2021 Q3 Rivian Shareholder Letter – December 16, 2021. 71K Preorders Received

[Oak62]

Amazed no one beat me to posting this:

https://assets.rivian.com/2md5qhoea...6fc93cb/Rivian-Q3-2021-Shareholder-Letter.pdf

Highlights:

"As of December 15, 2021, we have produced 652 R1 vehicles and delivered 386 of those, including the production and sale of our first two R1S vehicles earlier this week." - Page 6​

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"We expect to be a few hundred vehicles short of our 2021 production target of 1,200, however, we are encouraged by the progress and learnings our team continues to incorporate into our operations." - Page 6​

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"Since launching our mobile drives, we have hosted drives in New York Metro, Seattle, and Denver." Page 11 (Wait, Denver??? I'm not early enough to have expected an invite yet, but amazed we haven't heard of anyone yet)​

I'm curious why such a big difference between number produced and number delivered? Are the other 266 being delivered s00n??

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[AllInev]

Amazed no one beat me to posting this:

https://assets.rivian.com/2md5qhoea...6fc93cb/Rivian-Q3-2021-Shareholder-Letter.pdf

Highlights:

"As of December 15, 2021, we have produced 652 R1 vehicles and delivered 386 of those, including the production and sale of our first two R1S vehicles earlier this week." - Page 6​

​

"We expect to be a few hundred vehicles short of our 2021 production target of 1,200, however, we are encouraged by the progress and learnings our team continues to incorporate into our operations." - Page 6​

​

"Since launching our mobile drives, we have hosted drives in New York Metro, Seattle, and Denver." Page 11 (Wait, Denver??? I'm not early enough to have expected an invite yet, but amazed we haven't heard of anyone yet)​

Full disclosure, RJ was the person who purchased the first two R1S vehicles. RJ repeated this multiple times during the call.

 

[mkennedy1996]

Wall Street did not like what they heard:

Rivian Automotive — Electric vehicle maker Rivian saw shares slide about 10% after reporting its first quarterly results as a public company. Rivian said reservations for its electric pickup and SUV increased 28% and announced plans to build a new vehicle assembly plant in Georgia.

 

[Diddy123]

I expected more. Between this number and the hiccups in production already, I’m curious how negatively the market with react.

Not well. Down 8% in after-market trading...

 

[Guy]

I am very well aware. I have continually been in the camp that production will take all of 2023 to clear pre-orders (when they were 55k).

I’m merely saying if you look through the forum threads and posts, there are many people that believe Rivian is going to fill its preorders much faster than the S1 indicated. I believe RJ’s comments today are again trying to temper expectations.

They will need most if not all of 2023 to clear the preorders.

The S1 was complete preorders (at that time c. 55k) by end 2023, now it seems the 71k order maybe be filled by then. I am still cautiously optimistic that those original 55k orders are filled by Q3 2023.

I expect when the configurator is updated in January with expected delivery dates listed, that those will be 2024. Also expect that the prices goes to something like 70k for the truck and 72.5k for the SUV. Both based on the wording of responses in the call and that this is the price to be paid in two years time when something like 10% inflation has occurred.

 

[AllInev]

There has been a lot of comment on this forum about Rivian being “conservative” in its projections, and that it would overperform with a quicker than expected production ramp/delivery schedule. Nothing RJ said today let me to believe that preorders are going to be filled in 2022. As you noted, I took his comments as once again reaffirming they will need all of 2023 to clear the preorders, with preorders today headed to ‘24.

Yes, and they admitted in their filing and on the call that they're going to missing their 2021 target by "a few hundred."

 

[Dbeglor]

I read the investor letter, but did not get a chance to listen to the call. A few things stand out:

1. Very few specifics about deliveries and production expectations over the next quarter. Since they missed their 2021 delivery goal, this would have given investors a sense of where they are going over the next quarter.
2. They still have very few service techs and service locations. They definitely aren’t ready for nationwide deliveries. I think we’ll see deliveries focus on areas they do have service techs. Ie, some people may jump ahead of early reservation holders
3. They tout the current factory’s capacity, but haven’t given guidance for 2022 goals. Ie what does their ramp up look like. Investors don’t like to keep guessing.
4. there have been forum posts about CS saying all current reservation holders will get an email before end of year with an expected delivery timeframe. Doe we still think this will happen?

Just some food for thought.

I listened to the call.

1. They are not giving any additional production guidance beyond what was in the S1 regarding clearing the preorder backlog. An analyst asked the question specifically and RJ reaffirmed that the target is still to clear the preorders (71k) as of now by end of 2023, but new orders are going to start looking like early 2024 very soon as that grows.

Reading between the lines, what I gleaned as one reason that production was a little slower through end of year is that they made the decision to introduce the R1S to the line earlier than perhaps previously, which had the short term impact of slowing the line, but medium to longer term impact of accelerating the R1S and thus overall production.

2. They have 6 centers open, but if you look around the forums, there are many confirmed to be under construction and should have no issue being up and running before volume deliveries start happening in March. I think they had a handle on the timelines for all the service centers when they sent out the delivery emails in late November.

3. They didn't give 2022 production guidance on the call either. None of the analysts asked either, and I don't think investors care all too much about 2022 production. Really the question is how long will it take to fill the current demand, or an update on what was provided in the S1. Most of the Q&A was centered more on what might production look like in 2024 and beyond, with the new factory and the pace of preorders.

4. They didn't address this on the call, as it's not an investor concern. However, there is no reason to assume it won't happen as they said it would.

 

[Dbeglor]

In theory, production ramp should be a close to a step function as they bring on the additional shifts to run 24/6. They are supposed to hit 65k annually by late 2023 (not 2022, I'm a few beers in). With the added info, expecting 70kish end of 2023 means 2022 might be a bit light.

I think reasonable expectations should be around 20k in 2022 and 50k in 2023.

 

[mkennedy1996]

Full disclosure, RJ was the person who purchased the first two R1S vehicles. RJ repeated this multiple times during the call.

Almost correct. RJ and Claire purchased the first two R1Ss. Claire is the CFO. Meagan is RJ's wife.

 

[AllInev]

Not well. Down 8% in after-market trading...

Analyst questions were mostly focused on production. Missing their "conservative" production numbers by more than 10% is not going to be good for the stock price. Welcome Rivian to the joys of being a public company. Still, having a $20B cash cushion is nice for a year or so.

 

[AllInev]

Almost correct. RJ and Claire purchased the first two R1Ss. Claire is the CFO. Meagan is RJ's wife.

Thanks for the correction. I gotta work on my first names knowlege.

 

[virgnia_rivian]

I think the lack of additional guidance is why investors are concerned. As a stock holder that’s what concerns me. I know I’m way down the reservation list, but from a financial perspective I wanted more transparency as to any delays, issues etc. I realize they just hit the market, but it looks like other investors agree.

With that said, I may buy more on the dip.

 

[mike22co]

I enjoyed the call, very typical earnings call, but some good information.
Two things I noticed:

1. The Shareholder Letter states "Through our first customer deliveries of 11 R1Ts, we generated total revenue of $1 million for the three months ended September 30, 2021."
Those are fully loaded trucks with tent and kitchen and probably a few other add-ons. Not bad.

2. We really don't know what the number of existing pre-orders that are still active are. The language is vague. Does 71,000 pre-orders account for the people that cancelled? Or are they included in that number? I'd tend to lean that they have relatively few cancellations, but who knows.

 

[Dbeglor]

Analyst questions were mostly focused on production. Missing their "conservative" production numbers by more than 10% is not going to be good for the stock price. Welcome Rivian to the joys of being a public company. Still, having a $20B cash cushion is nice for a year or so.

They never claimed their production numbers to be conservative, we did. Their production numbers were simply extrapolating the current daily production rate at the time they made them through the end of the year. What other method would one use? You surely wouldn't take a negative approach of assuming an unforeseen hiccup, nor would you bake in hopes of ramping for such a forecast.

They also implied that they made decisions that focused on longer term production ramp in sacrifice of short term production.

 

[Dbeglor]

2. We really don't know what the number of existing pre-orders that are still active are. The language is vague. Does 71,000 pre-orders account for the people that cancelled? Or are they included in that number? I'd tend to lean that they have relatively few cancellations, but who knows.

They specify they are net preorders, which means net of cancellations, or orders that are still active and potential to be converted to revenue.

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