Why Jim Cramer Would Prefer To Sit 'On The Sidelines' With Rivian And Buy Ford Instead

CNBC "Mad Money" host Jim Cramer said on Monday he has reservations about whether the electric vehicle maker Rivian Automotive Inc can replicate Tesla Inc’s TSLA success and that he’d rather buy shares of Ford Motor Co F.

What Happened: Cramer said on his show that everything seems to be going right for Amazon.com Inc AMZN and Ford-backed Rivian but warned the electric vehicle space is getting more crowded. 

“Rivian’s got Ford’s F-150 Lightning hot on its heels, along with GM's electric Hummer and even Tesla Cybertruck.”

Rivian is scheduled to list its shares on Wall Street this week and expects to raise about $9.99 billion in its initial public offering, which would make it among the top ten IPOs in the U.S. history.

Cramer said that Rivian’s high valuation would not be a deterrent for investors as they are likely to focus on how quickly the company can scale up production and turn into a major electric vehicle competitor. 

The former hedge fund manager turned television host said he would stay “on the sidelines” with Rivian when it gets listed and continue to own Ford shares through his charitable trust.

Ford reportedly owns a 12% stake in Rivian.

See Also: How Ford Beat GM To An Investment In Rivian

Why It Matters: Rivian beat legacy rivals such as GM, Ford and Tesla to bring its electric sports utility vehicle and pickup truck to th market first.

Ford plans to begin selling the F-150 Lightning truck mid-next year. Tesla’s Cybertruck production has been delayed to 2022. GM’s electric Hummer is expected to go on sale this year.

Rivian says it has secured about 55,400 pre-orders for R1T and R1S in the United States and Canada as of Oct. 31.  These orders are from buyers who have paid a cancellable and fully refundable deposit of $1,000. The company said it aims to fill the pre-order backlog by the end of 2023.

The electric automaker also landed a 100,000 electric delivery van order from Amazon in 2019.

Rivian is reportedly investing at least $5 billion to build a second electric vehicle factory near Fort Worth, Texas. The manufacturing plant, codenamed “Project Terra,” would have an annual capacity of 200,000 electric vehicles and is expected to create above 7,500 jobs by 2027.

Price Action: Amazon shares closed 0.85% lower at $3,488.98 a share on Monday.