What the production-delivery gap at Lucid and Rivian reveals

[Count Orlok]

What the production-delivery gap at Lucid and Rivian reveals

Rivian was sitting on $13.8 billion at the end of Q3

now perhaps my memory is failing me but wasn't this number north of 25B just 6 months ago and there was a lot of optimism it would last through the completion of the GA plant? The cash-burn rate seems like Rivian is in trouble.

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[SeaGeo]

They're still expecting cash on hand at least until the original plan date IIRC from the last investors call. The GA shenanigans are obviously a huge uncontrolled variable though.

Also worth noting that their burn rate should reduce as the plant continues to ramp and they transition to higher MSRP vehicles and more vans.

 

[itselectric]

I think the worst thing announced by Rivian is that they won't be making the R2 until 2026. Two reasons.

• There's going to be a ton of competition out there. Probably 30-40+ EV models and at least 3-4 direct competitors when '26 rolls around.
  
  
• Rivian isn't going to survive selling R1s. A large chunk of reservations are for the old pricing structure, they likely have more recalls on the way with the suspension issues, and if the economy turns down next year, orders will slow a bit.

That would be all well and fine if they were able to take orders in 2024 for the R2 and start selling that hype/raising more capital based on interest. Now that process is going to be delayed a year and they will have to rely primarily on R1 sales in a weak economy.

Other OEMs such as GM, are focused on releasing a handful of more "affordable" EVs next year and in 2024 which may or may not force Rivian to lower prices again themselves.

It is going to be a bumpy ride for both them and Lucid imo. I'm not predicting bankruptcy, I think they have the money needed to weather the storm next year. But 2024 will be very critical.

 

[COdogman]

I disagree that Rivian is making a mistake not trying to produce the R2 sooner. Rivian's best bet IMHO is to produce as many of the 2 vehicles they currently sell, rather than add in yet another factor to slow them down. Their issue to this point has been DELIVERING the orders they already have. Once they have that down they will add another vehicle and have much more experience under their belt.

If they are doing it right there will be plenty of people willing to buy their smaller/ cheaper SUV over any competitors. They should continue to bet on themselves.

 

[fotoflux]

Anyone notice that they already reduced complexity by removing trims, delaying max pack, etc. They are doing what they can to constrain costs. Additionally, if I had to hazard a guess, they have significantly reduced investments in the RAN installations. They were claiming they were going to be done by end of 2023 at one point, they've installed like 5 sites out of 600 fast charging sites so far. (https://www.autoevolution.com/news/...stations-by-2023-from-its-website-192756.html)

 

[MountainBikeDude]

What the production-delivery gap at Lucid and Rivian reveals




now perhaps my memory is failing me but wasn't this number north of 25B just 6 months ago and there was a lot of optimism it would last through the completion of the GA plant? The cash-burn rate seems like Rivian is in trouble.

17 Billion USD as of March 31st 2022. If you convert that to Canadian about 22 Billion... New Zealand dollars 27.31 Billion....

The burn rate should reduce as they produce and sell more vehicles. The big variable as others touched on is the roughly 5B Georgia plant.

 

[Guy]

They're still expecting cash on hand at least until the original plan date IIRC from the last investors call. The GA shenanigans are obviously a huge uncontrolled variable though.

Also worth noting that their burn rate should reduce as the plant continues to ramp and they transition to higher MSRP vehicles and more vans.

Agree with you. The key thing is production numbers - the more they produce the quicker they get through pre-March holders and bring in more revenue to help cover some of the fixed costs. They need a target for 2023 well above 50k otherwise it will be 2025 until Normal is running at full capacity. Anything less than 80% capacity does not bode well financially.

 

[Guy]

Anyone notice that they already reduced complexity by removing trims, delaying max pack, etc. They are doing what they can to constrain costs. Additionally, if I had to hazard a guess, they have significantly reduced investments in the RAN installations. They were claiming they were going to be done by end of 2023 at one point, they've installed like 5 sites out of 600 fast charging sites so far. (https://www.autoevolution.com/news/...stations-by-2023-from-its-website-192756.html)

Yes they have reduced capital expenditure. The RAN is interesting because they need this to support the membership proposal next year. Even if they take three times as long (ie six years out to 2027) they would need to open 100 a year or two a week. Well above the current eight in the past six months.

Cost cutting or deferring costs will not help that much. They key thing is to increase production to something like 75k next year.

 

[fotoflux]

Yes they have reduced capital expenditure. The RAN is interesting because they need this to support the membership proposal next year. Even if they take three times as long (ie six years out to 2027) they would need to open 100 a year or two a week. Well above the current eight in the past six months.

Cost cutting or deferring costs will not help that much. They key thing is to increase production to something like 75k next year.

Yeah, the recurring revenue for membership was a huge part of their valuation when they went public. If they can't get people to buy subscriptions, their valuation will sink further than it has already (RAN? What RAN? Driver++? Maybe don't veer off the road randomly on highways first) That would not bode well for their ability to raise future capital or their longevity

 

[COdogman]

If we think about how Tesla really established their huge lead in the EV race, it was because they simultaneously built out their charger network all while going through "production hell". That paid off big time because people were comfortable buying their cars knowing they had a dedicated network to use after purchase. It will be hard and expensive but I think Rivian needs to do the same. It will pay off when they need that membership $ and with all future models they produce.

 

[Guy]

If we think about how Tesla really established their huge lead in the EV race, it was because they simultaneously built out their charger network all while going through "production hell". That paid off big time because people were comfortable buying their cars knowing they had a dedicated network to use after purchase. It will be hard and expensive but I think Rivian needs to do the same. It will pay off when they need that membership $ and with all future models they produce.

Agreed, especially since a nationwide network is not that expensive in the scheme of things. EA has built apribd 700 stations for a bit over $1billion.

 

[COdogman]

Agreed, especially since a nationwide network is not that expensive in the scheme of things. EA has built apribd 700 stations for a bit over $1billion.

IMHO That's totally worth it if it gets more people to buy your vehicles.

 

[dsmithsalinas]

Related to the charging networks, I’m honestly shocked we haven’t seen a large agreement between some auto companies to come together and build out a massive network to compete with Tesla.

For personal reasons, I would never buy a Tesla, but no one can deny that they have absolutely built a HUGE advantage with their charging network.

To me it would make sense for a Rivian/Ford/GM or whatever make up to come together, throw some money in, buy ChargePoint or create their own network and just blast the country with them.

 

[NY_Rob]

Related to the charging networks, I’m honestly shocked we haven’t seen a large agreement between some auto companies to come together and build out a massive network to compete with Tesla.

Maybe once supply catches up with demand, but with zero $$ invested in charging stations GM and Ford are selling out every EV they can produce with long waiting lists for cars yet to be made.

 

[jjwolf120]

but with zero $$ invested in charging stations GM and Ford are selling out every EV they can produce

Which isn't a high number at this time.

Also, GM has put some money into EVgo and Ford has prepaid EA for some charging.

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