When Jeff Wells made reservations for the Rivian R1T pickup in early 2019, he was one of the first in line for trucks from the Amazon.com Inc.-backed electric vehicle startup that promised to tap a niche at the time service that was not provided. by other automakers. But Wells, an accountant from Southern California, is increasingly frustrated as he watches the others, who placed their order years later, receive the truck while he waits. “It’s just annoying and there seems to be no order to how they’re doing,” he said of Rivian.
Wells is one of dozens of reservation holders who have complained in recent weeks about unreliable delivery deadlines and delays in online groups and forums.
Complaints filed by Rivian Automotive Inc in late April said it was changing the production order of the vehicles, prioritizing those with specific interior and exterior color and wheel options.
“Building in certain build combinations reduces complexity at our suppliers and plant and allows us to build a greater number of vehicles,” Rivian told customers in an email.
That meant many early reservation-holders stuck with their original color preferences, delaying their orders.
Rivian said in a statement to Reuters that delivery dates are not based solely on preorder times, and it is exploring new ways to expedite deliveries for customers.
Rivian’s delivery headache hasn’t garnered as much attention as the California company’s messy communication of slashed production plans or increased vehicle prices, which it previously announced across the board, but later followed backlash for existing reservation holders. terminated.
But the delivery woes can prove to be just as damaging.
Rivian’s supporters have remained largely loyal despite the company’s chaotic price changes
While all automakers are grappling with global supply-chain shocks, including semiconductor shortages and rising raw material costs, startups like Rivian have little room to fix things. Large investors, including Ford Motor Company and Tiger Global Management, have taken off Rivian stock after the IPO lockup period ended.
Rivian’s supporters have remained largely loyal, despite the company’s chaotic price changes. Even after the price hike, pre-orders have grown to 90,000 vehicles, which now only apply to new reservations.
But delivery delays could prove costly as other automakers launch their own electric pickup trucks, including Ford Motor Co’s F-150 Lightning.
Rivian said on May 11 that it was working on overhauling its order system to separate reservations from the configuration process, in an apparent attempt to deal with customer criticism over the lack of supply in its ordering system.
Rivian said in the statement that the changes allowed for transparency of pricing and timing.
‘The world has changed’
Rivian’s struggle to overhaul its ordering system also reflects broader industry challenges. Inflation and supply-chain shocks have rattled financial forecasts and added pressure on EV upstarts to cut costs while investors are closing their check books.
Daniel Ninivagi, chief executive officer of EV startup Lordstown Motors Corp., said, “The market is closed to every company, the good and the bad. You have to set your priorities and do whatever it takes to get to the other side.” ” This month it sold its plant to Taiwanese contract manufacturer Foxconn as cash reserves were depleted.
Rivian said it continuously monitors capital markets and is planning for a tough environment “by optimizing its product roadmap and operating expenses.”
At $16 billion, Rivian has significantly more cash than Lordstown and other smaller EV startups, such as Canoo Inc., which issued a worrying warning this month.
But Rivian burned about $1.2 million per vehicle in the first quarter and is projected to spend a total of $7 billion in cash this year, according to Morgan Stanley analyst Adam Jonas.
“I certainly wouldn’t put Rivian in the same basket as these other companies, but I think they have a higher burden, and they need to show that they can deliver,” said investment bank Drake Starr. said Vitaly Golomb, a partner who leads its EV and mobility practices and is also a Rivian investor and reservation holder.
While Rivian has told investors it had enough cash to open its second US plant for $5 billion in 2025, patience may be waning.
“Since your IPO, the world has changed dramatically, with investors not wanting to fund negative EBITDA growth companies in this environment,” Jonas cut out Rivian chief financial officer Claire McDonough with investors in the company’s most recent earnings call. Said on call.
Chief executives RJ Scaring and McDonough said the company will bring costs under control by simplifying its vehicle lineup and reducing expenses.
value travel
Scaring also said that Rivian, like some automakers, believed semiconductor’s worst shortcoming was behind it. However, other automakers have said that the shortfall could last till 2023.
Rivian hasn’t said when it expects to build the vehicle on profit margin. The price hike, which raises the sticker of currently available pickups from $67,500 to $79,500, is believed to improve economics and offset higher raw material costs. They apply to orders placed after March 1. Rivian also said in an email to customers on March 3 that it would launch a more basic R1T model for $67,500, which is expected to be delivered in 2024.
But industry competitors say it will be challenging to make profits even at that price.
Peter Rawlinson, CEO of luxury EV maker Lucid Group Inc. and a former engineering executive at Tesla Inc., estimates that Rivian spends about $22,000 on its entry-level battery packs, and about $22,000 on drive trains supplied by Robert Bosch GmbH. $20,000 – Requires vehicle sticker price of $95,000 to return mileage.
“The only way they could ever make that business model work was if they lost money on every truck they sold,” he told Reuters in March.
Rivian said he was confident about his “pricing journey.” It also said that it is working on a low-cost in-house motor and new battery design.
For Rivian reservation holder Wales, profit margins matter less. He just wants to get his hands on a truck as soon as possible. While he said he preferred Rivian’s R1T, Wells also had a reservation last year for the F-150 Lightning made by Ford.
“At this point, if Ford comes first, I think I’ll go with them,” Wells said.
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