sold out. The Lightning has orders that will take over a year to fulfill. While they need to add manufacturing capacity, I'm glad that they seem to be taking a steady pace to the EV ramp-up. Better to have more orders than vehicles rather than more vehicles than orders. They'll eventually get to a better production speed, and hopefully they don't get any hangups in the process.

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