Rivian CEO took out second mortgage to start multi-billion dollar company
Rivian CEO RJ Scaringe could personally earn up to $4.6 billion over the next decade if the electric car maker hits certain profit and stock price targets laid out in a new compensation package recently approved by the company’s board of directors.
The potential payout, which has been compared to Elon Musk’s Tesla payment plan, would likely never have been possible had the 42-year-old Rivian founder and his father not made a “highly financially unreasonable” decision. In 2009, the couple took out a second mortgage to secure the money needed to get the company off the ground.
Scare he said He said he founded Rivian, initially named Mainstream Motors, in June 2009, a day after receiving his doctorate in mechanical engineering from the Massachusetts Institute of Technology. He had dreamed of starting an automotive business since childhood when he helped a neighbor. restore classic carsAnd researched low emission combustion ignition engines as part of the doctoral program at the MIT Sloan Automotive Laboratory.
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First business project: building a hybrid sports car. But he didn’t have enough financing to start a capital-intensive business: An auto company would require “billions of dollars…thousands of engineers” [and] “It’s a manufacturing facility that will take years to build,” Scaringe said. October 2024 interview at Rensselaer Polytechnic Institute, where he received his undergraduate degree.
Scaringe had no employees at the time and had not yet designed or built the infrastructure or technology of his proposed vehicle; therefore investors were not willing to provide financing.
“This is an incredibly high-risk proposition, so my dad and I actually financed the startup. [of Rivian]. I had a house that I refinanced [and] “My father had a house that he refinanced,” Scaringe said, adding: “His love for me and his belief in me led him to do something that was extremely financially unreasonable… If that hadn’t happened, it would have been impossible to move on.” Both refinancings were second mortgages, The New York Times reported In July 2019.
Scaringe said he initially bought his own house with the money he saved from two summer jobs in high school (working at a restaurant and also apprenticed as a machinist), and later earned extra income by renting the house.How I Built Thispodcast in a September 2022 episode.
From sports cars to electric trucks and SUVs
Rivian’s founder hasn’t publicly disclosed how much money he got from the two refinancings, but on “How I Did This” he said the funds — along with some investments from “friends and family” — were enough to start hiring Rivian’s first engineers and building a prototype vehicle.
The company also leased a warehouse from Scaringe’s father, an engineer and founder of Florida-based Rockledge. Mainstream Engineering Companyis a company that produces various HVAC and cooling products.
Scaringe hired about 15 engineers and eventually designed a four-seat sports coupe that he hoped to sell to potential customers for about $25,000. he told the Orlando Sentinel In May 2010. After two years of development, he shelved the prototype, instead aiming to build something that could have a greater impact on the automotive industry and called “How I Built This.”
“The thought of going out and building what Tesla has already done [with the electric Tesla Roadster] …I felt like this wasn’t a problem the world needed [to be] I worked on it,” Scaringe said.
Scaringe went back to the drawing board during what he described as one of the “most confusing and challenging times” of his life. He said he was impressed by the challenge of building all-electric pickups and SUVs – popular vehicle categories produce more emissions than smaller cars when powered by gas engines.
in 2012 Rivian raises more than $1 million in donations in financing, Led by Saudi Arabian automobile distributor Abdul Latif Jameel. Scaringe met fellow MIT alumnus Abdul Latif Jameel’s president through the school’s alumni network and successfully pitched him his vision for Rivian, calling it “How I Built This.” Rivian raised $10.5 billion in funding from companies like Amazon and Ford before going public in 2021; That same year, the company’s electric trucks and SUVs finally hit the market.
Today, Rivian’s market capitalization is over $20 billion, and Scaringe owns a roughly 1.4% stake in the company. Forbes. If Rivian hits all profit and share price targets in Scaringe’s pay package over the next decade, its market value could increase by about $153 billion and give Scaringe a larger stake in its business, the company said. November 7 application With the U.S. Securities and Exchange Commission.
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