Updates on Rivian production ramp from 3rd S-1 amendment [filed 11/5]

[R1TMDSD]

Interesting info from Reddit:

Given the recent surge in comments about the production ramp, and now apparently some delays, I found this new paragraph, added to the Third Amended S-1 filed this afternoon, particularly interesting:

Based on our current production forecast, we expect to fill our preorder backlog of approximately 55,400 R1 vehicles by the end of 2023. Our manufacturing facility in Normal, Illinois (the “Normal Factory”) is currently equipped to produce up to 150,000 vehicles annually (distributed between the R1 platform, which will be used to produce the R1T and R1S, and the RCV platform, which will be used to produce EDVs and other commercial vehicles), when the equipment is operated at full rate and on multiple shifts. The current annual installed capacity for the R1 platform and RCV platform is approximately 65,000 and 85,000 vehicles, respectively. We produced 104 R1T vehicles during the last week of October 2021, representing approximately 8% of our target R1 production rate. Our target is to produce approximately 1,310 R1 vehicles a week, which when annualized (assuming 49.6 working weeks per year), equates to the current installed R1 platform capacity of approximately 65,000 R1 vehicles annually. With respect to the RCV platform, our target is to produce approximately 1,710 commercial vehicles (including EDVs) a week, which when annualized (assuming 49.6 working weeks per year), equates to the current installed RCV platform capacity of approximately 85,000 vehicles annually. We expect our vehicle production rate will improve as we continue to increase the speed of the line, hire and train employees to run additional shifts, commence production of the R1S and EDVs, and increase the rate of purchased materials from our supply chain. We expect to reach a vehicle production rate, which, when annualized, would result in us using 100% of the facility’s current installed capacity of up to 150,000 vehicles by late 2023.

The most salient tidbits:

• Current production rate is 8% of anticipated target.
• At full capacity, Rivian expects to produce 1310 R1s/week, and 1710 EDVs/week....or put another way, 65,000 R1s/year, and 85,000 EDVs/year. If there were any doubt about Amazon's importance to the company (and, ahem, favoritism), that paints a pretty clear picture.
• Notably, Amazon is only committed for 100,000 EDVs...yet Rivian will be able to produce 85,000/year by 2023. So I'm going to take a total shot in the dark here, but it seems like a reasonable bet that at some point in the next 90-180 days Rivian announces another significant/material order of EDVs by a company other than Amazon (perhaps a DHL/FedEx/UPS/USPS?) ... That would certainly be an interesting response to the Tesla/Hertz story!
• Production will increase based on (1) increased speed of the line (translation: solve all the QC issues); (2) hire and train more employees (equals additional shifts); and (3) purchased materials. That's a pretty clear indication of why those who may have been promised delivery in late October/November are now being pushed to April.
• Full run rate isn't expected to be achieved until late 2023. This seems reasonable for a new vehicle. Even though I'm a late, late number (probably in the 40,000-ish range), based on these new disclosures I am optimistic I'll still get delivery by the end of 2022 (assuming status quo holds and supply chain issues don't get significantly worse).

One last note... if and to the extent the recent allegations are true, then this paragraph (included in all of the S-1s thus far) is particularly cringe-y, but totally expected corporate speak:

Our Culture**.** We are incredibly intentional about the culture we are creating, which is our most durable competitive advantage. Everything from the way we recruit and onboard, to our equity-for-all philosophy, to our transparent way of communicating, is in service of making Rivian the company passionate professionals join to learn, grow, and do the most meaningful work of their careers.

However, I found it interesting that the "Legal Proceedings" discussion on page 153 still only mentions the Tesla and Illinois Automobile Dealers Association (et al.) lawsuits, with no mention of the new claims. Perhaps the company doesn't view it as material enough to include in the S-1, but it's likely too soon to tell.

Edited for words & clarity.

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[kanundrum]

Amazing find! I started reading it but got side tracked so thank you for going thru it!

 

[Scoiatael]

Late 2023 date makes a lot more sense now. They are being cautious with how fast they think they can ramp up. Still probably means someone like me with a May 2021 reservation won't have any chance next year, but hopefully it means at least all the early reservations get filled.

 

[SeaGeo]

Something Happened between the S-1 and the first amendment. Remember, they said that they expected to produce all 48k preorders by the end of 2022. There was some wiggle room in interpreting what they meant in the amendment by delivering all 55k by end of 2023. But now you have them hitting peak production (65k/yr) mid 2023. So, assuming even a linear increase, that's a peak rate of around 45k/yr at the end of 2022. Delivering roughly 20 to 30k trucks in 2023. Unless there is an external constraint that limits them to say... 45k/year until supply is addressed mid 2023. The latter seems unlikely to me.

 

[DB-EV]

Also, did the net number of preorders go down from the first S-1 update? this says 55,400.

 

[André]

This is quite informative and their production targets make a lot more sense with these numbers. This was probably a recurring question during the final stage of the roadshow to investors and they had to insert it in an updated S-1 to answer without doing selective disclosure. They need to make any new material information available to all potential investors at the same moment.

 

[MoreTrout]

I disagree with the poster that the production targets for the EDV vs the R1s showing any "favoritism" to Amazon. It's a commercial vehicle. Their are far fewer variables in configurations that need to be swapped in and out. The production lines can therefore be much more efficient with fewer variables.

One more sobering thought. Honda sold 1.6 million vehicles in just the U.S. in 2019. 150,000/year at full capacity from this single plant makes their IPO valuation greater than Honda really difficult to swallow.

 

[kommonplace]

I'm missing something, I guess. Why did this information make the Reddit OP believe that they'll get their order by the end of 2022?

I'm a June 2021 preorder, and was hoping to get it in 2022... and then the "end of 2023" stuff came out and I pretty much gave up all hope.

I'm not seeing (or understanding) what has changed to make at least this one person think things are better than that.

I know we're not on Reddit, but can someone ELI5?

 

[Guy]

I disagree with the poster that the production targets for the EDV vs the R1s showing any "favoritism" to Amazon. It's a commercial vehicle. Their are far fewer variables in configurations that need to be swapped in and out. The production lines can therefore be much more efficient with fewer variables.

One more sobering thought. Honda sold 1.6 million vehicles in just the U.S. in 2019. 150,000/year at full capacity from this single plant makes their IPO valuation greater than Honda really difficult to swallow.

I agree with you in valuation but then Tesla goes up $40 billion on news of a $3billion deal with Hertz which nets at most $600 million in profit, so not rational. Rivian are at least in the right market segments unlike Tesla was and Lucid are. Commercial also gives them some solid revenue for a long time too.

 

[sub]

Could the end of 2023 language be related to Max pack? They could burn through all of the regular battery preorders in 2022, but if they don't plan to start producing max packs until mid 2023 they can't say they will clear the backlog of orders until late 2023.

 

[Fred6v]

Where did you get the idea that they will delay max pack builds until mid-2023? That's 18 months later than planned.

 

[SeaGeo]

I'm missing something, I guess. Why did this information make the Reddit OP believe that they'll get their order by the end of 2022?

I'm a June 2021 preorder, and was hoping to get it in 2022... and then the "end of 2023" stuff came out and I pretty much gave up all hope.

I'm not seeing (or understanding) what has changed to make at least this one person think things are better than that.

I know we're not on Reddit, but can someone ELI5?

I think they're just being hopeful that they'll be closer to a production number 20,000 truck based on a response they had that said (like I did above) thst it sounds like production will probably be closer to 20k to 30k trucks on 2022.

 

[TessP100D]

I agree with you in valuation but then Tesla goes up $40 billion on news of a $3billion deal with Hertz which nets at most $600 million in profit, so not rational. Rivian are at least in the right market segments unlike Tesla was and Lucid are. Commercial also gives them some solid revenue for a long time too.

Rivian is not in Tesla’s league. Not yet anyway.

 

[Ralph]

UPS has taken a stake in a different EV company, Arrival. There is no way that UPS will be buying the Amazon spec vehicle. UPS fleet management specifies every single thing on their vehicles for optimum efficiency in context of their operation.

Fedex has made a commitment to General Motors BrightDrop.

And any order from USPS will go through a more public process of selection and increased funding. The funding might be in the infrastructure deal under consideration, and USPS current their deal with Oshkosh Defense is under review. So Rivian might sell some vehicles to them. But it seems unlikely to build capacity on such circumstances.

But there are many fleet opportunities and it will be interesting to see where increased capacity goes. Even though Wal-Mart is committed to local delivery, I very much doubt they will be purchasing from a company that has Amazon as a 20% owner and direct competitor (for business and actual vehicle delivery).

We have to assume they believe Rivian has potential, as yet uncommitted sales. I personally believe that it is just as likely that capacity represents what Amazon may commit to in the future after further review, analysis and yes, the IPO.

 

[poldim]

And any order from USPS will go through a more public process of selection and increased funding. The funding might be in the infrastructure deal under consideration, and USPS current their deal with Oshkosh Defense is under review. So Rivian might sell some vehicles to them. But it seems unlikely to build capacity on such circumstances.

I agree with most of your logic, but I’m not sure USPS will buy from a non union shop given all of this administration’s love for unions

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