Rivian CFO has a plan for regaining Wall Street's trust after stock plunge

Rivian Automotive Inc.’s Claire McDonough savored the stock market’s enthusiasm when she helped raise $13.7 billion in 2021’s biggest initial public offering. Suddenly, the EV maker was more valuable than Ford Motor Co. or General Motors.

Now the first-time CFO has to bend her own Wall Street experience to a new challenge: a 73 percent implosion in Rivian’s share price from its peak amid analysts’ downgrades, production snags, missed delivery targets and an embarrassing U-turn over pricing.

The pressure is on McDonough, 40, a former banker at Credit Suisse Group and JPMorgan Chase & Co. She has to prove her operational acumen and win back the confidence of investors who rushed to endorse Rivian as a worthy challenger to Tesla Inc., then snubbed it just as vigorously.

“If we can really prove out this ramp, if we can prove out our opportunity to bring new vehicles to market, to build additional capacity in a cost-effective way, the stock price will just take care of itself,” McDonough said in an interview.

The Irvine, Calif.-based company, founded in 2009, only recently started producing its signature plug-in pickup trucks and SUVs, as well as electric delivery vans for Amazon.com, a key investor. Rivian plans to deliver 10,000 vans to the e-commerce giant this year, McDonough confirmed, while building 25,000 vehicles overall.

Getting there will require cash, and the executive concedes that her greatest challenge now is spending wisely as supply-chain constraints hamper production. Rivian had $18.4 billion of cash as of Dec. 31, and a lengthy to-do list.

Rivian will burn through more than $14 billion over the next two years, analysts estimate. It could take several more years for its vehicles to produce meaningful revenue to offset cash usage, likely forcing Rivian to raise more capital amid equity market turmoil. The company isn’t alone as an EV startup with heavy cash needs, but Rivian is generally seen as one of the leading contenders to Tesla’s throne, giving it an advantage over competitors with more baggage.

“We’re very much in the driver’s seat in regards to the rate and speed at which we can dial up or dial back Rivian’s deployment of capital,” McDonough said. That also extends to deciding when to raise more money, she said.

Cash burn

Controlling the purse strings of one of the country’s buzziest automotive startups isn’t a role McDonough had always seen for herself. While at Duke University, she started a food-delivery business from her college dormitory and interned at the Food Network in New York. A connection to chef Jacques “Mr. Chocolate” Torres opened the door to a gig in France working pastry lines, then in kitchens in Washington, D.C., for Michel Richard.

McDonough got an MBA at Chicago Booth School of Business and was an intern and associate at Credit Suisse in New York. After a stint as finance director and treasurer at high-end grocery chain Fairway Market Group, she returned to banking with a job at JPMorgan, where she spent more than six years with the retail and consumer investment-banking team.

Rivian, meanwhile, was looking to bolster its leadership as it sought to turn from a startup into a legitimate vehicle manufacturer. While looking for a CFO in 2020, RJ Scaringe, Rivian’s founder and CEO, approached Peloton Interactive Inc.’s Jill Woodworth, according to people familiar with the discussions.

Woodworth didn’t want to leave the fitness-equipment maker, but she recommended McDonough and made the introduction. The pair had worked together previously at JPMorgan, and Woodworth subsequently insisted that McDonough be part of the bank’s team that co-led Peloton’s 2019 IPO.

With no experience as a CFO or in the auto industry, McDonough’s hiring 14 months ago didn’t cause much of a splash. It wasn’t until Rivian’s own IPO this past November that the logic began to prove out. The blockbuster offering was one of the half-dozen largest in U.S. history.

McDonough, the mother of two small kids, describes herself as the “partner in crime” to Rivian’s charismatic CEO. In searching for a CFO, the company wanted someone who could complement Scaringe’s vision and, when necessary, provide a dissenting voice.

“The best CFOs are not just a bookkeeper. They are making active and strategic decisions with the CEO,” said Wells Fargo analyst Colin Langan. Having to “manage the visionary” will be an important role for McDonough, he said.

McDonough has started to establish a more public profile, jumping in on earnings conference calls at times to offer more detail. Rivian insiders describe McDonough as a “killer” — strong on strategy, not afraid to speak up and fluent in the capital markets. But they also caution that she has little operating experience.

She got a lesson in the pitfalls of operational missteps this month.

Rivian raised sticker prices as much as 20 percent on its consumer models, including for previously placed orders, leading to cancellations by angry customers. McDonough and her team were lead proponents of the higher prices, arguing behind the scenes that they were necessary to achieve profitability in the long run, according to people familiar with the matter.

Just days later, Rivian reinstated the original prices for existing pre-order customers. It kept the higher prices for new orders after March 1, saying that the supply-chain crunch was boosting input costs.

Applying the price hike to prior customers, McDonough now acknowledges, was something “we got wrong.”

Since joining Rivian, McDonough has built out her team with several key hires, including bringing in Jeff Baker from Clorox as chief accounting officer. Gerard Dwyer, formerly CFO at Google’s self-driving unit Waymo, was hired in May as vice president of business finance.

It’s not lost on McDonough that she’s a woman in the historically macho world of automobile manufacturing. But that’s something she has dealt with throughout her career, from restaurant kitchens to Wall Street.

“My very first work experience was in a kitchen of 52 French men,” McDonough said. “Being a woman in a male-dominated industry, I learned from the very start how to navigate those waters.”

Like Rivian, EV rival Lucid Group Inc. has a woman at the helm of the finance operations. The pair, however, are still in the minority: Of the 682 Fortune 500 and S&P 500 companies, only 15 percent had a sitting female CFO as of Dec. 31, according to the Crist|Kolder Volatility Report.

‘Toxic bro culture’

In November, Laura Schwab, a former Rivian sales executive sued the company, accusing it of having a “toxic bro culture,” as reported by Automotive News.

McDonough was one of several senior women executives who came to the company’s defense.

In comments in an internal Slack channel that were seen by Bloomberg, she said Rivian’s culture was a strategic advantage and were it not for the company’s support of diversity, she’d never have been hired, given her lack of industry experience.

McDonough didn’t directly address the claims during the interview but repeated praise for Scaringe and Rivian’s culture while acknowledging the importance of diversity.

“I will say that we, collectively as an industry, need to recruit more women into the fold,” McDonough said.

She’ll get a chance to do just that. On the agenda for 2022 is the start of construction on a $5 billion plant in Georgia, which the company says will create more than 7,500 jobs. Rivian is also searching for a site in Europe and is building out a network of fast-charging stations in the U.S. McDonough will oversee all of that spending.

Scaringe told Bloomberg that McDonough has already acquitted herself well.

He said: “Her ability to balance our short- and long-term initiatives to achieve substantial scale is incredible, which coupled with her high intellect makes her a lot of fun to work with.”

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