For electric vehicle manufacturer Rivian, delivery headaches hit as market closes for vaults

Article content

When Jeff Wells placed a reservation for the Rivian R1T truck in early 2019, he was among the early adopters of a pickup from the electric car startup backed by Inc that promised at the time to capitalize on a niche unserved by other automakers.

But Wells, an accountant from Southern California, is becoming increasingly frustrated as he sees others, who placed their orders years later, receiving trucks while he waits.

“It’s just annoying and there seems to be no order in how they do things,” he said of Rivian.

Ad 2

Article content

Wells is one of dozens of bookers who in recent weeks have complained about unreliable delivery schedules and delays in online groups and forums.

Complaints escalated after Rivian Automotive Inc said in late April it was changing the production sequence of the cars, prioritizing those with specific interior and exterior colors and wheel options.

“Building in a small number of building blocks reduces complexity with our suppliers and in the factory and allows us to build a greater number of vehicles,” Rivian told customers in an email.

This means that many early bookers who stuck to their original color preferences have delayed their orders.

In a statement to Reuters, Rivian said delivery times are not based solely on pre-order timing, and that they are exploring new ways for customers to speed up deliveries.

Advertising 3

Article content

The Rivian’s delivery headaches haven’t drawn the same attention as the California company’s worrisome production plans or its chaotic communication with car price increases, which it first announced across the board but later canceled to existing booking holders after a backlash.

But delivery problems can be just as harmful.

While all automakers grapple with global supply chain crises, including semiconductor shortages and rising raw material costs, start-ups like Rivian have less room to get things right. Major investors, including Ford Motor Co and Tiger Global Management, dumped Rivian shares after the closing period that followed the IPO ended.

Rivian stock performance chart:

Advertising 4

Article content

Rivian’s supporters have remained largely loyal despite the chaotic changes in the company’s pricing. Pre-orders increased to 90,000 vehicles even after the price hike, which now applies only to new bookings.

But delays in delivery could prove costly because other automakers are releasing their electric pickup trucks, including Ford Motor Co’s F-150 Lightning.

Rivian said on May 11 that it was overhauling its ordering system to separate reservations from the make-up process, in an apparent attempt to address customer criticism about supply shortages in its ordering system.

Rivian said in the statement that the change allowed for transparency in pricing and timing.

The world has changed

Rivian’s struggles to overhaul its ordering system also reflect broader challenges in the industry. Inflation and the supply chain have shredded financial expectations and increased pressure on electric car startups to cut costs at a time when investors are closing their checkbooks.

Advertising 5

Article content

Markets are closed to every company, good or bad. Said Daniel Ninivaji, chief executive officer of Lordstown Motors, which sold its factory this month to Taiwanese contract maker Foxconn as a cash reserve. blinked.

Rivian said it was constantly monitoring the capital markets and was planning for an increasingly challenging environment by “improving its product roadmap and operating expenses.”

At $16 billion, Rivian boasts far more money than Lordstown and other small start-ups, such as Canoo Inc, which this month issued a warning about continued interest.

But Rivian burned about $1.2 million for every car it delivered in the first quarter and is estimated to spend a total of $7 billion in cash this year, according to Morgan Stanley analyst Adam Jonas.

Advertising 6

Article content

Vitaly Golomb, a partner at investment bank Drake Star, who leads its electric vehicle and mobility practice and is also an investor and reservation holder in Rivian, said.

While Rivian has told investors it has enough cash to open its second US factory for $5 billion in 2025, patience may be running out.

“Since its initial public offering, the world has changed dramatically, and investors do not want to fund negative EBITDA earnings growth companies in this environment,” Jonas said in the company’s latest earnings call with investors, cutting off Rivian’s chief financial officer Claire McDonough.

Advertising 7

Article content

CEO RJ Scaringe and McDonough said the company will get costs under control by streamlining its vehicle lineup and reducing expenses.

Pricing flight

Scaringe also said that Rivian, like some automakers, believed the worst of the semiconductor shortage was behind it. However, other automakers said the shortage could continue into 2023.

Rivian hasn’t said when it expects to manufacture cars at a profit. The price increases, which boost the truck’s currently available sticker from $67,500 to $79,500, should improve the economy and offset higher raw material costs. Applies to applications submitted after 1 March. In an email to customers on March 3, Rivian also said it will release a more basic R1T model for $67,500, which it expects to deliver in 2024.

Ad 8

Article content

But competitors in the industry say that making a profit even at this price will be difficult.

Peter Rawlinson, CEO of luxury electric car maker Lucid Group Inc and former CEO of engineering at Tesla Inc, has estimated that Rivian spends about $22,000 on an entry-level battery pack, and about $20,000 on drivetrains provided by Robert Bosch GmbH – requiring a sticker price The car is $95,000 to make a profit.

“The only way they can make this business model work is if they lose money on every truck they sell,” he told Reuters in March.

Rivian said it was confident in the “pricing flight.” It also said it’s working on a lower-cost inboard motor and new battery designs.

For a Rivian Wells reservation holder, profit margins are less important. He just wants to get his hands on a truck ASAP. While he said he preferred the R1T from the Rivian, last year Wells also booked Ford’s F-150 Lightning.

“At this point, if Ford came first, I think I’d go with them,” Wells said.

(Reporting by Tina Bellon in Austin, Texas). Joseph White contributed additional reporting in Detroit.



Postmedia is committed to maintaining an active and civil forum for discussion and encouraging all readers to share their opinions on our articles. Comments may take up to an hour to be moderated before they appear on the Site. We ask that you keep your comments relevant and respectful. We’ve enabled email notifications – you’ll now receive an email if you receive a response to your comment, if there’s an update to a comment thread you’re following or if it’s a user you’re following. Visit our Community Guidelines for more information and details on how to adjust your email settings.

#electric #vehicle #manufacturer #Rivian #delivery #headaches #hit #market #closes #vaults

Leave a Comment

Your email address will not be published.