How Ford Beat GM To An Investment In Rivian

With the Rivian IPO this week, Ford Motor Company F could be among the winners thanks to a 12% stake in the company. Here’s the story of how Ford beat rival General Motors Corp GM to acquire a stake in the startup.

What Happened: Ford and General Motors have been rivals dating back to the early 1900s, and that rivalry continued in a battle over acquiring a stake in Rivian, according to a Wall Street Journal report.

Joe Hinrichs, the former president of global operations at Ford, was one of the first traditional automaker executives to meet with Rivian with a September 2018 meeting. The timing wasn’t right for Ford, but Hinrichs kept close contact with Rivian founder RJ Scaringe in case Ford changed its mind.

Scaringe met with GM CEO Mary Barra and President Mark Reuss about a deal. GM was interested in Rivian early and wanted to utilize an investment to help get trucks to market faster.

An investment by Amazon.com Inc AMZN in a $700-million funding round helped reopen talks between Ford and Rivian, with Ford Chairman Bill Ford Jr. meeting with Scaringe.

Rivian was in late-stage negotiations with GM, but Hinrichs pushed Scaringe to reconsider partnering with Ford instead.

“Just because you got engaged to someone doesn’t mean you need to marry them,” Hinrichs told Scaringe.

Scaringe flew on a Gulfstream jet with Hinrichs for four-and-a-half hours, with the two texting and emailing their respective companies to get the deal done.

A deal was reached around 4 a.m. the day after the flight between Scaringe and Hinrichs. Ford’s original investment was $500 million in April 2019, with more to come in later rounds.

Related Link: Amazon Discloses 20% Stake In EV Firm Rivian

Why It’s Important: Ford owns 12% of Rivian and will likely see a nice payday for its early investment in the company. Amazon.com owns 20% of Rivian thanks to early investments in the company.

Rivian and its R1T electric pickup truck will compete with Ford and General Motors. Ford has the bestselling pickup truck in the country with the F-150. Ford will launch its own electric pickup truck, with the F-150 Lightning planned for a 2022 launch.

Rivian began deliveries of the R1T to customers in September and has a multiyear backlog of orders of the pickup truck and orders for its electric delivery truck designed for Amazon.

F Price Action: F shares were up 4.72% at $20.20 Monday afternoon. 

Photo courtesy of Rivian.