This one’s a firecracker! I’ll let the writer claim it in the comments if he likes… otherwise, consider this an anonymous contribution with a lot to say — JB
Do you like trucks and SUVs? Pardon me for reducing you to a statistic, but you probably do. In fact if you are a part of America in 2019, it’s more than 65 percent likely that you do. And with 1 in 5 residents admitting they would consider an electric vehicle for their next purchase, the 35 year old founder and CEO of electric truck and SUV startup, Rivian Automotive, must be feeling good.
If that didn’t sink in, let me repeat it: The surprisingly well funded car company you’ve never heard of is headed up by a 35 year old named RJ Scaringe. RJ has close to half a billion dollars in working capital, and currently employs over 600 people in four different cities. The employees? These are folks with history at companies you probably have heard of… Mclaren, Lotus, GM, Ford. Given his youth, you may expect for him to struggle in this position, but he really doesn’t suck at it. In fact he’s quite good.
By all accounts, Scaringe is experienced, disciplined, enthusiastic, well spoken – he’s even good looking. This MIT Ph.D toting CEO has enough initials after his name to make you feel like you’ve made some terrible life choices, so how about we look into how one becomes the owner of such esteemed credentials a half decade before being due for a prostate exam?
While there are plenty of fluff pieces full of thick praise for Rivan’s new acronym-labeled vehicles, the R1T (T for truck) and R1S (S for SUV… genius), which debuted in November at the Los Angeles Auto Show, for some reason, like an episode of deja-vu, I couldn’t quite put my finger on why it all sounded so familiar. I queried my inbox and lo and behold, dating back to 2010 was an email exchange I had with RJ’s Executive Assistant, both of whom were working for a company called Avera Motors, headquartered in Florida’s Space Coast. He would have been 27 then. With the help of the Google machine, I started to remember. Avera Motors was particularly exciting, because they were working on a prototype sports car, hybrid powered, estimated at 60mpg, priced under $25,000. They even had a revealing sneak peak of the quarter panel on their website, and a “Culture” tab that described the corporate visions of a true gearhead.
Now things get interesting. The car in the photo never entered production, and to this day has never been revealed or seen in public. Was it a real runner? At least it had nice RWD, mid-engine proportions, and large vented brakes peeking out behind 5-spoke wheels. We’ll never know, but what we do know is that in 2009, Scaringe locked down a $2,000,000 grant from the state of Florida and spent every penny of it on that car. Thanks to some solid investigative journalism, it was revealed that one of the votes in the legislature for the grant came from Florida State Representative Debbie Mayfield, who happened to be dating a Robert Scaringe at the time. Robert Scaringe, senior, was on the board of Avera Motors, along with his son RJ, and of the 2 million dollars in grant money almost $900,000 was paid in salary with another $170,000 paid to unidentified “contractors.” Today Debbie is married to Scaringe senior, and is a sitting Florida Senator.
Questionable ethics aside, Avera Motors was still doomed from the start. Not just because they received a cease and desist from Hyundai over similarity to the name “Azera,” or because there was never enough money to build a NHTSA/EPA compliant production car, but mostly because there is no sustainable market for a single model manufacturer of a two-seat roadster. You almost have to wonder if RJ knew that going in.
So how do Avera’s undelivered promises become Rivian? RJ’s father is no stranger to fundraising, being a business owner himself. He owns a company called Mainstream Engineering, a company that over 25 years has received over $61 million dollars of venture capital… from the US Government. The Small Business Association proudly puts this figure on their website. I’m generally an advocate of SBA loans, but that is A LOT of money, especially when Mainstream Engineering’s biggest line of business is built on military contracts. Is it really a loan when Uncle Sam is both your creditor and your future customer (and… ahem… your lover)? My bank certainly won’t give me a loan on a Porsche GT3 and then promise to buy it back for more, although if I could figure out a way to do this, I would. It’s like knowing the secret ??? step in the 1,2,3 Profit Memes.
At this point we have a failed automotive startup connected directly to the US Senate, funded by questionable grants and recycled government loans funneled through a private defense contractor. Where do we go from here? Seems just right to involve the Middle East somehow. Right then, back to Rivian.
In 2012, newly minted Rivian Motors, rising from the ashes of Avera Motors (after temporarily being called Mainstream Motors in a direct connection to Scaringe senior’s business) needed more money this time around. As you know, EV’s have been the car-du-jour on the U.S. government’s menu for close to a decade, and with bureaucrats subsidizing and incentivizing the market, U.S. EV companies have been tasty investments for foreign partners. The Abdul Latif Jameel company is owned by the fourth wealthiest family in the Middle East, and Jameel, famous for bringing the original Land Cruiser to Saudi America, recently gobbled up a large stake in Rivian. In 2015, Jameel thanked the Saudi King for his “unconditional government support” for 60 years of importing Toyotas to the Middle East. The remaining Rivian investors are Sumitomo Corp, coincidentally a battery supplier to Toyota, and 200 million in debt service to London’s Standard Chartered Bank. It’s all above board, but certainly interesting when you follow the money, and a reminder that public-private partnerships usually lean more heavily on the “public” than we realize.
Today Scaringe has almost $500,000,000 of working capital to get Rivian off the ground, making it the second highest funded EV company in the world after Chinese EV maker Byton… yes, Scaringe has more capital than Tesla did before it went public. No wonder people are calling him the Elon Musk of Illinois. He expects to sell his first vehicles in 2019, produced in a Normal, IL factory purchased from Mitsubishi for a $16 Million song.
If anything, this is a good example of how to get rich while constantly losing money. The massive funding and government support is in place, like Tesla. The man in charge is educated and charming, like Tesla. The Rivian products look good, like Tesla. Even if Rivian fails, or fails to produce a profit, like Tesla, it’s a win for Scaringe who was well groomed to continue the family business of recycling loans as income while socializing losses. As long as Scaringe stays well connected at the top, you can be sure he’ll never be reduced to a statistic.
A correction: this story originally identified Florida senator Debbie Mayfield as “Debbie Mayfair”, and indicated that she was a United States Senator.