Updates on Rivian production ramp from 3rd S-1 amendment [filed 11/5]

[yizzung]

That isn’t what the S1 said. The 14 per day was an average that “we” (readers of S1) calculated after the second amendment was released. The third amendment said 20 per day (104 for the week) in the last week of October which was for the end part of the timeframe of the 14 avg that we had guessed after the second amendment. So it isn’t 14 to 20. Recalculating using the 3rd amendment they made 168 total in October, 104 of those in the last week. So in the first 3 weeks of October they only made 64, assuming 3 5-day workweeks that is only 4 per day.

4 per day to 20 per day is the actual ramp up from beginning to last week of October. Edit: If working 7 days each week it’s closer to going from 3 to 15 per day.

In the second filing they provided a hard count of vehicles produced (124) between filings, published 9 days after the original total. It might be just an educated guess but you don’t have to be a rocket scientist to assume a 14-car per day if they made 124 in 9 days.

Regardless, not even sure what your point is. My point is that it’s not ramping very quickly and whether it’s 2 to 14 to 20 or 3 to 15 to 20, that’s not a rapid increase. Especially true when they were targeting 10K by Jan originally. 10K would have required an exponential ramp curve and this is a slightly bent but nearly flat one.

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[Kialoa]

A Non-linear Production Ramp Model:
Given that we have almost no data to work with any model created is... problematic.
Nevertheless - I could not resist to do a 'what if'...

IF - we assume they are currently at 104 Trucks/week, and IF we assume they can increase the percent production most at early times (when numbers are low), and less at later times (when they have already ramped up significantly) - I created the following % production increase model:

This model can then be used to estimate quarterly production runs -

As time goes on real numbers will replace guesses, and a clearer ramp-up picture will emerge.

 

[André]

A Non-linear Production Ramp Model:
Given that we have almost no data to work with any model created is... problematic.
Nevertheless - I could not resist to do a 'what if'...

IF - we assume they are currently at 104 Trucks/week, and IF we assume they can increase the percent production most at early times (when numbers are low), and less at later times (when they have already ramped up significantly) - I created the following % production increase model:

This model can then be used to estimate quarterly production runs -

As time goes on real numbers will replace guesses, and a clearer ramp-up picture will emerge.

They said in the latest S-1 that they would be at full capacity at the end of 2023 = 16,250 R1 each quarter (65k/4)

 

[Guy]

It is amazing to me that two years out from now they expect to be at one third of max production (and max production is small for an auto factory). Most commentators say for financial reasons you want to be at 80% or greater. Obviously they can’t be there now but in over 24 months time their ambition is low. They are building an extension at Normal and a new factory in AZ. These would come on line around that time when they still officially have 100,000 of capacity at Normal. They must be underpromising.

 

[GaryL]

A Non-linear Production Ramp Model:
Given that we have almost no data to work with any model created is... problematic.
Nevertheless - I could not resist to do a 'what if'...

IF - we assume they are currently at 104 Trucks/week, and IF we assume they can increase the percent production most at early times (when numbers are low), and less at later times (when they have already ramped up significantly) - I created the following % production increase model:

This model can then be used to estimate quarterly production runs -

As time goes on real numbers will replace guesses, and a clearer ramp-up picture will emerge.

If your projections are close to correct, and they very well maybe, you'll be able to but Rivian shares below the IPO price in the next 18 months

 

[wizard467]

A Non-linear Production Ramp Model:
Given that we have almost no data to work with any model created is... problematic.
Nevertheless - I could not resist to do a 'what if'...

IF - we assume they are currently at 104 Trucks/week, and IF we assume they can increase the percent production most at early times (when numbers are low), and less at later times (when they have already ramped up significantly) - I created the following % production increase model:

This model can then be used to estimate quarterly production runs -

As time goes on real numbers will replace guesses, and a clearer ramp-up picture will emerge.

Not disagreeing since your numbers might end up being 100% accurate, but I think its important to realize that they aren't trying to improve by X% per week.

It's a subtle difference, but it's why there is hope that they will reach their annual production rate faster (and why ramp ups are generally described as hockey sticks).

The key is Rivian isn't starting from 104 per week and saying "what can we do to improve it by X% next week". Instead they designed the complete production line to be able to produce 1,310 R1s per week (from the S1 3rd amendment):

Our target is to produce approximately 1,310 R1 vehicles a week, which when annualized (assuming 49.6 working weeks per year)​

The ramp up isn't trying to make a process that is only able to make 104 per week and gradually improve it. Instead the reason they are producing 104 per week instead of the 1310 is because a few (how many we will probably never know) stations are either understaffed (they talk about hiring in the S1), not functioning as expected (ex. the people at the station can't move fast enough to keep up with the expected build rate), robot not functioning properly (ex. custom robot works 9 out of 10 times, but then a person has to manually fix it, to reach 1310 the robot needs to work 100,000 out of 100,001 times), missing a robot/fixture (ex. supply chain limited ability to setup the station as designed), not enough parts to actually build 1310 per week (simple supply chain issues), etc.

 

[TessP100D]

It is amazing to me that two years out from now they expect to be at one third of max production (and max production is small for an auto factory). Most commentators say for financial reasons you want to be at 80% or greater. Obviously they can’t be there now but in over 24 months time their ambition is low. They are building an extension at Normal and a new factory in AZ. These would come on line around that time when they still officially have 100,000 of capacity at Normal. They must be underpromising.

Just think what almost happened to Tesla during the Model 3 ramp up.

almost gone.

 

[Guy]

Just think what almost happened to Tesla during the Model 3 ramp up.

almost gone.

agreed but Rivian have Ford and Amazon backing them so bankruptcy in ramping up will not be an option. Bankruptcy due to slow deliveries over many years is different

 

[Sgt Beavis]

It is amazing to me that two years out from now they expect to be at one third of max production (and max production is small for an auto factory). Most commentators say for financial reasons you want to be at 80% or greater. Obviously they can’t be there now but in over 24 months time their ambition is low. They are building an extension at Normal and a new factory in AZ. These would come on line around that time when they still officially have 100,000 of capacity at Normal. They must be underpromising.

I do think they're intentionally being conservative, but that is coming from supply chain issues. The information we don't have is just how much battery, computer chip, and other part availability is hurting them.

 

[Rivian_Hugh_III]

Guess it will be the Lightning for me... my order's in the 40k range in line

Same here... first day Lightning reservation, 10/21 Rivian reservation. I'm thinking of picking up the Lightning with a $12,500 tax discount. If it holds value like a Tesla I could sell it after 18 months without much loss. (According to the math above I won't get my R1T until March, 2023, assuming they sell in the he order of reservation.)

 

[Wanderer000]

It is amazing to me that two years out from now they expect to be at one third of max production (and max production is small for an auto factory). Most commentators say for financial reasons you want to be at 80% or greater. Obviously they can’t be there now but in over 24 months time their ambition is low. They are building an extension at Normal and a new factory in AZ. These would come on line around that time when they still officially have 100,000 of capacity at Normal. They must be underpromising.

The second US factory is not set to open for Az. Texas is still in the runniing. There may be other states still in the mix.

 

[yizzung]

Not disagreeing since your numbers might end up being 100% accurate, but I think its important to realize that they aren't trying to improve by X% per week.

It's a subtle difference, but it's why there is hope that they will reach their annual production rate faster (and why ramp ups are generally described as hockey sticks).

The key is Rivian isn't starting from 104 per week and saying "what can we do to improve it by X% next week". Instead they designed the complete production line to be able to produce 1,310 R1s per week (from the S1 3rd amendment):

​

Our target is to produce approximately 1,310 R1 vehicles a week, which when annualized (assuming 49.6 working weeks per year)​

The ramp up isn't trying to make a process that is only able to make 104 per week and gradually improve it. Instead the reason they are producing 104 per week instead of the 1310 is because a few (how many we will probably never know) stations are either understaffed (they talk about hiring in the S1), not functioning as expected (ex. the people at the station can't move fast enough to keep up with the expected build rate), robot not functioning properly (ex. custom robot works 9 out of 10 times, but then a person has to manually fix it, to reach 1310 the robot needs to work 100,000 out of 100,001 times), missing a robot/fixture (ex. supply chain limited ability to setup the station as designed), not enough parts to actually build 1310 per week (simple supply chain issues), etc.

Yeah, I too was trying to fiddle with a gradually ramping model as a guesstimation but more realistically I suspect that we'll see big step function increases. (Somebody with discrete mfg experience please fill us in...)

So, ignoring parts and raw materials availability, it may be more likely that they have four painting robots but can only run one right now. And when #2 comes online, the output doubles instantly. Or that they have enough staff to run 8 hours per day (one shift?) but with enough hiring it'll jump instantaneously to 16 (2 shifts) and then eventually to 24 (3 shifts). Again, I don't know what I'm talking about...

Who knows? Since I have no clue where I am in line, it's also kinda silly to try to figure out how fast they're building. Just boredom. The good news is that once they are public, they'll have to routinely answer to third-party auto analysts who are smarter than me, will ask the right questions during earnings calls, and push out their opinions based on better models.

 

[Guy]

Yeah, I too was trying to fiddle with a gradually ramping model as a guesstimation but more realistically I suspect that we'll see big step function increases. (Somebody with discrete mfg experience please fill us in...)

So, ignoring parts and raw materials availability, it may be more likely that they have four painting robots but can only run one right now. And when #2 comes online, the output doubles instantly. Or that they have enough staff to run 8 hours per day (one shift?) but with enough hiring it'll jump instantaneously to 16 (2 shifts) and then eventually to 24 (3 shifts). Again, I don't know what I'm talking about...

Who knows? Since I have no clue where I am in line, it's also kinda silly to try to figure out how fast they're building. Just boredom. The good news is that once they are public, they'll have to routinely answer to third-party auto analysts who are smarter than me, will ask the right questions during earnings calls, and push out their opinions based on better models.

Interesting idea about the painting robots. They should have enough staff as they have 3000 at the factory (larger than Lucids entire workforce) so they should be able to make a reasonable number of vehicles

 

[LordUlhtred]

Yeah, I too was trying to fiddle with a gradually ramping model as a guesstimation but more realistically I suspect that we'll see big step function increases. (Somebody with discrete mfg experience please fill us in...)

So, ignoring parts and raw materials availability, it may be more likely that they have four painting robots but can only run one right now. And when #2 comes online, the output doubles instantly. Or that they have enough staff to run 8 hours per day (one shift?) but with enough hiring it'll jump instantaneously to 16 (2 shifts) and then eventually to 24 (3 shifts). Again, I don't know what I'm talking about...

Who knows? Since I have no clue where I am in line, it's also kinda silly to try to figure out how fast they're building. Just boredom. The good news is that once they are public, they'll have to routinely answer to third-party auto analysts who are smarter than me, will ask the right questions during earnings calls, and push out their opinions based on better models.

You give way too much credit to the “auto analyst“ community.

 

[Guy]

The second US factory is not set to open for Az. Texas is still in the runniing. There may be other states still in the mix.

Fair enough but if they choose a site next year and start building then in early 2024 it could be up and running at some level. Given the estimates so far the Normal factory would only be at 33% capacity which, if true, is very low.

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