Rivian is one of the young American automakers showing great promise. Alongside Lucid, these two brands can follow in Tesla's footsteps and win more market share without entirely copying the first mover. Here's what the Irvine-based electric vehicle manufacturer plans on doing from now on, according to the startup's Chief Financial Officer, Clair McDonough.
After being removed from the Nasdaq 100 index and replaced with a chip maker, investors, and diligent customers turned their attention to Rivian. They started questioning the automaker's plans and their feasibility. GM and Ford switching to Tesla's charging port only amplified the pressure, which led to some notable online figures claiming that the brand might never reach profitability.
But Rivian's future is not in danger because its products are great, and the team behind them is motivated to continue fighting. The R1T and R1S are a definitive hit with customers, and the EDVs are very liked by Amazon's drivers. Moreover, Rivian's acquisition of A Better Route Planner (ABRP) shows it is trying to improve its software and find new revenue streams.
Plus, the New York space is being opened to the public very soon, which will only allow more Americans to interact with the young marque's products.
The EV maker's CFO also had a timely intervention at a Deutsche Bank event, where she cleared some important stuff up and announced a couple of noticeable plans.
McDonough also confirmed that there had been an improvement in the supply chain and that demand for the all-electric pickup truck and SUV remains robust. Pre-orders still extend well into 2024, but she admitted that the current economic environment had led some customers to cancel their reservations. But daily deposits are being registered, renewing confidence in the market.
The CFO says that Rivian prioritized R1T production at first, and that's why it is now able to deliver the pickup truck in two weeks or less, and it even held a same-day sales event recently. However, buyers want the R1S more now, so the SUV will represent most of the production volume at the end of the second quarter of 2023. Over 70% of the existing pre-orders are for the R1S, and Rivian will make sure to get these vehicles to customers as soon as possible.
McDonough also said that the company's still working with the backlog of pre-March 2022 pre-orders that include the customers who locked in a starting price of $67,500 for an R1T and $70,000 for an R1S. Today, the cheapest pickup truck costs $79,000, and the SUV's price starts from $84,000. Remember that these EVs sport two motors less than what the pre-March 2022 pre-order holders paid a deposit for. Early customers will be invited to consider a dual-motor R1T or R1S, but they should be aware of the powertrain paywall.
The strategy was tested with the EDV at the beginning of the current year, and it has worked. Moreover, even though the plant was temporarily shut down, gross profit per delivered vehicle increased by 17%.
The factory downtime will also allow for the introduction of the lithium iron phosphate battery (LFP), which gives owners more peace of mind since it can be charged to 100% without risking advanced degradation. They will be available for the cheaper, standard battery pack-equipped R1 vehicles. The entry-point dual-motor R1T with the LFP energy storage unit will have a starting cost of $73,000 next year.
The production line will also be expanded to have an output of 20,000 more R1-series units per year, growing from 65,000 to 85,000. The EDV program will be moved to a single-shift schedule, running at half capacity until other customers join Amazon in buying the commercial vans.
The existing nickel battery pack will also be changed, but the CFO didn't say what exactly will be addressed.
McDonough also said the first R2-series vehicle will be unveiled early next year. It will have a price ranging between $40,000 and $60,000 without compromising the ethos set forward by the R1-series units.
Rivian remains dedicated to expanding its Level 2 (Waypoints) and fast-charging (RAN) networks, but it is not considering changing to the NACS port for now. It remains open to partnerships, however.
Finally, the company is also looking at self-driving capabilities and wants to reach Level 3 capability, which means the car can do most of the driving, but the driver remains responsible.
But Rivian's future is not in danger because its products are great, and the team behind them is motivated to continue fighting. The R1T and R1S are a definitive hit with customers, and the EDVs are very liked by Amazon's drivers. Moreover, Rivian's acquisition of A Better Route Planner (ABRP) shows it is trying to improve its software and find new revenue streams.
Plus, the New York space is being opened to the public very soon, which will only allow more Americans to interact with the young marque's products.
Looking good
Rivian is ahead of schedule with the ramp-up of the Enduro powertrain, the dual-motor solution for the R1T and R1S recognizable by the silver badging and brake calipers. This is an important development because it allows the company to sell more trucks at a lower price point without compromising its profitability outlook. At the same time, it doesn't require as many semiconductors as the quad-motor versions, so manufacturing can receive a boost once the production line is fully ready.McDonough also confirmed that there had been an improvement in the supply chain and that demand for the all-electric pickup truck and SUV remains robust. Pre-orders still extend well into 2024, but she admitted that the current economic environment had led some customers to cancel their reservations. But daily deposits are being registered, renewing confidence in the market.
The CFO says that Rivian prioritized R1T production at first, and that's why it is now able to deliver the pickup truck in two weeks or less, and it even held a same-day sales event recently. However, buyers want the R1S more now, so the SUV will represent most of the production volume at the end of the second quarter of 2023. Over 70% of the existing pre-orders are for the R1S, and Rivian will make sure to get these vehicles to customers as soon as possible.
The $73,000 R1T
The executive says that the EDV and the supporting subscription-based software suite (Fleet OS) represented 20% of the company's sales in 2022, which is expected to remain at similar levels this year too. In 2024, however, the Normal factory will be temporarily shut down to add new technologies for the R1-series vehicles, like the network-based architecture. This lowers the need for semiconductors and the cost of production again because instead of having several chips per device, there will be multifunctional chips for each part of the car that control multiple systems. As a direct consequence, the wiring harness will also be simplified.The strategy was tested with the EDV at the beginning of the current year, and it has worked. Moreover, even though the plant was temporarily shut down, gross profit per delivered vehicle increased by 17%.
The factory downtime will also allow for the introduction of the lithium iron phosphate battery (LFP), which gives owners more peace of mind since it can be charged to 100% without risking advanced degradation. They will be available for the cheaper, standard battery pack-equipped R1 vehicles. The entry-point dual-motor R1T with the LFP energy storage unit will have a starting cost of $73,000 next year.
The existing nickel battery pack will also be changed, but the CFO didn't say what exactly will be addressed.
McDonough also said the first R2-series vehicle will be unveiled early next year. It will have a price ranging between $40,000 and $60,000 without compromising the ethos set forward by the R1-series units.
Rivian remains dedicated to expanding its Level 2 (Waypoints) and fast-charging (RAN) networks, but it is not considering changing to the NACS port for now. It remains open to partnerships, however.
Finally, the company is also looking at self-driving capabilities and wants to reach Level 3 capability, which means the car can do most of the driving, but the driver remains responsible.