WSJ: Rivian’s Great EV Expectations Meet the Harsh Reality of Manufacturing (pay wall)

[Count Orlok]

WSJ: Rivian’s Great EV Expectations Meet the Harsh Reality of Manufacturing (pay wall)

sorry if already posted.

Sponsored

 

[chrismc]

As a somewhat disillusioned owner, I’d rephrase that as “Rivian’s great EV expectations meet the harsh realities of software development”.

 

[zipzag]

Rivian was extraordinarily lucky with the timing of their IPO. As long as they have healthy excess demand in 2024 many of these short term problems don't matter.

 

[SASSquatch]

Rivian was extraordinarily lucky with the timing of their IPO. As long as they have healthy excess demand in 2024 many of these short term problems don't matter.

Pay the man!

RIVIAN hit the lottery with their timing. They now have an overwhelming advantage over where Tesla was at the same point in their history: COLD HARD CASH.

With $18 Billion in the bank, they can survive production ramp-up, getting their new factory online, and clearing out their pre-March 1 reservation holders who are hurting their margins.

As a stockholder, reservation holder, and RIVIAN supporter, what I need to see is continued demand (i.e. new reservations) for either the dual motor or quad-motor R1T post March 1 because that is where RIVIAN is going to play catch-up on profitability.

That, and continued production increases and fewer fires.

They also need to keep securing orders for their EDV offerings beyond the 100K from Amazon.

 

[DJG]

As a somewhat disillusioned owner, I’d rephrase that as “Rivian’s great EV expectations meet the harsh realities of software development”.

I think if you look at things holistically, you'd have a different view. I also own an eTron, which excluding Tesla and Rivian I'd say is as advanced as it gets in the tech/software arena, even on a static 2019 vehicle in 2022. However, getting the Rivian makes it clear Audi is light years behind Rivian, even with the things in the R1T that are still in development. I also don't believe Audi will have any of their vehicles at the level of a current R1T for at least 5 years, if ever. Germans may never have the culture to produce truly competitive software in the EV world, unless they outsource it to America.

Rivian is in my eyes unquestionably better than everyone except Tesla in the software department, because frankly it's a really low bar. There are still several things that can /should get much better, but an honest comparison to the field is pretty clear. Perhaps Lucid is in the same league, but they don't have enough vehicles on the road to gain any information, but early reports on that front have them far behind Rivian despite the prototype software showing a ton of promise.

 

[FormerRIVTech]

I think if you look at things holistically, you'd have a different view. I also own an eTron, which excluding Tesla and Rivian I'd say is as advanced as it gets in the tech/software arena, even on a static 2019 vehicle in 2022. However, getting the Rivian makes it clear Audi is light years behind Rivian, even with the things in the R1T that are still in development. I also don't believe Audi will have any of their vehicles at the level of a current R1T for at least 5 years, if ever. Germans may never have the culture to produce truly competitive software in the EV world, unless they outsource it to America.

Rivian is in my eyes unquestionably better than everyone except Tesla in the software department, because frankly it's a really low bar. There are still several things that can /should get much better, but an honest comparison to the field is pretty clear. Perhaps Lucid is in the same league, but they don't have enough vehicles on the road to gain any information, but early reports on that front have them far behind Rivian despite the prototype software showing a ton of promise.

..... Does that include some of the flagship brands like BMW's EV dept?

 

[EVTrucking]

..... Does that include some of the flagship brands like BMW's EV dept?

Rivian also needs relief from supply chain constraints. Without parts they cannot become profitable and will burn through money more rapidly.

I have not read much in the news to indicate that 2023 will be any better than 2022 for parts supply. Possible worst case scenario would be to restrict Rivian to 15k or less R1s in 2023 due to parts supply.

Really hard to grow orders when faced with taking years to deliver.

I know new parts factories are planned but I doubt they will come on line until 2024.

All OEMs are facing this but the legacy ones have the bargaining power.

No parts = No R1s

 

[lefkonj]

How is Rivian any different than Tesla during its first few years. Production issues, quality issues, software problems.

The Germans are 1 acquisition away from having the battery tech to overtake the industry, the question is who buys who and when. This is what happens in other industries.

 

[EVTrucking]

How is Rivian any different than Tesla during its first few years. Production issues, quality issues, software problems.

The Germans are 1 acquisition away from having the battery tech to overtake the industry, the question is who buys who and when. This is what happens in other industries.

I think a huge difference between early Tesla and current Rivian is the complete break down of the supply chain simultaneously with the exponential explosion of OEMs rushing to meet the global demand for EVs!!

Great timing for IPO but disastrous timing for mass production.

No parts = No R1s …. It is that simple

 

[SANZC02]

I think a big issue Rivian will have with the 90k pre-orders is the longer they take to deliver them the lower the conversion rate to order will be.

They have a lot of preorders where people are already stretching to get on at current pre March 1st pricing. The longer it takes inflation will eat away at the free cash flow for the monthly budget and as the interest rates go higher people will be forced out of the market.

There are many people who already have set aside the funds for the purchase but clearly a lot of people had stated the increased prices put them over the edge. Higher prices on day to day consumables and interest rates will do the same thing.

In a perfect world the EDV market and the actual R1 sales will help carry them until they get to the more mass market R2 models but it is still going to be an uphill climb to get over the hump. That 5 billion dollar plant will be hit by inflation as well and may end up being closer to 7 billion by the time it is ready.

 

[EVTrucking]

I think a big issue Rivian will have with the 90k pre-orders is the longer they take to deliver them the lower the conversion rate to order will be.

They have a lot of preorders where people are already stretching to get on at current pre March 1st pricing. The longer it takes inflation will eat away at the free cash flow for the monthly budget and as the interest rates go higher people will be forced out of the market.

There are many people who already have set aside the funds for the purchase but clearly a lot of people had stated the increased prices put them over the edge. Higher prices on day to day consumables and interest rates will do the same thing.

In a perfect world the EDV market and the actual R1 sales will help carry them until they get to the more mass market R2 models but it is still going to be an uphill climb to get over the hump. That 5 billion dollar plant will be hit by inflation as well and may end up being closer to 7 billion by the time it is ready.

Absolutely!!!

The legacy OEMs will get the lions share of the parts and will significantly out produce Rivian, thus eroding a portion of Rivian's customer base and restricting the stream of new customers.

No parts = No R1s ..... it really is that simple

 

[StefanB]

Couple of interesting points in the article that jumped out to me:

1. Rivian is running only 1 ten hour shift for only 2-3 days a week! No wonder I can't get an update on when my R1S will actually show up.
   1. " Mr. Scaringe said the production rate is improving. The plant is currently running single 10-hour shifts two or three days a week, he said. By sometime in the second half of the year, he aims to run two shifts a day, five days a week. "
2. Growing pains continue with how to ensure parts that are in the warehouse (read as: not a supply chain issue) make it to the manufacturing line.
   • "The logistics of managing and moving parts inside the factory have been a problem, he said, but it is easing, in part through beefed-up training of its workforce.
     
     “If you’re sitting line-side and you’re waiting for a part shipment to come in, and you’re standing there from 11 a.m. to 1 p.m. waiting for those parts, that’s a frustrating day,” Mr. Scaringe said. “It’s also not cost-effective in any way for us.”"

I feel for the folks at Rivian but sometimes I think these problems are just as much about experience and expertise as external factors. Especially surprised to hear about the limited shifts per week.

 

[SANZC02]

Couple of interesting points in the article that jumped out to me:

1. Rivian is running only 1 ten hour shift for only 2-3 days a week! No wonder I can't get an update on when my R1S will actually show up.
   1. " Mr. Scaringe said the production rate is improving. The plant is currently running single 10-hour shifts two or three days a week, he said. By sometime in the second half of the year, he aims to run two shifts a day, five days a week. "
2. Growing pains continue with how to ensure parts that are in the warehouse (read as: not a supply chain issue) make it to the manufacturing line.
   • "The logistics of managing and moving parts inside the factory have been a problem, he said, but it is easing, in part through beefed-up training of its workforce.
     
     “If you’re sitting line-side and you’re waiting for a part shipment to come in, and you’re standing there from 11 a.m. to 1 p.m. waiting for those parts, that’s a frustrating day,” Mr. Scaringe said. “It’s also not cost-effective in any way for us.”"

I feel for the folks at Rivian but sometimes I think these problems are just as much about experience and expertise as external factors. Especially surprised to hear about the limited shifts per week.

The limited shifts do not surprise me, they are working on getting the lines up to full speed so when they have the stock the run the lines. Would not make sense to run the line at throttled speed just to keep it moving.

 

[EVTrucking]

The limited shifts do not surprise me, they are working on getting the lines up to full speed so when they have the stock the run the lines. Would not make sense to run the line at throttled speed just to keep it moving.

Totally agree!

Spread the work out and keep more folks at least somewhat productive.

 

[Rasputin]

Seems like some good news may be coming? Keep the faith Rivianati!


https://www.bloomberg.com/news/arti...eel-chip-crisis-easing-as-global-growth-slows

Carmakers Feel Chip Crisis Easing as Global Growth Slows
Mercedes, Daimler Truck, BMW, VW say plants running as normal
Tentative improvement comes months ahead of predictions

New Mercedes-Benz AG automobiles inside a Daimler AG showroom in Frankfurt. Photographer: Alex Kraus/Bloomberg By Joshua Gallu June 4, 2022, 12:00 AM PDT From Hyperdrive Want the lowdown on European markets? In your inbox before the open, every day. Sign up here. The global semiconductor shortage that’s bogged down the auto industry for almost two years is showing signs of easing, at least for now.

Mercedes Benz AG, Daimler Truck Holding AG, and BMW AG are among carmakers now getting enough of the high-tech components to produce at full capacity after experiencing crippling outages for months. The breakthrough comes earlier than the companies predicted and marks a bright spot for an industry facing a deteriorating economy and inflation while managing an historic transition to electric-vehicle production. Manufacturers are cheering the chip-supply improvement but aren’t declaring victory yet. “We’re still monitoring it week to week, but up to now basically worldwide, we had no issues running production,” said Joerg Burzer, Mercedes’s head of production and supply-chain management. Supply issues occur “here and there,” he said, “but nothing compared to what it was like last year.” Read more: World’s Biggest Truck Manufacturer Says Chip Crunch Easing Even as demand for cars boomed, auto manufacturers have had to curtail output as plants globally couldn’t source enough chips critical for increasingly computerized vehicles. The outages have been so severe that global passenger car output has barely shown signs of recovery to pre-pandemic levels.

Robots weld car body components for vehicles at the BMW Manufacturing Co. assembly plant in Greer, South Carolina. Photographer: Luke Sharrett/Bloomberg
As the chip supply improves, carmakers are working down their order backlogs, and concerns are turning to how consumer demand will hold up amid accelerating inflation and higher interest rates. Tesla Inc. Chief Executive Officer Elon Musk said the electric-car maker needs to cut staff by 10% and that he has a “super bad feeling” about the economy, according to Reuters, which cited an internal memo.

But not everyone is as pessimistic as Musk. German carmakers’ sentiment improved significantly in May, according to an Ifo Institute survey. The survey showed growing confidence among the carmakers that they’ll be able to raise prices to cope with soaring raw material costs.
Some of the new availability of chips stems from the weakening economic outlook and inflation, which has cut into demand for consumer electronics that also use the components. Karin Radstrom, head of the Daimler Truck’s Mercedes brand, said the company is now getting the chips it needs to work down a backlog of orders.
“It’s not perfect, but it’s better than last year,” Radstrom said in an interview. “I try to not celebrate too early. We’re still monitoring the situation closely.”
BMW expressed similar reserved optimism, saying all plants are up and running and the company isn’t experiencing any stoppages due to chip supplies.
“Currently, the situation is a little bit more stable,” a spokesman said, adding that BMW still monitors the chip supply on a daily basis and doesn’t rule out the possibility of fresh disruptions in the coming weeks and months.
Volkswagen AG, which like others estimated that the logjam would begin to ease in the second half of 2022, is also seeing steady supplies, according to a spokesperson, who underscored that there’s still significant uncertainty about the coming months.
Harry Wolters, president of Paccar Inc.’s DAF Trucks unit, has seen the same trend.
“We’ve seen better supply of components than we maybe anticipated five, six weeks ago,” Wolters said. “So in the U.S. and Europe, we’ve been able to increase build rates.”

But not all companies are enjoying the same relief. Volvo Trucks said it’s still seeing limited chip availability and expects an impact on second-quarter production. And according to to research by Susquehanna Financial Group,
delivery times for chips -- used in a range of electronics -- remained flat in May, a sign that lags persist.
Mercedes CEO Ola Kallenius said last year his company would resort to using a more expensive semiconductor to avoid the shortage. Ford Motor Co. Chief Executive Officer Jim Farley said last month the company would buy chips wherever it could in the open market.
— With assistance by William Wilkes, Wilfried Eckl-Dorna, and Debby Wu

Sponsored