Rivian's progress - high likelihood of meeting 2021/2022 goals?

johnbro23

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Rivian is targeting 40k production in its first "full year" which I assume is June 2021-May 2022, per a recent Bloomberg article. I think this is reasonable based on a few different frames of reference:

Frame 1, Employees: They have 1,100 employees in Normal as of April, targeting 1,800 by June, and 2,500 by end of 2021. Tesla has 10k employees at Fremont (assembly) and 7k in Nevada (battery and drivetrain) which combine for annual production capacity of 600k which translates to ~500k net of downtime. Factoring in that Tesla is a well-oiled machine at this point vs Rivian with growing pains of more than doubling its employees in the next 9 months, I think the employee count of 2,500 (15% of Tesla) supports 40k (8% of Tesla) production for year 1.

Frame 2, Reservation count: Rivian had 30k reservations in Aug 2020, and likely almost 50k today. Tesla had 455k Model 3 reservations in Q3 17 when production started, and shortly thereafter in Q4'18, they said that only 25% of that quarter's deliveries went to reservation-holders, after delivering a cumulative 86k Model 3 units through Q3'18. It means they essentially fulfilled the reservation demand after <20% of reservations were fulfilled, meaning the vast majority canceled or delayed purchasing the vehicle. The Model 3 reservation fee was similar to Rivian at $1k, and lead time similar (reservations started 2-3 years before delivery), so Rivian only needs to deliver 10k units to fulfil to its reservation demand using that same 20% conversion rate.

Frame 3, size. Rivian's factory is plenty big at 2.6m SqFt vs Fremont+Nevada at 10m combined, enough for 125k in theory. But an empty building isn't hard.

Frame 4, machinery/equipment. Rivian's stamping press was installed and operational in Q1'20. Welding robots were on site in mid 2020 videos. Seems to be on track, but Rivian shares very little footage of the assembly line.

Frame 5, capital. Tesla had only $200m of cash when ramping their first "mass" program the Model S (after roadster) which reached a 20k annual run-rate after the 3rd quarter of operations. They had no clue what they were doing, and Elon pushed the envelope on manufacturing process. Rivian seems to be taking fewer chances with experimental production techniques. They also have raised a cumulative $10bn of cash, and can easily raise a few billion more.

Any different views out there?





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DuckTruck

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Rivian is targeting 40k production in its first "full year" which I assume is June 2021-May 2022, per a recent Bloomberg article. I think this is reasonable based on a few different frames of reference:

Frame 1, Employees: They have 1,100 employees in Normal as of April, targeting 1,800 by June, and 2,500 by end of 2021. Tesla has 10k employees at Fremont (assembly) and 7k in Nevada (battery and drivetrain) which combine for annual production capacity of 600k which translates to ~500k net of downtime. Factoring in that Tesla is a well-oiled machine at this point vs Rivian with growing pains of more than doubling its employees in the next 9 months, I think the employee count of 2,500 (15% of Tesla) supports 40k (8% of Tesla) production for year 1.

Frame 2, Reservation count: Rivian had 30k reservations in Aug 2020, and likely almost 50k today. Tesla had 455k Model 3 reservations in Q3 17 when production started, and shortly thereafter in Q4'18, they said that only 25% of that quarter's deliveries went to reservation-holders, after delivering a cumulative 86k Model 3 units through Q3'18. It means they essentially fulfilled the reservation demand after <20% of reservations were fulfilled, meaning the vast majority canceled or delayed purchasing the vehicle. The Model 3 reservation fee was similar to Rivian at $1k, and lead time similar (reservations started 2-3 years before delivery), so Rivian only needs to deliver 10k units to fulfil to its reservation demand using that same 20% conversion rate.

Frame 3, size. Rivian's factory is plenty big at 2.6m SqFt vs Fremont+Nevada at 10m combined, enough for 125k in theory. But an empty building isn't hard.

Frame 4, machinery/equipment. Rivian's stamping press was installed and operational in Q1'20. Welding robots were on site in mid 2020 videos. Seems to be on track, but Rivian shares very little footage of the assembly line.

Frame 5, capital. Tesla had only $200m of cash when ramping their first "mass" program the Model S (after roadster) which reached a 20k annual run-rate after the 3rd quarter of operations. They had no clue what they were doing, and Elon pushed the envelope on manufacturing process. Rivian seems to be taking fewer chances with experimental production techniques. They also have raised a cumulative $10bn of cash, and can easily raise a few billion more.

Any different views out there?
Nice dissertation on the subject. All throughout this process, I’ve felt that RJ and Rivian have both followed a more conventional automobile-production process and wisely learned many unintended lessons provided by Elon and Tesla. From taking their time to create the R1’s right, through finding the best factory/location and attracting great partners/financing, Rivian has distinguished themselves from the competition. Their calm demeanor while making something revolutionary makes them stand out from those who appear to be either smoke & mirrors, or masters at polishing turds and telling us they’re gemstones.
 

McRat

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There is a huge unknown right now: The Chip Shortage. Established supplier chains have a big advantage over startups since they often have large contracts with redundancy and punishments for not meeting deadlines.

I hope it's not an issue, but it could be.
 

CommodoreAmiga

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There is a huge unknown right now: The Chip Shortage. Established supplier chains have a big advantage over startups since they often have large contracts with redundancy and punishments for not meeting deadlines.

I hope it's not an issue, but it could be.
I see it as the opposite. Large manufacturers, such as Ford/GM/Toyota/Honda need VOLUME to keep up with their projected numbers.

Rivian is a startup. Enough chips to meet their annual target wouldn't cover one of the "big boys" for a week.

It'll be a lot easier for Rivian to get chips in the quantity they need.
 

McRat

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I see it as the opposite. Large manufacturers, such as Ford/GM/Toyota/Honda need VOLUME to keep up with their projected numbers.

Rivian is a startup. Enough chips to meet their annual target wouldn't cover one of the "big boys" for a week.

It'll be a lot easier for Rivian to get chips in the quantity they need.
I hope it works that way.

Here's the reality in my experience: Compare this to building 10 desktops for your business vs Dell building computers. Who is having a harder time getting chips?
 

MurryR1T

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I see “first full year” as the first full calendar year. June 2021-December 2021 will be all about ramping up and working through production issues and not part of the production targets (IMO).
 

whyasky

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The best information we have to go on is that Rivian continues to assert they will produce all LE vehicles in '21 and begin the next series (max pack, explore, etc) in '22. No one knows the LE number exactly but guesstimates around this forum seem to range from 10-20K. Even if they produce 'only' 10K vehicles this calendar year, that's a meaningful accomplishment and should put them well on the way to a 40K/yr sustained run rate by early '22.
 

CommodoreAmiga

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I hope it works that way.

Here's the reality in my experience: Compare this to building 10 desktops for your business vs Dell building computers. Who is having a harder time getting chips?
I don't think that's a fair analogy.

Rivian isn't an individual. Your analogy would be more like GM building cars in a factor vs Mr. Shadetree restoring a car in their residential garage.

Perhaps the analogy would be better said as "Compare Falcon Northwest building 10 desktops vs Dell". A small/niche manufacturer vs a behemoth. Maybe Falcon NW has to pay a little more for some components -- but they can get those 10 units. Dell may have trouble meeting production targets, regardless of cost.
 

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I don't think that's a fair analogy.

Rivian isn't an individual. Your analogy would be more like GM building cars in a factor vs Mr. Shadetree restoring a car in their residential garage.

Perhaps the analogy would be better said as "Compare Falcon Northwest building 10 desktops vs Dell". A small/niche manufacturer vs a behemoth. Maybe Falcon NW has to pay a little more for some components -- but they can get those 10 units. Dell may have trouble meeting production targets, regardless of cost.
Here is what I'm hoping for: That Rivian has an excellent automotive HR staff and an excellent 'buyer' with heavy auto experience. Many folk do not realize how important the buyer (procurement dept) is to a manufacturer. Talented buyers are a critical team member. This is one area that Tesla has show weakness over the years. They treat their suppliers poorly in many cases and have no loyalty to them. This is both an HR and a purchasing failure. And also a corporate leadership deficiency as well.

If Rivian has a first rate procurement team, they resolved chip issues about a year ago and have a redundant supply chain.
 

cwoodcox

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This is one area that Tesla has show weakness over the years. They treat their suppliers poorly in many cases and have no loyalty to them. This is both an HR and a purchasing failure. And also a corporate leadership deficiency as well.
This is one of those corporate culture things Tesla wants to buck, loyalty and the like. Nobody else wants to. It’s bad.

If Rivian has a first rate procurement team, they resolved chip issues about a year ago and have a redundant supply chain.
If at least one of the other major automakers doesn’t have a “first rate procurement team” by your standard, I have a hard time believing a startup in Normal IL does.
 
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johnbro23

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I just hope that the fact that Rivian is trying to IPO this year with very serious investors behind them to this point means they thought long and hard about setting an achievable goal of June deliveries start when they delayed last year on COVID. I really hope they don't end up like Lucid, IPO'd through a shady SPAC process in Jan, and delays deliveries by 9 months in February. Rivian is in the big leagues with their investors T Rowe Price, Amazon, etc., they'll do a normal IPO with Goldman Sachs and be a more typical beat and raise story for their new investors in the IPO.. hopefully..
 
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Whataboykie!

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I hope it works that way.

Here's the reality in my experience: Compare this to building 10 desktops for your business vs Dell building computers. Who is having a harder time getting chips?
You forget to mention that the chip manufacturers have contracts with all their buyers, and as a manufacturer I need to keep my BIG clients happy, so a little startup like Rivian means nothing to them.
 

Amdolan

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You forget to mention that the chip manufacturers have contracts with all their buyers, and as a manufacturer I need to keep my BIG clients happy, so a little startup like Rivian means nothing to them.
This is true, however there aren’t all that many other places to go for chips should one of the manufacturers get fed up with their chip supply. Supply chains have gotten so complex and dependent with JIT manufacturing that even missing 5% of chips in a shipment could mean the production line is impacted.

There’s something to be said for smaller orders too as they are generally easier to fill (less parts) and have higher profit margins for the manufacturer due to smaller price breaks. Does it make sense to pull 100k chips from an order of 2M to fill an order with a greater profit margin? Maybe?

Lastly, Samsung is a major producer of chips. Not sure where Rivian is getting theirs, but if it’s Samsung, they may want to take care of Rivian since they’re purchasing battery cells from them as well. Obviously this is complete speculation
 

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