RJ Scaringe: "Big efficiency updates to our plant are officially underway!"

[Administrator]

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[NoGoingBack]

Wonder what happened that he’s wearing a sling?

 

[Canthoney]

Wonder what happened that he’s wearing a sling?

Said surgery on his shoulder. Said he’ll be fine

 

[Cycliste]

He had surgery on the shoulder. He is wearing an immobilizer worn post-op. Ask me how I know.

 

[mikehmb]

He had surgery on the shoulder. He is wearing an immobilizer worn post-op. Ask me how I know.

I had a hook plate to repair my clavicle. Immobilized my arm for 3 months. Still recovering, a year on. Getting that little bastard out was the single most physically joyous moment I’ve had in my life.

Arm mobility is so underrated …

 

[Gen(R3)Xer]

Exciting stuff. These efficiencies will have to carry Rivian until the R2 comes out in 2026. My hope is that they stop losing money on each vehicle and continue with great lease deals until interest rates come down. Maybe have a premium version and a standard version of the R1T and R1S.

 

[Rob Stark]

My hope is that they stop losing money on each vehicle and continue with great lease deals until interest rates come down.

My hope is people stop using this bs metric.

Rivian is a startup company in a heavily capital intensive industry. Currently, expenses exceed revenue and they sell a certain number of vehicles.

But they don't "lose money on every car they sell". The cost of parts plus blue collar labor to manufacture a vehicle does not exceed the sell price. Rivian is expanding, Rivian has a lot of overhead with high quality engineers and other white collar workers. And that overhead is spread out over a small number of vehicle sales.

But as sales grow they won't need more CEO and CFOs. And when they double number of vehicle sales they won't need double the software engineers.

 

[fbkr]

But they don't "lose money on every car they sell". The cost of parts plus blue collar labor to manufacture a vehicle does not exceed the sell price.

Actually Rivian does lose money on every car they sell (except for the edv) and they admitted as much on the last earnings call.

Revenue minus direct cost of parts / labor is what Rivian calls their "contribution margin" and they said they were still negative on it for the quarter even for post price hike R1s.

Sad but true.

That said, after the rework they will definitely be in the positive on contribution margin and moving towards positive gross margins.

 

[Electrified Outdoors]

Thanks for sharing. I'm curious what these updates entail.

 

[Gen(R3)Xer]

I’m not making this up. It’s how the industry works. I want Rivian to succeed.

“The company reported it lost $43,372 per unit delivered in the fourth quarter, a more than two-thirds improvement from the $124,162 it lost per unit in Q4 2022.”

https://techcrunch.com/2024/02/21/rivian-lays-off-10-of-workforce-as-ev-pricing-pressure-mounts/

 

[BigSkies]

Actually Rivian does lose money on every car they sell (except for the edv) and they admitted as much on the last earnings call.

Revenue minus direct cost of parts / labor is what Rivian calls their "contribution margin" and they said they were still negative on it for the quarter even for post price hike R1s.

Sad but true.

That said, after the rework they will definitely be in the positive on contribution margin and moving towards positive gross margins.

Thank you for calling this out. Contribution Margin is the metric that matters most for the moment, and it’s not publicly reported.

Gross margin is going to start mattering soon though. They’ve committed to a positive gross margin by Q4. I’d consider that a “make or break” commitment for the value of the company.

 

[BigSkies]

Wonder what happened that he’s wearing a sling?

Someone asked about CarPlay one too many times and it got a little heated.

 

[Mygrain]

Revenue minus direct cost of parts / labor is what Rivian calls their "contribution margin" and they said they were still negative on it for the quarter even for post price hike R1s.

That said, after the rework they will definitely be in the positive on contribution margin and moving towards positive gross margins.

Please help me understand how the rework (and efficiency updates) during shutdown will change revenue, parts and labor such that the R1 contribution margin will change from negative to positive.

 

[DuoRivian]

Please help me understand how the rework (and efficiency updates) during shutdown will change revenue, parts and labor such that the R1 contribution margin will change from negative to positive.

They are reorganizing parts of the plant for more efficient manufacture, they have renegotiated quite a few supplier contracts and in some cases using new suppliers and they are making major changes to the number of computer chips and computer architecture which cuts down on parts needed.

 

[mkhuffman]

My hope is people stop using this bs metric.

Rivian is a startup company in a heavily capital intensive industry. Currently, expenses exceed revenue and they sell a certain number of vehicles.

But they don't "lose money on every car they sell". The cost of parts plus blue collar labor to manufacture a vehicle does not exceed the sell price. Rivian is expanding, Rivian has a lot of overhead with high quality engineers and other white collar workers. And that overhead is spread out over a small number of vehicle sales.

But as sales grow they won't need more CEO and CFOs. And when they double number of vehicle sales they won't need double the software engineers.

As Ed pointed out, it isn't a BS metric. It is the most important metric.

If they don't have a positive contribution margin on every vehicle produced, survival is impossible. If you think they already a positive contribution margin, please show us where it says that in their financial statements. It doesn't, because they don't.

The product and process efficiency upgrade happening now is make or break for the company. And the stock market knows it. If you think they can do it, buy more stock. Because if they do, the stock price will definitely go up. The market is obviously very skeptical it can be done. The risk of failure is very high.

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