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

[dfx]

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.

As eager to get delivery of these exciting new EV's as most of us are, it is sobering to realize how significant the odds of the company being bankrupt in 7 years is

Sponsored

 

[SeaGeo]

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

don't forget that they are also planning on several other streams of revenue. Insurance, membership, offsets for other manufacturers, etc. I'll probably roll all my insurance over to them, and expect I'll get the membership (assuming it's priced right). That's a couple of hundred bucks a month to them that I wouldn't pay a normal manufacturer.

 

[Aroohoo]

don't forget that they are also planning on several other streams of revenue. Insurance, membership, offsets for other manufacturers, etc. I'll probably roll all my insurance over to them, and expect I'll get the membership (assuming it's priced right). That's a couple of hundred bucks a month to them that I wouldn't pay a normal manufacturer.

While I agree that those are additional revenue streams (some with very high margins) they are small relative to the cash they get per vehicle (I would have to look it up but I want to say it was 1:7 ratio in S1, and that includes people forking over the 10k for full self driving).

Given that those revenue streams are tied to vehicle sales, in the end they have to sell cars to have a chance to realize those additional revenues.

Funny note, I did model the insurance in my DCF calculation. I had assumed they would get a very generous 40% conversion rate (even though a lot of us here talk about getting it, not sure the general public will be as enthusiastic. Most people are sticky when it comes to things like insurance, they rarely shop around). Given that Rivian is only serving as a broker for the insurance, they probably get a 10-20% commission on each account. Its additional revenue with high margin for them, but the total amount is a small percentage of the entire cash flow per vehicle.


Funny side story....I once worked a project where our business guys way under bid a project, our margins were -30+% per unit sold (each unit was 7+figures). The program manager once said we can fix this, just sell more!

 

[Scott]

As eager to get delivery of these exciting new EV's as most of us are, it is sobering to realize how significant the odds of the company being bankrupt in 7 years is

There is a difference between being bankrupt and not making a profit. If they make compelling cars and gain market penetration the company value will grow significantly and raising debt or capital via equity sale will not be a problem no matter how in the red they are. For whatever reason today’s capital markets are much more focused on growth than profits when determining value and finding attractive investment opportunities.

if on the other hand they can’t produce vehicles with a consistent quality or provide a good ownership experience or scale their manufacturing process they won’t grow revenue and then won’t be able to find more capital and will go out of business. I actually am fairly bullish on their odds to scale manufacturing and produce compelling vehicles based on these initial results.

 

[ruawahoo2]

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).

Again, I’m not saying that they will turn a profit soon. But there are few things that differentiate Rivian from Tesla that I think affect costs and profit margins in Rivians favor over Teslas.

1) Tesla raised about $1B between founding in 2003 and the production off the first customer vehicles in 2012. It’s my understanding that Rivian raised ~$10B. More money, if spent wisely, means more thought and planning into product development and production.

2) Rivian isn’t trying to reinvent everything like Musk did/does: a new factory, robotic everything, etc. Musk’s development approach was big investment now will pay dividends later. But by reinventing the wheel, he added a lot more cost and delay to scaling production.

Rivian on the other hand bought an abandoned factory and retooled it, with the help of Ford advising on production. It didn’t reinvent the wheel; it leveraged abandoned assets and borrowed knowledge to gear up to production. This is cheaper, thus lowering costs.

3) Musk is a business guy who thinks big and then demands that others make it a reality. He also has a notoriously poor record of retaining talent, especially at the executive leadership level. High turnover lowers morale, decreasing productivity and development which in turn lead to higher costs.

Rivian is led by an engineering Ph.D who specifically studied automotive development. He is an expert whose expertise informs the vision he crafts. It appears that Rivian executive leadership turnover is low due, in part, to the collaborative culture Rivian possesses. This higher stability should help Rivian avoid some of the more costly pitfalls Tesla faced.

4) Rivian is starting five years after Tesla, which means it has the advantage of more knowledge and advancements in the relevant fields of science (e.g., energy storage) as well as a more mature group of suppliers who have better technology with lower costs to choose from.

5) Tesla had one product to sell when it went live with production. It took Tesla three years before it had a second model. Those three years ate up a lot of R&D costs affecting the overhead.

Rivian starts its first year with 3 (maybe 5) models likely to be produced: a truck, a SUV, and a delivery van (which can come on 3 sizes). Three products in year 1 helps broaden sales opportunities because it covers more market segments. Production for the truck and SUV are coming through the same line, so no expensive retooling needed.

6) Trucks and SUVs have better margins than cars.

Using that raw estimate seems to indicate that the possible Rivian advantages listed above may be working towards a better outcome than Tesla when compared to similar periods in the companies’ respective histories.

 

[Deleted member 3282]

I'd be cool if they did a pay as you use model, not subscription, for the premium Driver+ features. I guess I understand the subscription is more financially appealing but from a customer point of view it'd be nice to use from time to time but not have to pay for it all the time.

Why not offer both —subscription or pay-as-you-go? I’d give pay-as-you-go a try and if I liked it and thought I’d use it frequently then I’d subscribe to, in theory, save a little money.

 

[drcarric2650]

I just hope the Rivian employees aren't distracted by this. When your company IPO's it can be a huge distraction. I guarantee you the employees that currently own stock are also sifting through this, but obviously focusing on different parts than we are. I'm guessing all work at Rivian ground to a halt today once this was released, "Stay on Target, Stay on Targettttttt"

If they are still only making 10 a day, it can't imagine any grinding to a stop...

 

[drcarric2650]

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 doubt if they will actually make money on these vehicles for a year.

 

[SeaGeo]

While I agree that those are additional revenue streams (some with very high margins) they are small relative to the cash they get per vehicle (I would have to look it up but I want to say it was 1:7 ratio in S1, and that includes people forking over the 10k for full self driving).

Given that those revenue streams are tied to vehicle sales, in the end they have to sell cars to have a chance to realize those additional revenues.

Funny note, I did model the insurance in my DCF calculation. I had assumed they would get a very generous 40% conversion rate (even though a lot of us here talk about getting it, not sure the general public will be as enthusiastic. Most people are sticky when it comes to things like insurance, they rarely shop around). Given that Rivian is only serving as a broker for the insurance, they probably get a 10-20% commission on each account. Its additional revenue with high margin for them, but the total amount is a small percentage of the entire cash flow per vehicle.


Funny side story....I once worked a project where our business guys way under bid a project, our margins were -30+% per unit sold (each unit was 7+figures). The program manager once said we can fix this, just sell more!

Totally agree. Just pointing out that being profitable should (in theory) be easier over the long run.

 

[Rivianmd]

Im late on the game with this whole thread but my main disgruntled factor is this, buying a 2022 vehicle with "OLD" tech-ish seems like a let down in the EV space. It would be like we are all using carburetors, a brand new company comes out, you are expecting fuel injection but their carburetor is a bit fancier but its still a carburetor. Im sure ill get over it as that is literally the only drawback and who knows maybe there is some sort of trick up their sleeve but I am doubting it at least initially.

Did they nix the switch functionality to charge 800v - 400 in parallel? I think they just needed to compromise to keep initial cost down on a feature that will be used very infrequently by most consumers. 99% of the electrons flowing to these babies will be from garage installed chargers. Would be nice though to come out of the gate with cutting edge approach. Also would have reduced weight…,

 

[Gator42]

Ordered my plate.

What’s a ‘rivn’?

 

[Rivianmd]

Question for resident experts, faster charging regardless of whether accomplished via 800/400 will degrade the battery cells faster correct? Said another way, does 800v charging change heat build in cells when charging as fast as possible?

 

[Gator42]

Did they nix the switch functionality to charge 800v - 400 in parallel? I think they just needed to compromise to keep initial cost down on a feature that will be used very infrequently by most consumers. 99% of the electrons flowing to these babies will be from garage installed chargers. Would be nice though to come out of the gate with cutting edge approach. Also would have reduced weight…,

I love you all dearly but you folks depressed about not making F1 speed level pit stops on your bi- weekly cross continent trips need to move closer to where you want to be

Seriously, when I watched out of spec on their long haul EV trip in the Porsche they don’t seem to be stopping more than an extra 10 minutes than I’d stop in my current ICE every 150-200 miles. If you can’t add an extra few minutes to your journey maybe this EV thing isn’t for you?

 

[R1S Maineiac]

This is... definitely... a suck salad with crispy bits of shit sprinkled on top. It means with my 180KWh battery pack, my ass will be charging a good bit longer to get to 80% on the fast chargers.

I did note on the Colorado trip videos, they were referring to "Miles gained" and no longer referencing "% Battery in x mins" which I thought was odd at the time.

We don't yet know how long the 180kWh pack can sustain the peak rate.

 

[FLARIVIAN]

https://www.sec.gov/Archives/edgar/data/1874178/000119312521289903/d157488ds1.htm

Take Aways:

• 14
  • Directed Share Program - Preorder holders will likely be able to participate in the IPO in some fashion.
• 21
  • Preorders - 48,390 R1T / R1S as of September 30, 2021 in the United States and Canada.
• 100
  • R1S Deliveries Build starting in December.
• 101
  • As of September 30, 2021, we operated six service centers in four states (California, Illinois, Washington, and New York), 11 mobile service vehicles, a 24/7 service support center in Michigan, and have secured 24 RAN DCFC sites in seven states, 145 Rivian Waypoints charging sites in 30 states, and 20 service center locations for further expansion.
• 111
  • Delivery fee is likely $1,7XX
  • Autonomous Driving Fee is likely $10,000
  • Per vehicle 'subscription' (likely the Membership) is expected to be $5,500 over 10 years.
• 115
  • Higher performance and fewer motor vehicles are being planned for.
• 116
  • Driver+
    • 11 cameras, 12 ultrasonic sensors, five radars, and a high-precision GPS antenna
    • We expect our platform’s architecture will enable us to evolve and expand our Driver+ offerings to support SAE Level 3 autonomy
• 117
  • Rivian has plans for Fleet Management. Later in the doc is more detail about it.
• 119
  • Factory - 150,000 vehicles annually. Up to 200,000 vehicles annually in 2023.
• 120
  • Service
    • 120 service centers and to deploy in excess of 1,000 mobile service vans in 2023
    • Our entire service infrastructure is shared by our consumer and commercial customers which generates operational synergies in both physical assets as well as labor. (Is this using Amazon locations as service centers?)
• 121
  • DCFC - RAN DCFCs are designed to output over 200 kW of DC power for initial R1 vehicles (up to 140 miles of range in 20 minutes), with over 300 kW planned for future vehicles. Oof.
• 124
  • R1S Camp Kitchen - A rear cargo mounted Camp Kitchen will also be available for the R1S
  • Amazon Vans - There are 3 different lengths. Range of between 120-150 miles.
• 126-128
  • Additional screenshots of app future functionality such as financing and service.
• 139
  • States they can sell in - Long list. Post here.
• 147
  • Board Members
    • Karen Boon - President of Restoration Hardware
    • Sanford Schwartz - Cox
    • Rose Marcario - Patagonia
    • Peter Krawiec - Amazon
    • Jay Flatley - Illumina (genetic analysis company)
    • Pamela Thomas-Graham - Dandelion Chandelier (luxo digital media)
• 156
  • RJ Salary - $1,300,000 all in salary and bonus. He also controls a tremendous amount of company shares.
• 174
  • Ford - They have purchased bodies in white from them in the past, but no longer do. They currently purchase tooling and experise.
  • Cox - Cox will be the reseller of any used Rivians, and likely trade ins. They will get preferential pricing on service on them and whatnot in exchange for marketing.
• F-25
  • Rivian terminated a contract with a major supplier in 2019 and demanded repayment of $18M. They believed that it would settle for less, but in December 2020 made a call that they would never get that money back.

What are the implications of living in a "Restricted State" (p. 139)? Is it likely that the list of full-approval states will be the first to receive deliveries?

Sponsored