To the Rivian Board: Get your priorities straight

[GA_Rivian]

The recent IPO filings revealed that Amazon have not only ordered 100,000 vans for delivery over the next 10 years, but that Amazon also controls ~20% of Rivian. Amazon is now flexing its muscle to prioritize their custom delivery van over the R1T.

The board needs to wake up and view the Amazon influence for what it is in the long run -- a lucrative sideline, not the main business. Rivian is poised to capture a large part of their target market, but only if they can deliver in a timely manner. While Rivian’s customers have a certain amount of brand loyalty, as soon as a Ford F150 is available it will be extremely enticing. Rivian has a very limited window in which they can capture market share. After that, their innovation edge will have a lot of competitors, and potential customers will have a lot of options. Availability is a huge motivator. 10,000 vans this year is nothing compared to 40,000 or more trucks, and in the long run, hundreds of thousands more trucks. Yes, the vans are an important part of the business, but they are only a sideline, not the main event.

Prioritizing the vans at the expense of the R1T is not good business for Amazon either. If the truck fizzles, “their” company will become an also-ran. Rivian’s customer base will migrate elsewhere, leaving Amazon with an investment in a failing company. It is in Amazon’s best interest, as well as Rivian’s, to prioritize the R1T to capture market share to insure the company is a powerhouse in the long run.

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[Tim-in-CA]

Agreed. The iron is hot, strike it!

 

[sub]

I agree time is of the essence. But producing vans certainly will not impact truck production if the holdup is that Rivian just doesn't know how to build the truck yet.

From what we've seen they have only produced a handful of trucks and a handful of vans. The evidence at this point is that Rivian just does not know how to produce anything high volume. There is no reason to blame the van contract.

 

[KenJ]

Does anyone actually know for a fact that the van is “taking away” from the R1x production. I thought I’d read that they are completely separate assembly lines. I don’t think the board is ignorant to the short and long term prospects and balancing different customer bases and the immediate financial situation of the company. The S1 also mentions how important the Amazon order is to give them enough scale to justify the whole endeavor.

 

[Babbuino]

Does anyone actually know for a fact that the van is “taking away” from the R1x production. I thought I’d read that they are completely separate assembly lines. I don’t think the board is ignorant to the short and long term prospects and balancing different customer bases and the immediate financial situation of the company. The S1 also mentions how important the Amazon order is to give them enough scale to justify the whole endeavor.

Bloomberg said so...

 

[mgc0216]

20% stake != 20% control

 

[mgc0216]

Also I am going to bet the Rivian board knows more about launching and running a multi billion dollar company than the average user on an Internet forum.

 

[CabinCrusher]

Also I am going to bet the Rivian board knows more about launching and running a multi billion dollar company than the average user on an Internet forum.

BS, state your source!

JK… this thread seams silly. Yet here I am…. ?

 

[guernsej]

I take it this is your totally qualified advice as an experienced entrepreneur based on the result of extensive market research and analysis, and not the biased ramblings of some rando that just wants their vehicle sooner?

Letter to the board lol

 

[ATL_Canes]

This thread = the internet in a nutshell.

 

[OldGoat]

Is Rivian making a wise decision with respect to Amazon vans? Leaving aside the question of what the decision is let's assume, for the sake of this exercise, they are making vans in lieu R1T/S's. In order to understand the wisdom of that choice one needs to know, among many other things:

The specific terms of the Amazon contract. Specifically, performance credits/penalties, termination clauses, etc. What are the legal and financial repurcussions if Rivian breaks/does not meet its contractual obligations?

The actual and projected production ramps/output across the two products. What components, processes, and jobs are fully fungible across production lines.?

Related to the above, current and near-term supply chain, raw material inventory and pipeline, especially as it pertains to items that are unique to one line.

A detailed analysis of cash flow projections over the next 12+ months, based on the production ramp BOM and sales across products.

Even things as mundane as the on-going maintenance models (including expense and revenue impacts) between a commercial Amazon van and a cosumer R1T/S as well as the implications of the upfitting of the vans as remote service vehicles would be important to consider. This would also encompass the costs of Rivian direct sales locations, lobbying efforts in States that do not allow direct sales or service and the build out of the charging network.

Bottom line is that complex business decisions are...complex.

 

[R_1_T]

The Amazon vans are cookie cutter - one size fits all. Orders of magnitude simpler from a supply chain and manufacturing perspective when compared to the R1T/R1S. Volume ramp up takes time. They're simultaneously training a new work force, refining processes, while ensuring product quality will meet expectations. This isn't a water faucet you just turn on at full blast.

 

[André]

Everyone here should feel more confident that not only their $1,000 deposit is more secured with Amazon on board with RIVAIN but also that someone with really deep pockets is behind this Company in case things are getting worst before getting better as for many similar start-up situations. RIVIAN has a run rate cash need of 1B$ every quarter currently. Remember that Tesla came close to go bankrupt when they launch the Model 3… I would rather get my truck later than sooner with no one remaining to service it 6 months after delivery !

 

[jjswan33]

So I don’t believe that Rivian is prioritizing Van production over R1 production, even if that was reported by Bloomberg. Now they may have had some contractual requirement to produce 300 vans or whatever this year and the company may have mobilized some resources to get that across the finish line, this is good business. That doesn’t mean they stopped work on ramping the R1 line.

On the other had I agree with the poster. If Rivian wants to be successful in the truck and SUV market they would be well served to deliver as many vehicles as possible to build their brand loyalty before more competition hits the market.

 

[doozenberg]

Everyone here should feel more confident that not only their $1,000 deposit is more secured with Amazon on board with RIVAIN but also that someone with really deep pockets is behind this Company in case things are getting worst before getting better as for many similar start-up situations. RIVIAN has a run rate cash need of 1B$ every quarter currently. Remember that Tesla came close to go bankrupt when they launch the Model 3… I would rather get my truck later than sooner with no one remaining to service it 6 months after delivery !

Facts you stated above should be discomfiting, not reassuring.
1. If Tesla almost went under several times trying to ramp 1 vehicle at a time, what happens to a brand new startup trying to ramp 3 vehicles at time?
2. Amazon's leverage over Rivian may lead to an outright buyout if/when IPO cash runs dry in a year or possibly less. This situation would not be good for the consumer, as Amazon will likely then fully prioritize remaining assets to expand its internal delivery fleet if anything. R1T will become a collectable like the DeLorean, and production R1S will likely never see the light of day. I hope I can return to this post in year+ and be proven wrong.

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