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What's Rivian Got to do with Lucid Motors?

1 Corinthians Chapter 13 verses 4-5 state, "Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs."


Love is a seemingly easy emotion to describe, and yet is mired with complexity. I like how the Bible instructs me as to what love is. It makes it very easy for me to think about how I love others, and whether my form of love is real or superficial. I often realize that my self interests are the primary item that fights against love's core attributes as the Bible describes. As I focus on myself less, I have a greater capacity to love others.


At the same, I consider elements from the Bible verse above - patience, lack of envy, no boasting or pride, not self-seeking, not easily angered, and no records of wrongs - all can be related to aspects of investing.


This thinking is what brings me to today's thought process with respect to Rivian's recent announcement on going public, and how this relates to Lucid Motors. As many know by now, Rivian has stated that they are looking to go public, potentially by September 2021, at a valuation of $50 billion. It was also stated that that the IPO could slip to later in the year or even to 2022.


Rivian has been backed by both Amazon (AMZN) and Ford Motor Co. (F), and has raised more than $8 billion from investors to date. Rivian also has a deal with Amazon to build 100,000 custom electric delivery vans by 2030, with 10,000 vans expected to be making deliveries by 2022. The company is also looking at beginning delivery of the RIS SUV in August of this year.


Rivian and Lucid Motors are viewed as the top two electric vehicle manufacturers for investors. However, the recent rush for a plethora of companies to go public, notably through Special Purpose Acquisition Companies, SPACs, has muddied the waters. This is especially true for delivery vehicles as we now have General Motors (GM), Ford, Mercedez-Bens, Workhorse Group (WKHS), The Shyft Group (SHYF), Canoo, Inc. (GOEV), Arrival via CIIG Merger Corp. (CIIC), Bollinger Motors, among others.


At the same time, many traditional auto manufacturers and new SPACs are also targeting passenger vehicles in addition to Lucid Motors including Tesla, Inc. (TSLA), General Motors, Ford, BMW (BMWYY), Mercedes-Benz, Toyota Motors (TM), Volkswagen (VWAGY), Fisker, Inc. (FSR), Canoo, Faraday Future via Property Solutions Acquisition Corp. (PSAC), among others.


So what is the deal with this new information with respect to Rivian and Lucid Motors? It's pretty simple and straightforward. Rivian is targeting a $50 billion valuation. This valuation is likely to increase as the company moves closer to going public. At this scale, it is very unlikely that a SPAC would be the vehicle for bringing the company public - the potential extension of timing also alludes to this.


In today's public environment whether a traditional or Direct Listing IPO process, is witnessing substantial premiums afforded to companies with very strong business models and growth prospects. To this point, I believe that Rivian will hit public secondary markets with an EV north of $100 billion.


I believe that Lucid Motors will command a higher premium than Rivian. I would suspect that it would range from $125 to $200 billion. Working backwards from the Churchill Capital Corp. IV (CCIV) speculated merger with Lucid Motors, and we are looking at a potential SP from $85 to $135 per share at this EV range. This reflects a 3 to over 4 times return from today's SP trading just north of $31.


It still remains to be seen whether Churchill Capital will inevitably announce a merger agreement, but this simple math should be on the radar now as we will be getting more transparency from Rivian as the company works towards its own IPO.


The speculation with Lucid Motors has already required a degree of patience, as Bloomberg initially announced the rumors in early January. Further patience and diligence will be required to continue to monitor and assess the opportunities as time marches on. At a minimum, we now have some ballpark numbers to consider for both Rivian and Lucid Motors, which are clearly the top investment options for the shift towards electric vehicles.



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