? Rivian IPO S1 Filing - reveals preorder numbers, R1S delivery date, Autonomous Subscription Fee & more...

[RegReader]

That's a good point and did not cross my mind, but Rivian is not Ford when it comes to manufacturing and scalability.

Right now they have a single manufacturing plant that is just getting up and running to churn out US LE R1Ts.

So I don't know how they can use that single plant to also manufacture Canadian versions, which will have different requirements, i.e. DRL. The Canadian requirements could very well be just SW and HW retrofit to the US models. But they are not going figure this out until they start the certification process. So they are not going to have a final design/assembly plan, until February 2022. Unless of course they have already started this.

Elsewhere in the S-1 it said they’re bringing the Normal plant up to 200k/year or so (can’t recall the exact number) but suffice to say, there will be plenty of capacity to build Canadian vehicles there. And if they planned to build these at a plant in BC, and start selling them in the first half of next year, they’d need to have announced and started building out that plant a few years ago. All Rivians will come from Normal for the next few years.

And any certification team worth its salt will know that US and Canada regs are almost the same, and ensure no major tear-ups are required to launch in Canada so I’m confident the DRLs are accounted for in the US lighting design. The rest will just be software changes.

My guess is the delay is just so they can focus on the R1S and EDV launches first.

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[mike813]

Ordered my plate.

me too…

 

[JayinNJ]

I know that Tesla has a 10k option of adding hardware for future autonomous driving capabilities. I'm assuming Rivian includes the hardware (cameras, sensors) in our trucks, but $10k is to unlock the software?

For Tesla the 10k is to unlock software too. The hardware is already there, although they would upgrade t he computer if needed in the future included in that price.

 

[rraj2k81]

Elsewhere in the S-1 it said they’re bringing the Normal plant up to 200k/year or so (can’t recall the exact number) but suffice to say, there will be plenty of capacity to build Canadian vehicles there. And if they planned to build these at a plant in BC, and start selling them in the first half of next year, they’d need to have announced and started building out that plant a few years ago. All Rivians will come from Normal for the next few years.

And any certification team worth its salt will know that US and Canada regs are almost the same, and ensure no major tear-ups are required to launch in Canada so I’m confident the DRLs are accounted for in the US lighting design. The rest will just be software changes.

My guess is the delay is just so they can focus on the R1S and EDV launches first.

DRL is one example I can think of. I am not very familiar with all the regulatory requirements of Automobiles for Canada.

But I am hoping you are right as well, because anything else means Canada is not going to start receiving orders till Spring of 2022.

 

[ruawahoo2]

This is the most interesting thing that I have gleaned: while Rivian is bleeding $300M a quarter, if the average Rivian vehicle sells for $70K, then Rivian only has to sell 4,286 vehicles to break even.

Granted, that isn’t reflective of the raw materials that they need to purchase to assemble that many vehicles. But I was surprised at how low the vehicle break even number probably is.

 

[ElectricDan]

Expected fees on 111:

• Delivery - $1.7k
• Autonomous - $10k / $5.5k Subscription

What happened to driver plus always being included?

 

[flabyboy]

This is the most interesting thing that I have gleaned: while Rivian is bleeding $300M a quarter, if the average Rivian vehicle sells for $70K, then Rivian only has to sell 4,286 vehicles to break even.

Granted, that isn’t reflective of the raw materials that they need to purchase to assemble that many vehicles. But I was surprised at how low the vehicle break even number probably is.

don't forget the employees who expect to be paid, or service centers and charging infrastructure they have to pay for

 

[DucRider]

What happened to driver plus always being included?

Driver+ is not autonomous (and never has been)

 

[ruawahoo2]

don't forget the employees who expect to be paid

Right, but with a substantial employee base of 7K+ in the last quarter, a lot of the human capital associated with overhead and production that is needed to eek out 5K vehicles/quarter seems to be in place already. The scale up of servicing, customer support, and additional production employees will be done in proportion as demand increases.

I’m not saying that the number is accurate, but from a basic standpoint, Rivian does seem to have figured out how to keep the costs in check.

 

[Scott]

This is the most interesting thing that I have gleaned: while Rivian is bleeding $300M a quarter, if the average Rivian vehicle sells for $70K, then Rivian only has to sell 4,286 vehicles to break even.

Granted, that isn’t reflective of the raw materials that they need to purchase to assemble that many vehicles. But I was surprised at how low the vehicle break even number probably is.

I am willing to bet their per car profit margin is pretty slim at the moment. Their S1 filing flat out says they don’t expect to be profitable any time soon. The marginal cost per vehicle via human labor that they only recently scaled up for the line plus materials and 3rd part components plus delivery and service infrastructure probably eats in to most of that revenue. It is possible they even lose money on every car at the moment. If I had to guess your 4K per quarter number is off by close to a full order of magnitude to stop them from burning cash.

And if magically they could do 40k cars a quarter, they would just ramp up spend and burn faster to build more plants and develop new product.

 

[Zoidz]

Some states made "Tesla only" agreements. All others like Fisker, Lucid, Rivian, etc... were left out (probably because they didn't really exist at the time).

I really hope these stupid ass laws change.

Pennsylvania passed "Tesla Only" direct sales legislation in 2014. There is a bill in process right now to open sales up to all EV manufacturers. I wrote my state Representative and asked him to support it. Anyone else here living in Pennsylvania should write your Representative, asking him/her to support House BIll 1907.

 

[SANZC02]

I am willing to bet their per car profit margin is pretty slim at the moment. Their S1 filing flat out says they don’t expect to be profitable any time soon. The marginal cost per vehicle via human labor that they only recently scaled up for the line plus materials and 3rd part components plus delivery and service infrastructure probably eats in to most of that revenue. It is possible they even lose money on every car at the moment. If I had to guess your 4K per quarter number is off by close to a full order of magnitude to stop them from burning cash.

And if magically they could do 40k cars a quarter, they would just ramp up spend and burn faster to build more plants and develop new product.

I’m sure the biggest factor in how long it will take to make a profit is the current build out schedule. The RAN, all of the service and experience centers, as well as the EU and second US plants.

Took Tesla 9 years to have a positive quarter and that was in a market where they were making a ton of money on ZEV credits, that market is drying up now because of all of the other EV vehicles being sold.

 

[Aroohoo]

Using Tesla as an example (this is the closest analog to Rivian at the moment), their 2020 10k had cost of automotive sales as 20.2B and Revenue of 27.2B.

Split 3.1B 'Selling, general and administrative' expenses proportional to each revenue stream, you get 2.7B. That gives a gross margin of 15% (excluding R&D costs).

Lets assume that Rivian has that similar gross margin on their vehicles, a $80k R1T would have a gross profit of $12k. They would have to sell 25,000 vehicles per quarter to cover their $300M per quarter cash burn.

Rivian probably is nowhere close to those types of margins (most manufacturing companies are very inefficient when they first start up a product line and find ways to bring down the cost of manufacturing as time goes on). Rivian will also be burning cash to build out their service network and other related components of their business in the early years without necessarily being able to monetize it. This and other cash outflows, I'm guessing 35-40k vehicles per quarter are necessary to cover their current cash expenditures. And I would only expect their expenses to increase faster in the near term (2-3 years) than what they can bring in through sales (vehicles, services, carbon credits, etc).

They are going to have to increase their sales velocity substantially along with finding other revenue streams coupled with getting their gross margins up to be cash flow positive.

I want them to succeed, and I think the team they have assembled is a good one to make that happen, but the reality is that automobile manufacturing is a tough business.

 

[Scott]

Using Tesla as an example (this is the closest analog to Rivian at the moment), their 2020 10k had cost of automotive sales as 20.2B and Revenue of 27.2B.

Split 3.1B 'Selling, general and administrative' expenses proportional to each revenue stream, you get 2.7B. That gives a gross margin of 15% (excluding R&D costs).

Lets assume that Rivian has that similar gross margin on their vehicles, a $80k R1T would have a gross profit of $12k. They would have to sell 25,000 vehicles per quarter to cover their $300M per quarter cash burn.

Rivian probably is nowhere close to those types of margins (most manufacturing companies are very inefficient when they first start up a product line and find ways to bring down the cost of manufacturing as time goes on). Rivian will also be burning cash to build out their service network and other related components of their business in the early years without necessarily being able to monetize it. This and other cash outflows, I'm guessing 35-40k vehicles per quarter are necessary to cover their current cash expenditures. And I would only expect their expenses to increase faster in the near term (2-3 years) than what they can bring in through sales (vehicles, services, carbon credits, etc).

They are going to have to increase their sales velocity substantially along with finding other revenue streams coupled with getting their gross margins up to be cash flow positive.

I want them to succeed, and I think the team they have assembled is a good one to make that happen, but the reality is that automobile manufacturing is a tough business.

I agree with your analysis except I don’t think they have any desire to be cash flow positive. They will surely aim to improve per car unit economics but any cash they make they will burn. The goal of this IPO is to put them at around 10b cash. They have every intent of burning that cash. I predict that it will be unlikely Rivian sees more than a handful of quarters where they turn a profit in the next decade if they do it at all.

 

[Aroohoo]

I agree with your analysis except I don’t think they have any desire to be cash flow positive. They will surely aim to improve per car unit economics but any cash they make they will burn. The goal of this IPO is to put them at around 10b cash. They have every intent of burning that cash. I predict that it will be unlikely Rivian sees more than a handful of quarters where they turn a profit in the next decade if they do it at all.

I concur, they can't think about being cash flow positive from operations until they get to scale with their operations and have sufficient market penetration (X units sold per month). You have to spend money to get to that point.

In reality, 10B really isn't all that much money when they are talking about 2-3B for a new factory. As long as the financial sector doesn't do another Lehman Brothers (nearest term risk is that the doofuses in DC can't get their act together) and Rivian shows that they have increasing demand for their offerings, they won't have an issue getting additional debt or equity financing.

The point I was trying to make was that they will have to sell a lot and become quite efficient in order to self fund themselves (i.e. be cash flow positive from operations, not necessarily profitable). I just don't see that happening any time in the near future

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