Ford’s stake in EV truck start-up Rivian is worth more than $10 billion in first day of trading
Rivian electric trucks are seen parked near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.
Michael M. Santiago | Getty Images
A major winner following electric vehicle start-up Rivian Automotive‘s blowout IPO on Wednesday is ironically one of its competitors, Ford Motor.
Ford owns about 12% of the company through equity and bond investments that started in 2019, according to public filings by Rivian. Based on Rivian’s closing price of $100.73 a share Wednesday following its Nasdaq debut, Ford’s roughly 102 million shares of the company, which include notes that convert to shares in June, are worth about $10.3 billion alone. It purchased its equity stake for an aggregate of $820 million, according to public documents.
When Ford sunk $500 million into Rivian in 2019, the companies had plans to jointly develop a vehicle for the Detroit automaker’s Lincoln luxury brand, which was later abandoned. Ford also received a seat on the company’s board, which it has since relinquished.
The actions have led some to questions whether Ford, which is going through a multibillion restructuring, will be a long-term investor in Rivian. Ford has continued to call Rivian a “strategic investment,” which it confirmed again on Wednesday.
“We’ve said that Rivian is a strategic investment and we’re exploring potential collaborations,” Ford spokesman T.R. Reid said in an email to CNBC. “We won’t speculate about what Ford will do, or not, in the future.”
Ford CEO Jim Farley, who inherited the investment in Rivian from his predecessor, Jim Hackett, tweeted congratulations to Rivian and its CEO and founder RJ Scaringe on Twitter Wednesday.
Rivian, in its registration statement with the SEC, acknowledged Ford’s investment as potentially leading to a conflict of interest but also a benefit in other ways.
“Accordingly, such stockholders may have different business interests than us or our other stockholders, and may take action or vote their shares in a manner which could adversely impact us or our other stockholders,” the company said, citing both Ford and Amazon, which owns about 20% of Rivian.
Ford bought $415 million in convertible notes in July that become common stock in June 2022. The conversion price will be equal to the lesser of $71.03 a share or the IPO price per share multiplied by the applicable discount rate determined by reference to the time of conversion, according to the documents.
A wholly owned subsidiary of Ford called Troy Design and Manufacturing also has a contract to supply parts for Rivian’s R1 vehicle program, according to public documents.
