‘Big Boost Coming,’ Says Investor About Rivian Stock

[ATLRivvy]

Nobody values a capital intensive manufacturer on “price to sales multiple”. This article should be ignored.

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[fbkr]

Agree that you shouldn't expect too much annual growth from vehicles priced in the 70-100k range. But it is Rivian themselves who built capacity for and targeted 85k unit sales across the R1T/R1S and are now in a tricky spot as that level of demand has not materialized.

 

[richguess]

There’s 0 reason for any ‘big boost’ until R2. Stock is going to bounce between $9-14 for the next year until we see how R2 is received.

if so, and I hope that’s true, it makes for a good investment opportunity.

 

[kurtlikevonnegut]

Agree that you shouldn't expect too much annual growth from vehicles priced in the 70-100k range. But it is Rivian themselves who built capacity for and targeted 85k unit sales across the R1T/R1S/RDV and are now in a tricky spot as that level of demand has not materialized.

65k for R1 and 85k for EDV. They are actually pretty close to their capacity for R1 which is pretty good considering the economic environment with high interest rates. What's hurting them is the relatively low usage of the EDV line. Amazon refusing to take more than 10k a year has throttled production and the exclusivity agreement has prevented anyone from filling the void until this year.

That said, I think the one thing that could really impact the stock at this point would be public announcements of large orders of the EDV. A 5 digit order of EDVs from DHL or UPS would be pretty significant and likely would allow Rivian to adjust their production guidance for the year upwards.

 

[fbkr]

65k for R1 and 85k for EDV. They are actually pretty close to their capacity for R1 which is pretty good considering the economic environment with high interest rates. What's hurting them is the relatively low usage of the EDV line. Amazon refusing to take more than 10k a year has throttled production and the exclusivity agreement has prevented anyone from filling the void until this year.

That said, I think the one thing that could really impact the stock at this point would be public announcements of large orders of the EDV. A 5 digit order of EDVs from DHL or UPS would be pretty significant and likely would allow Rivian to adjust their production guidance for the year upwards.

I think they're still quite far from hitting max R1 capacity. They can do 57k R1 on two shifts, so 85k would be max capacity on 3 shifts (when they did the factory refresh they said they were taking R1 capacity from 65k to 85k). R1 for this year is probably <40k units (50% capacity) if you assume 10k for the EDV.

In any case, the big picture is that the math of delivering 50k units in a factory with 150k capacity just doesn't work. But any big incremental EDV orders would be a major help as you said.

 

[BigSkies]

I think they're still quite far from hitting max R1 capacity. They can do 57k R1 on two shifts, so 85k would be max capacity on 3 shifts (when they did the factory refresh they said they were taking R1 capacity from 65k to 85k). R1 for this year is probably <40k units (50% capacity) if you assume 10k for the EDV.

In any case, the big picture is that the math of delivering 50k units in a factory with 150k capacity just doesn't work. But any big incremental EDV orders would be a major help as you said.

Agreed.

RJ did say that the factory has some flexibility between capacity on different platforms. When you add up the capacity of the different production lines on the investor slide, it works out to more than the total factory capacity of 215k. So they can flex somewhat between R1 and R2 production.

There's also the geographic factor. They have ongoing demand for ~40k R1's per year today. But the launch of the R2 will involve opening a lot more service centers. Those new service centers will sell additional R1's, even if they can't be justified solely on today's lineup. Some can be sold in Europe when Rivian is ready for that expansion. Of course the R2 will also cannibalize some R1S sales.

I'm surprised at how well Rivian is doing operating the factory at 1/3 capacity. I've read that the rule of thumb on auto factories is that they become profitable at around 90% capacity. I'm not an automotive industry expert, but I do work in finance. Getting to positive gross margin while only operating a factory at 1/3 capacity gives me a lot of optimism for the future. There's a lot of room for the R2 to be financially successful, as well as the long-term opportunity for EV/ICE prices to converge as these factories start running at higher capacity.

 

[kurtlikevonnegut]

I think they're still quite far from hitting max R1 capacity. They can do 57k R1 on two shifts, so 85k would be max capacity on 3 shifts (when they did the factory refresh they said they were taking R1 capacity from 65k to 85k). R1 for this year is probably <40k units (50% capacity) if you assume 10k for the EDV.

In any case, the big picture is that the math of delivering 50k units in a factory with 150k capacity just doesn't work. But any big incremental EDV orders would be a major help as you said.

Fair enough regarding the retooling but we're still talking about ~50% capacity on the R1 line compared with ~15% capacity on the EDV line. Rivian could be very close to satisfying the Amazon 100k order right now if Amazon was willing to accept the vans as quickly as Rivian could make them. If Rivian could match the output/capacity of R1 with EDV it would nearly double their production forecast for the year.

 

[DuoRivians]

Cramer said to avoid Rivian today. So that means we should all load up.

 

[kurtlikevonnegut]

Cramer said to avoid Rivian today. So that means we should all load up.

TO THE MOOOOOOOOOON

 

[Zoidz]

Agreed.

RJ did say that the factory has some flexibility between capacity on different platforms. When you add up the capacity of the different production lines on the investor slide, it works out to more than the total factory capacity of 215k. So they can flex somewhat between R1 and R2 production.

The R1 and R2 production lines in Normal will both use the existing R1 Paint Shop which is reported to have a maximum capacity of ~150k/year. That appears to be a hard constraint bottleneck unless a new paint shop is built in Normal.

"Although 155,000 units per year sounds like a solid capacity for the early stages of production, there is a bottleneck that might require additional investments. Specifically, the only paint shop at the factory has a capacity limited to 150,000 vehicles per year. This means that Rivian needs to find other ways to paint 65,000 units before reaching that capacity ceiling."

 

[defcon888]

I laugh at all the people that are selling their "Teslas" in protest. I may or may not agree with Elon (or any CEO of a company), but I wouldn't cry boo hoo because of their political beliefs. IF that was the case, I would be homeless and starving and naked becaus pretty much there could be a issue with every product.

To these snowflakes (no one in this group)....put on your big boy pants and get a life.

 

[Swezey]

Too much sensible analysis going on in here. Where's the crypto bros and stonk hodlers at?

 

[Donald Stanfield]

I laugh at all the people that are selling their "Teslas" in protest. I may or may not agree with Elon (or any CEO of a company), but I wouldn't cry boo hoo because of their political beliefs. IF that was the case, I would be homeless and starving and naked becaus pretty much there could be a issue with every product.

To these snowflakes (no one in this group)....put on your big boy pants and get a life.

OTOH I’m in the corporate world and there are plenty of companies I won’t do business with because I do not like their values or business practices.

 

[Zoidz]

Too much sensible analysis going on in here. Where's the crypto bros and stonk hodlers at?

 

[Swezey]

Ahhh yaaaas much better!

Now I can jump on the hype train!

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