Dell’s car startup wants a valuation of $50 billion

Rivian Automotive, a business car startup backed by billionaire Michael Dell, opened a new hangar at a Michigan factory while the company itself weighs on Wall Street.

The company is seeking the valuation of more than $50 billion in a private offering of shares, two people familiar with the matter said this week. Rivian’s chief executive officer told a Detroit-area conference last month that the venture is looking to expand production lines to meet demand, most likely with an emphasis on electric vehicles.

Rivian wants to go public next year, and it’s unknown whether the bid for the equivalent of multiples of sales will prove sufficient in luring investors as it tries to change the auto industry’s playbook. That bid will feature the plug-in hybrid from Rivian’s sister company, Chrysler, which the automaker is still planning for launch next year.

Fiat Chrysler Automobiles NV is helping Rivian finance its Advanced Development Vehicles factory in Melvindale, Mich., built to build the compact SUV, called the Aspire, that’s due to go on sale next year. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley will manage the offering, said the people, who asked not to be identified because the talks aren’t public. The company plans to sell a minimum of 15 million shares, they said.

Rivian uses monolithic aluminum body panels to achieve better aerodynamics than other carmakers, and the technology allows it to build big, powerful trucks and SUVs on electric power. It expects to roll out four models in a little more than a decade that are designed to be affordable and fuel-efficient and feature open designs where windows let in sunlight and ventilators open outdoors for warm-weather drivers.

Rivian is using electric motors, batteries and other technology from electric-car pioneer Tesla Inc.’s Palo Alto, Calif., headquarters. That approach has served the automaker well over the years. Tesla still has nearly 1 million customers who have acquired its cars through the series of expensive cash purchases or leasing deals with previous owners.

Dell, co-founder of the largest maker of personal computers, has made three major investments in Silicon Valley. They include a stake in EMC Corp., a storage hardware maker in Hopkinton, Mass., in 2011; a stake in cybersecurity-software maker Palo Alto Networks Inc. in 2016; and his earlier-stage investment in computer-chipmaker Dialog Semiconductor Plc in 2010.

The most recent venture came in August when the billionaire and various relatives added 3 million shares to their stake in a deal for about $230 million at $15 a share.

In a recent interview, the Revitalize Detroit Investing In Detroit executive adviser said he wouldn’t be surprised if Detroit Electric LLC, an automotive startup backed by Michael Ford and his cousin Roger, filed an initial public offering by mid-2018. The privately held automotive company unveiled its first electric car in September at an electric car show in Las Vegas.

Ford Family-owned Detroit Electric sues Steven Filipkowski, who proposed $2 million retail deal to invest in electric car company — CityLab (@CityLab) October 21, 2016

David Noland, Andrea Chang and Charlie Spiering contributed to this report.

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