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Dwight_Schrute

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Copper windings is what they’re in shortage of, due to mis-communication/management:

Photo of copper winding in Rivian motor

Rivian R1T R1S Rivian Miscalculation & Miscommunication With Supplier Triggered Parts Shortage (Copper Windings For Motors) rivian motor copper windings


https://www.bloomberg.com/news/arti...iggered-parts-shortage-hobbling-its-ev-output

Here’s the full article.

Rivian Misstep Triggered Parts Shortage Hobbling Its EV Output

October 7, 2024

When Rivian Automotive Inc.’s shares sunk nearly 9% on Friday, analysts were puzzled as to why the electric-vehicle maker had to so drastically cut its 2024 production targets over yet another supply chain hiccup.
The answer lies in a miscommunication earlier this year between Rivian and its supplier, Atlanta-based Essex Furukawa, which has left the carmaker without access to copper windings, a core component in the electric-vehicle motors that Rivian makes in-house, according to people familiar with the matter.

The ongoing shortage has already hobbled production of its R1 pickup and SUV models as well as the delivery van Rivian makes for Amazon.com Inc., further tempering expectations for the EV maker.

Rivian declined to comment on its supplier relationships. Representatives for Essex didn’t respond to requests for comment.

The carmaker miscalculated when communicating supply and demand needs with Essex, Rivian’s sole supplier of what are essentially copper wires that carry the electric current inside the EV motors, said the people, who asked not to be identified discussing the confidential matter.

Essex Furukawa, a unit of Superior Essex Inc., subsequently committed its machines to support other customers, the people said. Rivian has identified other suppliers capable of providing appropriate replacements, but at too high a cost at such short notice.

The blunder helps explain Rivian’s decision on Friday to slash its production forecast by as much as 18% to between 47,000 and 49,000 electric vehicles this year.

Rivian on Friday said the shortage began to impact production in the third quarter and had become “more acute in recent weeks and continues.”

The situation has been exacerbated by a lack of backup vendors in its supply chain, the people said. Rivian lacks an immediate alternative to provide the parts after its misstep with Essex, allowing the shortage of a single part to mushroom into a significant bottleneck that has hobbled production at its sole assembly plant in Normal, Illinois.

Larger automakers often rely on multiple suppliers for their most important parts but Rivian is still producing EVs at relatively low volumes.

Analysts have been reassessing their expectations since the surprise announcement. Following the move, Deutsche Bank analysts led by Edison Yu told investors they are concerned that the shortage could impact deliveries into the first quarter of 2025. They also questioned whether it’s possible for Rivian to achieve its goal of reaching a positive gross margin for the final three months of this year.
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Copper windings is what they’re in shortage of, due to mis-communication/management:


Rivian R1T R1S Rivian Miscalculation & Miscommunication With Supplier Triggered Parts Shortage (Copper Windings For Motors) rivian-motor-copper-windings-


https://www.bloomberg.com/news/arti...iggered-parts-shortage-hobbling-its-ev-output

Here’s the full article.


When Rivian Automotive Inc.’s shares sunk nearly 9% on Friday, analysts were puzzled as to why the electric-vehicle maker had to so drastically cut its 2024 production targets over yet another supply chain hiccup.
The answer lies in a miscommunication earlier this year between Rivian and its supplier, Atlanta-based Essex Furukawa, which has left the carmaker without access to copper windings, a core component in the electric-vehicle motors that Rivian makes in-house, according to people familiar with the matter.
The ongoing shortage has already hobbled production of its R1 pickup and SUV models as well as the delivery vanRivian makes for Amazon.com Inc., further tempering expectations for the EV maker.


Rivian declined to comment on its supplier relationships. Representatives for Essex didn’t respond to requests for comment.

The carmaker miscalculated when communicating supply and demand needs with Essex, Rivian’s sole supplier of what are essentially copper wires that carry the electric current inside the EV motors, said the people, who asked not to be identified discussing the confidential matter.
Essex Furukawa, a unit of Superior Essex Inc., subsequently committed its machines to support other customers, the people said. Rivian has identified other suppliers capable of providing appropriate replacements, but at too high a cost at such short notice.
Read More: Rivian Shares Drop After EV Maker Slashes Production Target
The blunder helps explain Rivian’s decision on Friday to slash its production forecast by as much as 18% to between 47,000 and 49,000 electric vehicles this year.


Rivian on Friday said the shortage began to impact production in the third quarter and had become “more acute in recent weeks and continues.”
The situation has been exacerbated by a lack of backup vendors in its supply chain, the people said. Rivian lacks an immediate alternative to provide the parts after its misstep with Essex, allowing the shortage of a single part to mushroom into a significant bottleneck that has hobbled production at its sole assembly plant in Normal, Illinois.
Larger automakers often rely on multiple suppliers for their most important parts but Rivian is still producing EVs at relatively low volumes.

Analysts have been reassessing their expectations since the surprise announcement. Following the move, Deutsche Bank analysts led by Edison Yu told investors they are concerned that the shortage could impact deliveries into the first quarter of 2025. They also questioned whether it’s possible for Rivian to achieve its goal of reaching a positive gross margin for the final three months of this year.
Previousy in this thread I suggested -
...or Rivian failed to properly secure/confirm OEM quantities - which would obviously be their own fault and "supply shortage" is true but self-inflicted.
I wonder if one or more of the recent departures was directly related to this debacle, whether it was "You're Fired!" or "This is bad, I'm out!"

  • Kjell Gruner: Resigned as chief commercial officer and president of business growth in July 2024. Gruner joined Rivian in September 2023 and previously worked at Porsche.

  • Jeffrey Baker: Resigned as chief accounting officer in July 2024. Baker joined Rivian in May 2021 from Clorox.

  • Tim Fallon: Left Rivian to take a manufacturing role at Stellantis. Fallon was instrumental in ramping up Rivian's plant in Normal, Illinois.
 

DuoRivians

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Previousy in this thread I suggested -


I wonder if one or more of the recent departures was directly related to this debacle, whether it was "You're Fired!" or "This is bad, I'm out!"

  • Kjell Gruner: Resigned as chief commercial officer and president of business growth in July 2024. Gruner joined Rivian in September 2023 and previously worked at Porsche.

  • Jeffrey Baker: Resigned as chief accounting officer in July 2024. Baker joined Rivian in May 2021 from Clorox.

  • Tim Fallon: Left Rivian to take a manufacturing role at Stellantis. Fallon was instrumental in ramping up Rivian's plant in Normal, Illinois.

Hard to say if any of them had a direct input into the miscalcs. I do wonder what the planning/supply chain order process is like at Rivian.

Such an unforced error here by Rivian, regardless
 

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I would hope that they have pursued the help of a master in supply chain dynamics like Tim Cook and his team or someone similar to navigate this, and paid dearly for the advice. This seems like a very careless mistake based on the extremely limited public info we have access to. Come on Rivian! We want you to succeed!
 

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I would hope that they have pursued the help of a master in supply chain dynamics like Tim Cook and his team or someone similar to navigate this, and paid dearly for the advice. This seems like a very careless mistake based on the extremely limited public info we have access to. Come on Rivian! We want you to succeed!
Bingo! I’ve been saying a Tim Cool like executive would be the perfect CEO to transition to. It’s all about execution now
 

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This is disastrous after putting in so much work to reduce costs. The fact that it sounds like it was self inflicted with miscommunication from Rivian to a supplier makes it all the more worse. Not securing a backup supplier beforehand is icing on the cake. Hopefully they can recover without too much negative impact and apply lessons learned point forward.
 
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This is an unforced error and the stock was deservedly punished. The key is for Rivian to learn from it both culturally and in terms of systems to ensure it's not repeated – diversifying suppliers, adding internal checks and balances, doubling down on detail and focus, etc. There's no reason this has to be an ominous sign with regards to future performance – unless they fail to learn from it.

I'm optimistic; so far the company has a strong history of execution and foresight in a difficult operating environment. If they can pivot this error into some good learning and continue strengthen supply chain partnerships going forward, it just means the stock is on sale in the short term. But I won't fault anyone for a more pessimistic view.
 

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I wonder if this is the delay for the new Quad? Each Quad does take double the motors, therefore double the copper windings, as a Dual; but probably doesn't cause double the profits.
 

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I wonder if one or more of the recent departures was directly related to this debacle, whether it was "You're Fired!" or "This is bad, I'm out!"
  • Kjell Gruner: Resigned as chief commercial officer and president of business growth in July 2024. Gruner joined Rivian in September 2023 and previously worked at Porsche.

  • Jeffrey Baker: Resigned as chief accounting officer in July 2024. Baker joined Rivian in May 2021 from Clorox.

  • Tim Fallon: Left Rivian to take a manufacturing role at Stellantis. Fallon was instrumental in ramping up Rivian's plant in Normal, Illinois.
These folks (and those that report to them) are much more likely responsible:

VP of Supply Chain, Andreas Reutter - https://www.linkedin.com/in/andreas-reutter-945721185/

Chief Operating Officer, Javier Varela - https://www.linkedin.com/in/javier-varela-a597b566/
 

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I wonder if this is the delay for the new Quad? Each Quad does take double the motors, therefore double the copper windings, as a Dual; but probably doesn't cause double the profits.
I wouldn't be surprised if they were more than double the profit of a basic dual motor. As you go up in trim the major costs don't really increase. The battery, the shell of the car all the wiring for the most part are the same. Couple that with the fact that margins on vehicles isn't very high. This gives you an end result that the quad might cost 30k more for the consumer but only cost Rivian 10K more. The extra 20 is profit, so if the demand is there for tri and quad motors they are going to make them to make that profit.
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