Ford Motor Company has reduced its ownership in Rivian Automotive to 1.15%. The move comes as part of Ford’s strategy to scale back its involvement with the electric vehicle (EV) firm. Ford initially held an 11.4% stake in Rivian at the time of its IPO in 2021. The plan was for Ford to utilize Rivian’s skateboard-style all-electric platform for its own electrification initiatives.
However, the recent news of Ford’s seemingly withdrawal from Rivian has caused a decline in both companies’ stocks. Rivian’s shares dropped by 3.4% and Ford’s by 8% at the time of the filing. According to CNBC, Ford sold 91 million shares of the EV start-up in 2022, generating $3 billion in total revenue from its $1.2 billion investment.
Unfortunately, Rivian’s performance has been struggling, with missed production targets and slow production increases. When Rivian went public, its stock was trading at around $180 per share, but now it is trading at around $20 per share, valuing the company at $18 billion. Furthermore, last week, reports indicated that Rivian is considering laying off 6% of its workforce due to declining cash reserves.
Ford’s connection with Rivian started in 2019, prior to the start-up’s IPO. However, Ford has since developed its own technologies for the F-150 Lightning and no longer requires Rivian’s platform. This means that Ford no longer sees value in investing in a potential future competitor.
It is worth noting that the enthusiasm for EV start-ups was high in 2021, with many investors believing that Tesla had opened the door for new automakers to challenge established brands. This led to many companies going public prematurely for a quick cash grab, but few are performing well today.
See also: LG Energy Solution to increase EV batteries supply to Ford
Rivian, however, was not one of those companies as it was founded in 2009 and carefully planned its platform and business before going public. Unfortunately, the pandemic has had a negative impact on Rivian’s performance, and the current stock price of $20 per share is still considered overpriced for a small automaker. In comparison, Ford is currently trading at around $12 per share, Toyota is trading at around $14, and Volkswagen is trading at around $13.
