Ford Ditches Electric SUV: Is it Time to Address the Elephant in the Room?

[SASSquatch]

And how do they get the capital to setup an ICE production line? They are all in on EVs or bust.

Again, I'm not arguing they setup an ICE production line. I am saying they leverage their relationship with VW to provide VW the electrified components of a hybrid/PHEV that VW sells under the VW label.

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[RWerksman]

But the percentages are still extremely small relative to what those same OEMS are selling in hybrids, PHEV's and ICE.

OEMS are not making money on the EV's they are selling (except Tesla). They are making money on everything else, which is why every OEM not producing purely EVs is pulling back on their EV development roadmaps.

Startup costs. Amortization of that and R&D over shorter spans. Rivan 'loses' money on each vehicle because those costs are baked in. If you look at the BOM for each vehicle, that's a different story.

 

[emoore]

Again, I'm not arguing they setup an ICE production line. I am saying they leverage their relationship with VW to provide VW the electrified components of a hybrid/PHEV that VW sells under the VW label.

I don’t think that was in the terms of the deal. So it doesn’t matter.

 

[josh0]

Rivian is losing over $30K for every R1 they sell. I want to believe they can bring a mass market R2 or R3 (I'm putting down a reservation on the R3 the moment it opens) but I'm worried that they don't have the capital to make that happen.

Yes, Rivian might go out of business theoretically. They are building a fairly niche product for a fairly limited audience. It would really suck for us, as fans of the company if that happened, but it does not necessarily say anything worthwhile about the market at large, other than that its much harder to be profitable selling a low volume product.

I hope, and believe, that Rivian will last long enough to make the transition to a more mass-market product (or be bought by a legacy carmaker that‘s struggling to make the EV transition—back when Ford was a major shareholder, I figures they would eventually buy Rivian), but if they don’t, the EV market will continue to grow, as it’s doing around the world. This wouldn’t be the first time in my lifetime that American auto manufacturers had their lunch handed to them but foreign automakers who simply did a better job of producing the vehicles that people want, tariffs be damned.

 

[SASSquatch]

The tax credit for those needs to be discontinued.

Please actually read my original post. I never said Rivian would produce an ICE anything. They would provide the electrified components to VW for a vehicle sold under the VW brand. They would also provide software licensing, which is under their existing relationship.

 

[SASSquatch]

Yes, Rivian might go out of business theoretically. They are building a fairly niche product for a fairly limited audience. It would really suck for us, as fans of the company if that happened, but it does not necessarily say anything worthwhile about the market at large, other than that its much harder to be profitable selling a low volume product.

I hope, and believe, that Rivian will last long enough to make the transition to a more mass-market product (or be bought by a legacy carmaker that‘s struggling to make the EV transition—back when Ford was a major shareholder, I figures they would eventually buy Rivian), but if they don’t, the EV market will continue to grow, as it’s doing around the world. This wouldn’t be the first time in my lifetime that American auto manufacturers had their lunch handed to them but foreign automakers who simply did a better job of producing the vehicles that people want, tariffs be damned.

Right! What I am saying is, I'd rather Rivian explore partnerships with OEM's that could open them up to new lines of investment and capital vs them going out of business.

Rivian should never develop and sell an ICE, hybrid, or PHEV under their brand. But the partnership with VW gives them an opportunity to provide their expertise in the electrified components of a hybrid or PHEV and give them access to the capital that OEM's are using to survive their significant losses in their EV divisions.

 

[SASSquatch]

My point is that it was not a bailout; it was an investment. Subtle, I know....

It's not subtle - it's pointless because investment is inherent in the relationship. It is subtle to understand that even though it was an investment, it was effectively a bail out because Rivian can't afford to secure that capital at existing market rates.

 

[RandomMcRandomFace]

I assume the only reason for this thread is so OP can tell us how he/she has six figures invested In Rivian. There is no other rational explanation.

 

[SASSquatch]

We need a new poll.

Will Rivian ever make a product that Sassquatch will actually take delivery on?

Yes, it's called an R2/R3 since neither of them come with the promise of a working PTC or a "real" camp kitchen.

Until then, I decided to forgo my preferred pricing so that Rivian doesn't lose another $30K selling me an R1T that they can sell to someone else at a higher profit margin because they need that cash flow.

Oh, and I've invested multiple R1's worth of $$ in their stock from Day 1.

 

[CrazyOne]

Imo, every 2 car household should have 1 EV and 1 hybrid/phev at this time. If we had to replace our second car, which is ICE, it would be hybrid/plugin. When it's time to actually replace our car in about 5 years, things will be different and we decide at the time.

For me, ICE cars became unsafe when EVs weigh 30% more. It's a no-brainer. SUVs were the nukes till recently, now EVs are the nukes.

 

[SASSquatch]

Startup costs. Amortization of that and R&D over shorter spans. Rivan 'loses' money on each vehicle because those costs are baked in. If you look at the BOM for each vehicle, that's a different story.

No argument there RWerksman. The problem is, Rivian needs to achieve a scale to actually get into the black that I'm concerned they simply don't have the capital to execute.

We can argue about what the best way to obtain that capital is, but the writing is on the wall if Rivian can't figure out how to raise it or bring down costs significantly.

OEMs can bleed billions per quarter on their EV divisions because they are counterbalancing that with significant profits from their ICE/hybrids/PHEV sales. Rivian doesn't have anything to fall back on.

I hoped that Rivian could rely on their electrified van sales and extend those into european markets, but that hasn't happened yet.

 

[SASSquatch]

It’s also worth pointing out that while Ford has ditched their plan for a large electric SUV, they’ve explicitly said that the plan is to instead focus on smaller, more affordable EVs.

Yes! Which will become direct competitors to the R2/R3.

Ford can sell at a competitive cost and bleed $$ from EVs while they still earn significant profit from their ICE/hybrid/phev lines.

Rivian doesn't have that luxury.

 

[richpike]

I assume the only reason for this thread is so OP can tell us how he/she has six figures invested In Rivian. There is no other rational explanation.

Holy shit. You nailed it. ??

 

[SASSquatch]

I assume the only reason for this thread is so OP can tell us how he/she has six figures invested In Rivian. There is no other rational explanation.

That was simply to underline the point that I'm very invested in Rivian's success.

I guess you don't understand the concept of forums.

 

[SASSquatch]

Snarky responses aside, I would love for someone to argue against the main thesis of my argument. Rivian is bleeding capital. Demand for R1 vehicles has fallen.

Market forces have shifted, and consumer sentiment has shifted. How does Rivian adapt to this new market?

You can disagree with my idea, but it doesn't change the basic equation at what Rivian is facing. I'm simply trying to start the conversation about what can Rivian do to improve their positioning in a market that is changing.

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