RJ Hint's there may be a demand problem.....

[Mark_AZR1T]

Rivian's Demand Problems -- and Q1 Progress
Chief Executive RJ Scaringe did not reassure investors when he said the company, which manufactures the R1S SUV, the R1T pickup truck and the EDV van at its Normal, Ill., plant, likely has a demand problem.

"Certainly, what we're witnessing in the macro and what we're seeing in terms of interest rate is ... across the industry, having an effective moderating overall demand," Scaringe told analysts during the fourth-quarter earnings call.



https://www.thestreet.com/investing/tesla-rival-rivian-gets-breathing-room

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[DuoRivians]

This is really old news and doesn’t add anything concrete. It was said many times after by him and Claire that they have backlog well into 2024

 

[Mark_AZR1T]

Demand isn't a backing issue....

 

[DuoRivians]

Demand isn't a backing issue....

Production of 40k R1X in 2023, 85k in 2024. Well into 2024 implies a backlog, ie orders to fill, of at least halfway through 2024. Which means they have 80k+ orders to fill. Demand is there, and more reservations are being made. Rivian is not disclosing them any more because they found customers’ knowing how long the backlog is is the single biggest deterrent for placing an order.

Furthermore, this is a quote from The Street, which is just one level above motley fool for trash financial articles/advice

 

[tk21]

you can have preorder backlog but if a good number of the aren’t pulling tge trigger when it comes time for purchase and you are having slowing additional orders based on the economy, I’d agree that’s a problem.

 

[JohnB R1T]

Operative words here..."macro" and "across the industry". Please learn the definitions of what you're reading and discussing before assuming that RJS is stating anything beyond the obvious.

"In the macro", rising fuel prices impact demand for ICE vehicles"...that doesn't mean that the car manufacturer who makes such a statement is implying a "demand problem" of his own.

 

[R1Tom]

I have one curiosity on this....

If they have orders to fulfill well into 2024, then why does the website state new orders for R1T can expect to be filled in 1-4 months?

 

[Guy]

I have one curiosity on this....

If they have orders to fulfill well into 2024, then why does the website state new orders for R1T can expect to be filled in 1-4 months?

Because they are still making a lot of trucks vs the SUV (where the real backlog is and will take at this pace through to end of 2024 to fill). They said that most truck sales this year would be the post March 2022 pricing so they are moving through their truck backlog efficiently.
There is only a certain US/Canadian market size for expensive (but good value for money) vehicles in this economic environment.

 

[Jac]

Rivian’s biggest challenges are still 1. Ramping production, 2. Continuous quality improvement, 3. Building out and staffing Service Centers to support quality and timely new vehicle deliveries and post-sale service. The product is excellent and distinctive. The current pricing is competitive. Focus on items 1, 2 and 3 and new orders will flow.

 

[R1Tom]

Because they are still making a lot of trucks vs the SUV (where the real backlog is and will take at this pace through to end of 2024 to fill). They said that most truck sales this year would be the post March 2022 pricing so they are moving through their truck backlog efficiently.
There is only a certain US/Canadian market size for expensive (but good value for money) vehicles in this economic environment.

That does make sense. It seems a little weird that they will take a order for a R1T and put it in front of all the R1S customers who have been waiting in line, but maybe they can get only so many 3rd row seats or something.

 

[jjswan33]

One thing I would say about demand is I would rather be in Rivian's position with a pair of new and exciting models and a van all in largely untapped segments with a backlog of orders than a Tesla with a set of 4 models that have basically been the same cars they have been selling for 10 years. Not to mention a shrinking market share in some of it's largest markets.

 

[MountainBikeDude]

That does make sense. It seems a little weird that they will take a order for a R1T and put it in front of all the R1S customers who have been waiting in line, but maybe they can get only so many 3rd row seats or something.

Some locations are still outside of the service center area. So some orders in Toronto, or even Calgary Canada as examples, will have customers that placed 2018 reservations not seeing their orders fulfilled until 2024 when those areas come online. Same is true in some areas of the US.

Also they are trying to shore up their margins by pumping out new and price locked legacy orders simultaniously. Lets say a 3k profit on a price locked config, vs a 28k profit on a new order (pulling numbers out of my ass) helping them recoup investment costs etc in manufacturing. I agree with this approach, as it still has legacy orders taking delivery, but also making the vehicle attractive to new order holders when they see that they can presumably take delivery of their vehicle within months, and not years like other manufacturers.

 

[NineElectrics]

Production of 40k R1X in 2023, 85k in 2024. Well into 2024 implies a backlog, ie orders to fill, of at least halfway through 2024. Which means they have 80k+ orders to fill. Demand is there, and more reservations are being made. Rivian is not disclosing them any more because they found customers’ knowing how long the backlog is is the single biggest deterrent for placing an order.

If you believe this explanation, I have a bridge to sell you. The biggest deterrent to placing an order is the estimated delivery date, which Rivian still shows you on the reservation page (as they should). Right now it's 2024 for R1S and 1-4 months for R1T. Once the early adopter market is exhausted, the mainstream buyer doesn't plan more than a month in advance. They buy what's available. Rivian just doesn't want the street to know that their rate of new reservations has slowed. Tesla did the same thing when the same thing happened to them. It doesn't necessarily translate into lower sales; like I said, most people buy near-term. If they can get it in less than a month, they will still buy.

 

[Zoidz]

If you believe this explanation, I have a bridge to sell you. The biggest deterrent to placing an order is the estimated delivery date, which Rivian still shows you on the reservation page (as they should). Right now it's 2024 for R1S and 1-4 months for R1T. Once the early adopter market is exhausted, the mainstream buyer doesn't plan more than a month in advance. They buy what's available. Rivian just doesn't want the street to know that their rate of new reservations has slowed. Tesla did the same thing when the same thing happened to them. It doesn't necessarily translate into lower sales; like I said, most people buy near-term. If they can get it in less than a month, they will still buy.

I and many other people I know research and plan car purchases much farther out than a month. Your timeline sounded incorrect to me. Google search indicates a much different story from the industry. AVERAGE is six months, which mean some, like me, are a year or more. In a niche marke such as Rivian, people are more likely to wait for the vehicle they want.

—Consumers will spend an average of six months researching a vehicle they will potentially buy.

 

[SANZC02]

Rivian's Demand Problems -- and Q1 Progress
Chief Executive RJ Scaringe did not reassure investors when he said the company, which manufactures the R1S SUV, the R1T pickup truck and the EDV van at its Normal, Ill., plant, likely has a demand problem.

"Certainly, what we're witnessing in the macro and what we're seeing in terms of interest rate is ... across the industry, having an effective moderating overall demand," Scaringe told analysts during the fourth-quarter earnings call.



https://www.thestreet.com/investing/tesla-rival-rivian-gets-breathing-room

This should be news to no one based on all of the financial data we have been monitoring the last 12+ months. Fear of recession and raising interest rates is going to impact the auto industry in general including EVs history does repeat itself.

As for the impact on Rivian, certainly there will be some but with lower volumes and most likely their pool of buyers would come from upper middle class or higher I would expect the impact to be less than someone like Tesla with a production target 40 times higher (2 million compared to 50k) and pulling a lot of those buyers from lower middle class which historically is more impacted during a recession.

Rivian still has a ton of headwind I just do not think this is high on the list until they start rolling out the R2 versions which was pushed into 2026. This actually could end up being one of the few things where the timing is actually working out for Rivian, they certainly could use a break.

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