Not looking too good for continued operations beyond 2025

[UnsungZero_OldTimeAdMan]

Fear monger much?

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[AllInev]

Nice FT article - https://www.ft.com/content/ff4002a9-57a3-448c-af49-f665f38340ae

- Rivian's CFO expects the company to earn a gross profit in 2023...enough cash to maintain operations through the end of 2025
- Rivian has become a key player in the economy of Normal, Illinois
- Market capitalization has dropped from $162bn to $12.5bn, yikes!
- Targets to produce 50,000 vehicles in 2023
- plenty of shortfalls in Rivian's ability to meet expectations while the market sees increasing competition

I was thinking about why I don't have my pre-ordered Rivian and it's because so many changes were made that the product is no longer what I wanted when i engaged the pre-order (may 2019). I can't be alone in how I feel.

What's the plan here? Ive been a fan for so long but this is just isn't feeling recession proof (as a product or as an investment). It's hard to say when enough is enough; macro or micro indicators have all been pointing in the direction of parting ways.

Are others just riding this out (to what ever exit becomes available)?

(Boy oh boy, I wish there was a better eye-roll emoji!!!)

 

[NineElectrics]

Can you site any manufacturer that is making it look easy? I'm struggling to find context that the above statement proves true.

The Koreans, in particular. VW+Audi+Porsche also making them in quality and without drama. Volvo and BMW (in small quantities). Stellantis. Geely. BYD. Ford is having problems making the F150, but only because demand far exceeds forecasts and they're expanding production. GM had battery issues with the Bolt, but their EVs now outsell Rivian.

 

[NineElectrics]

The product itself is the best on the market. There is no truck (EV or ICE) that is as good as what Rivian is producing. They keep doing that, get better at pumping them out, and hopefully win the stupid lawsuits in GA that have tried to derail their second plant and they will be fine for the long run.

Despite the many flaws in my R1S, I agree, it's the best on the market. But you can't expect a manufacturer to make something which is "the best" and have it also not cost the most money to make. That's just common sense.

Rivian designed the product to be too expensive for the current pricing, so expect them to lose money doing it. There's a reason no other manufacturer is producing an equivalent car. I don't think they can raise prices any more, so they have to drive up volume, try to negotiate more discounts, lock in prices in long term supply contracts and hope inflation saves them as they slowly increase the price.

They want to get big fast, so this is going to happen again: they're going to spend a lot of money building yet another factory with another huge cash bleed ramping the R2s. Growing fast always costs.

 

[rivianUGA]

Despite the many flaws in my R1S, I agree, it's the best on the market. But you can't expect a manufacturer to make something which is "the best" and have it also not cost the most money to make. That's just common sense.

Rivian designed the product to be too expensive for the current pricing, so expect them to lose money doing it. There's a reason no other manufacturer is producing an equivalent car. I don't think they can raise prices any more, so they have to drive up volume, try to negotiate more discounts, lock in prices in long term supply contracts and hope inflation saves them as they slowly increase the price.

They want to get big fast, so this is going to happen again: they're going to spend a lot of money building yet another factory with another huge cash bleed ramping the R2s. Growing fast always costs.

This is a good point. It's always seemed to me their strategy was similar to the AMZN strategy in this regard. The future of Rivian will likely depend on how things go with the R2 products. The R1 is exactly what you said, a car that is made better than the price tag. R2 will need to be very profitable and the GA plant needs to be working well from the beginning.

 

[NineElectrics]

Don't confuse being a "fanbois" with calling out people who come here and state innaccurate or incorrect information, or conveniently ignore important facts to bolster their position. The biggest one is the complaining about Rivian changing features from product announcement to today. We all knew this was a startup when we signed on, and it was stated clearly in the agreement we all signed that features could change. Other manufacturers change some specs every model year. We also knew that Service Centers would be few and far between in the early days. That's early adopter territory that we all knowingly agreed to, or should have known by reading the agreement. But A LOT of people clicked to reserve a Rivian like they were buying movie on Amazon without reading the agreement or understanding any of this.

If you don't like the fact that the options have changed or don't meet your expectations, no problem, that's understandable and your choice to move on is fine. But when some come here and rant about Rivian intentionally screwing people it is going to get called out, not because of being a fanbois, but because they are conveniently ignoring a fundamental fact - they agreed to all of this in writing.

I read the agreement in full and signed it. But a bait and switch is still illegal under federal advertising rules regardless of whether a subset of people signed something. The whole point of a bait and switch is to find those willing people in the first place, by deceptively advertising to a lot more. There are also tangential benefits around buzz, word of mouth, funding. You can get some people to sign anything. The specs are sooo good. Let's take a chance! That's why the rules are about ethical behavior towards everyone (the general public).

 

[Tpaguy]

Nice FT article - https://www.ft.com/content/ff4002a9-57a3-448c-af49-f665f38340ae

- Rivian's CFO expects the company to earn a gross profit in 2023...enough cash to maintain operations through the end of 2025
- Rivian has become a key player in the economy of Normal, Illinois
- Market capitalization has dropped from $162bn to $12.5bn, yikes!
- Targets to produce 50,000 vehicles in 2023
- plenty of shortfalls in Rivian's ability to meet expectations while the market sees increasing competition

I was thinking about why I don't have my pre-ordered Rivian and it's because so many changes were made that the product is no longer what I wanted when i engaged the pre-order (may 2019). I can't be alone in how I feel.

What's the plan here? Ive been a fan for so long but this is just isn't feeling recession proof (as a product or as an investment). It's hard to say when enough is enough; macro or micro indicators have all been pointing in the direction of parting ways.

Are others just riding this out (to what ever exit becomes available)?

I have to admit that I’m nervous about Rivian’s future. I have high hopes for the company and also am a shareholder.

My delivery date is next quarter and I’m not as confident about moving forward as I was this time last year. Some of it is related to the troubles that Rivian has experienced ramping up but the large part is the economy and whether they can ramp up not only the R1 line but also the R2 line before reaching the breaking point that Tesla almost did (during a time period of historic low interest rates, easy capital raises and pre-Covid supply chains).

The Rivian management team certainly has their hands full trying to balance on so many levels. The product is great - which is a huge plus and gives them a good head start.

 

[SANZC02]

I have to admit that I’m nervous about Rivian’s future. I have high hopes for the company and also am a shareholder.

My delivery date is next quarter and I’m not as confident about moving forward as I was this time last year. Some of it is related to the troubles that Rivian has experienced ramping up but the large part is the economy and whether they can ramp up not only the R1 line but also the R2 line before reaching the breaking point that Tesla almost did (during a time period of historic low interest rates, easy capital raises and pre-Covid supply chains).

The Rivian management team certainly has their hands full trying to balance on so many levels. The product is great - which is a huge plus and gives them a good head start.

Actually the R2 being pushed to 2026 is probably good timing. A typical recession is 17 or 18 months so if we have one in the second half of this year we will probably be coming out of it before the R2 launches. The R1 is really more upper middle class buyers and probably will not be as impacted in a recession, they will lose some sales but probably will be still enough buyers out there, they are not planning on a very high number of R1s relatively speaking.

 

[Tahoe Man]

I have to admit that I’m nervous about Rivian’s future. I have high hopes for the company and also am a shareholder.

My delivery date is next quarter and I’m not as confident about moving forward as I was this time last year. Some of it is related to the troubles that Rivian has experienced ramping up but the large part is the economy and whether they can ramp up not only the R1 line but also the R2 line before reaching the breaking point that Tesla almost did (during a time period of historic low interest rates, easy capital raises and pre-Covid supply chains).

The Rivian management team certainly has their hands full trying to balance on so many levels. The product is great - which is a huge plus and gives them a good head start.

Access to relatively inexpensive credit is going to be key going forward. Like you, equity investors aren't confident either. After earnings the equity couldn't even make a new intraday high compared to the high a few weeks ago. That's not a good sign.

A recession like 2009 would wipe them out. I guess we'll find out what eventually happens if it's a mild recession.

I would expect a merger or acquisition when/if the equity gets cheap enough. It's not like GM/Ford etc are sitting on their hands in the EV market either.

 

[Count Orlok]

Drove about 600 miles and I saw at least 6 Pontiacs, 3 Saturns, and 1 Saab yesterday but not a single Rivian on the road. These other companies must be beating Rivian to death!!!!

 

[mkg3]

Some people just hold onto their vehicles for a long time (my kid still drives a Saab 9-3). I did like the last GTO that was sold under the Pontiac badge, made by Holden in Oz.

Rivian, on the other hand are now able to delivery new R1T orders in less than 2 weeks, for those that want something new.

https://electrek.co/2023/05/12/rivian-r1t-delivered-2-weeks/

So as ridiculous as using just observing what's on the road, I do believe they have a demand problem with R1T.

The parts supply inventory is such that they cannot just produce more R1S. The backlog for R1T must be for those that live outside of SC, max pack, and that's about it.

At least it will increase ASP and help the cashflow, if they get an uptake in new orders.

Edit to add an image:

 

[Guy]

Some people just hold onto their vehicles for a long time (my kid still drives a Saab 9-3). I did like the last GTO that was sold under the Pontiac badge, made by Holden in Oz.

Rivian, on the other hand are now able to delivery new R1T orders in less than 2 weeks, for those that want something new.

https://electrek.co/2023/05/12/rivian-r1t-delivered-2-weeks/

So as ridiculous as using just observing what's on the road, I do believe they have a demand problem with R1T.

The parts supply inventory is such that they cannot just produce more R1S. The backlog for R1T must be for those that live outside of SC, max pack, and that's about it.

At least it will increase ASP and help the cashflow, if they get an uptake in new orders.

Edit to add an image:

It is a short term demand issue until duo drive and max pack are available in the next few weeks/months. Once those are available then they have thousands of orders to fill. Getting to SC, NC, NM and other states will help unlock more existing orders/reservations. Next year becomes interesting as they have said 85k R1s are their target, majority likely to be R1S but that still means 25-30k R1Ts to sell.

 

[Craigins]

Some of it is related to the troubles that Rivian has experienced ramping up

What troubles has Rivian had ramping up?

From what I can tell they are still on schedule for their ramp up curve that they announced in the S1 when going public.

Earlier this year they even pivoted the distribution of capacity at the plant, likely due to the decrease in immediate orders from Amazon.

 

[Dark-Fx]

Some people just hold onto their vehicles for a long time (my kid still drives a Saab 9-3). I did like the last GTO that was sold under the Pontiac badge, made by Holden in Oz.

Rivian, on the other hand are now able to delivery new R1T orders in less than 2 weeks, for those that want something new.

https://electrek.co/2023/05/12/rivian-r1t-delivered-2-weeks/

So as ridiculous as using just observing what's on the road, I do believe they have a demand problem with R1T.

The parts supply inventory is such that they cannot just produce more R1S. The backlog for R1T must be for those that live outside of SC, max pack, and that's about it.

At least it will increase ASP and help the cashflow, if they get an uptake in new orders.

Edit to add an image:

I think Rivian has worked through the majority of people who are willing to switch their config to get a vehicle sooner for the R1T. Thus the already built and at SC configs that have been orphaned don't have a home to go to. If Rivian told me I could get the config I want in four months and was really set on a particular config, I wouldn't be switching just to get it early if it wasn't something I wanted.

You can't just walk into an SC and buy a car off their floor like you can at a traditional dealer. This is about the only way to accomplish that with how their system currently functions. I suspect it's possible we might see an inventory system that doesn't require a reservation within the next 6 months

 

[itselectric]

I just don't believe any short-term news makes or breaks Rivian in any way. None of these headlines or strategies will be what ultimately propels or sinks Rivian.

Right now we are in a bad economic environment with interest rates, job loss (in particular the tech sector, Rivian's largest buying audience more than likely), and only the most expensive trims that do not qualify for a tax credit are available.

A dual motor, standard pack R1T and R1S can be had for sub-$67k based on taxes next year. That's a pretty big difference from the currently only available base config of $87k.

As @Guy noted, many of the remaining pre-orders are likely waiting for a dual motor or max pack (or both). That is currently the "pressure" Rivian is feeling for the R1T. I am one of these buyers as well.

The path for Rivian's success is somewhat clear, but definitely not easy or a given:

• Survive the current economic downturn via remaining dual motor/max pack pre orders
  
  
• 2024, launch standard pack, reduce initial entry cost by almost $20k
  
  
• 2025, based on expansion of ownership, lower cost base trims, earn sales and a strong customer base. Take pre-orders for R2, which may allow for even more funding if needed.

• This is the year where if things aren't going well, might be trouble.

• 2026+: R2 needs to be a strong platform, competition is going to be fierce. Expect electric Jeeps, Bronco, Range Rovers/Land Rovers, etc.

• Reduce entry cost in to the brand by another $20k.

I see two critical points then: mid, end of 2024 - if standard pack isn't selling or sales don't improve with a much better economy (hopefully) that's a problem. 2026, if R2 doesn't show strong demand.

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