The AI boom has catapulted certain large-scale model enterprises, which are not yet profitable, into the limelight.

With revenues of less than $500 million, Rivian was valued at over 300 billion yuan, a testament to the market's fervor for AI large models. However, it's crucial to recognize that valuation bubbles in hot sectors are not sustainable indefinitely. If highly valued companies fail to deliver results within the expected timeframe, they may ultimately face financial ruin.

In 2019, Tesla's groundbreaking achievements ignited a global new energy revolution. Amid this capital frenzy, numerous outstanding enterprises emerged, and some startups were propelled to great heights by conceptual hype, with electric vehicle company Rivian standing out as the most emblematic example.

In 2019, even before producing a single vehicle, Rivian secured four rounds of financing within a year, amassing a total of $2.85 billion. In November 2021, the company successfully went public on the Nasdaq.

As a premier electric vehicle brand backed by Amazon and Ford, Rivian's $12 billion financing round positioned it as one of the largest IPOs in U.S. history.

With the collective efforts of various stakeholders, Rivian's market value skyrocketed to an exaggerated level. To cater to market expectations and craft a narrative of future success, it was labeled the 'Tesla Killer.'

Just a week after its IPO, Rivian's market value surpassed the $150 billion mark, surpassing Daimler and Volkswagen to become the world's third-largest automotive company.

However, even the most captivating stories require tangible performance to sustain them, and this timeline is typically short-lived. This frenzied 'wealth creation' game soon reached its peak. Within four months of its IPO, Rivian's market value had plummeted by 80%. To this day, its market value has still declined by over 90%, with a total loss of more than $130 billion.

In essence, the capital market is never devoid of compelling narratives. This round of AI stories is even more grandiose than the last. With Google and Meta trading at less than 30 times earnings, some startup large model companies dare to propose fantastical valuations, revealing the market's irrational exuberance.

The Power of Capital Winds

For global technological advancement, capital bubbles play a pivotal role. Only with substantial capital investment can the industry make leaps and bounds until quantitative changes lead to qualitative transformations.

From the new energy perspective, although Tesla ignited a global new energy investment wave, the market's valuation of it remained relatively restrained. Ultimately, riding the wave of success, Tesla used its performance to digest the valuation bubble, becoming the most valuable automotive company—a title it still holds. After the boom, Rivian, which had briefly eclipsed Tesla with capital backing, saw its fortunes decline.

This turning point occurred two years ago.

To survive, U.S. electric vehicle startups began to improvise. Some chose bankruptcy, while others sought refuge with automotive giants. Rivian accepted investment from Volkswagen Group, while Fisker, once hailed as the 'Apple of the automotive world,' opted for bankruptcy liquidation.

According to Volkswagen Group's statement, Volkswagen invested $5 billion in Rivian and established a joint venture. This new entity will construct a technology platform based on Rivian's software and electrical architecture to develop next-generation pure electric vehicles and automotive software. Volkswagen and Rivian will then leverage this platform to produce their respective products.

Ultimately, Volkswagen Group invested $5.8 billion in Rivian. Desperate for cash, Rivian was compelled to cut costs and enhance efficiency. It eliminated over 100 steps from the battery manufacturing process, removed 52 pieces of equipment from the body shop, and reduced over 500 components from the design of its flagship SUV and pickup truck, resulting in a production cost reduction of more than 35%.

Regarding Rivian, Musk once remarked, 'Their product design isn't bad, but what truly makes it challenging for an automotive company to be profitable is achieving mass production and positive cash flow.'

To this day, Rivian remains mired in losses, far from achieving true profitability.

From Rivian's example, it's evident that companies in hot sectors must possess highly robust products and technologies to justify their valuations amid market bubbles.

Therefore, we should maintain optimism about top-tier companies but exercise caution with mid-tier ones.

This round of the AI wave is actually larger in scale and hype than the previous new energy boom. Super top-tier companies like Google, Meta, Microsoft, and Amazon are investing even more frenziedly. According to statistics, these four tech giants—Google, Meta, Microsoft, and Amazon—will collectively spend $650 billion this year, a massive capital expenditure that surpasses any previous period.

Backed by the hype and substantial capital spending, giants like Nvidia have emerged. In just two to three years, Nvidia became the first company to surpass a $5 trillion market value. Compared to Tesla and CATL in the new energy era, the wealth creation effect of this AI wave is even more pronounced, suggesting that when the AI bubble bursts, the fate of mid-tier AI companies could be even more dire.

Rivian's Decline

Once the bubble bursts, valuations will inevitably return to rationality.

In mid-February, Rivian released its Q4 2025 financial report, revealing Q4 revenue of $1.286 billion, down 25.84% year-over-year (YoY), compared to $1.734 billion in the same period last year.

Among this, Q4 automotive revenue was $839 million, down 45% YoY, compared to $1.52 billion last year. Rivian attributed the revenue decline to a $270 million drop in regulatory credit sales, a decline in vehicle deliveries due to expired tax credits, and a decrease in average selling price due to a higher proportion of EDV deliveries.

Notably, software and services emerged as a bright spot for Rivian in Q4. Financial reports show that revenue in this segment reached $447 million, surging 109% YoY. The company attributed this growth to increased vehicle electrical architecture and software development services provided through its joint venture with Volkswagen Group, as well as rising sales from vehicle trade-ins and maintenance services.

For the full year 2025, Rivian achieved revenue of $5.387 billion, up 8.39% YoY, compared to $4.97 billion last year; net loss was $3.646 billion (approximately RMB 25.2 billion), up 23.19% YoY, compared to a net loss of $4.746 billion last year.

Financial reports show that Rivian's automotive segment generated $3.83 billion in revenue for the year, down 15% YoY, while software and services revenue surged 222% YoY to $1.557 billion. The company produced 42,284 vehicles and delivered 42,247 vehicles for the year.

Rivian revealed plans to launch the R2 model in Q2 this year.

Rivian CEO RJ Scaringe stated, 'This is a critical turning point for us, through which we will demonstrate the long-term profitability of the R2 business. R2 is a vital project for us to scale our operations.'

Rivian expects single-quarter deliveries to reach approximately 9,000 to 11,000 units in the first half of 2026, with deliveries surging to 22,000 to 23,000 units per quarter in the second half as R2 production ramps up.

RJ Scaringe also mentioned that Rivian expects to receive an additional $2 billion in cash and debt this year from its joint venture with Volkswagen.

However, it should be noted that capital expenditures will also increase synchronously, with 2026 capital spending estimated between $1.95 billion and $2.05 billion, up from $1.7 billion in 2025.

Financial reports also show that as of December 31, 2025, Rivian held $6.082 billion in cash and cash equivalents, short-term investments, and restricted cash, indicating continued financial pressure.

Kanjian Finance believes that with the global new energy boom coming to an end, the industry landscape has solidified. From a performance perspective, although Rivian's losses are narrowing year by year, its timeline for profitability remains uncertain. Currently, despite some support from Volkswagen Group, this has not fundamentally altered the company's situation. Only by achieving break-even and developing self-sustaining capabilities as soon as possible can Rivian completely escape its survival crisis.