For electric vehicle maker Rivian, delivery headache hits as market closes coffers

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May 23 (Reuters) – When Jeff Wells made a reservation for a Rivian R1T pickup in early 2019, he was one of the first in line for a truck from the Amazon.com Inc-backed electric vehicle startup (AMZN.O) which at the time promised to tap into a niche not served by other automakers.

But Wells, a Southern California accountant, has grown increasingly frustrated as he watches other people who placed their orders years after him receive trucks while he continues to wait.

“It’s just boring and it feels like there’s no order to the way they do things,” he said of Rivian.

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Wells is one of dozens of reservation holders who in recent weeks have complained about unreliable delivery times and delays in online groups and forums.

The complaints piled up after Rivian Automotive Inc (RIVN.O) said in late April that it was changing the production sequence of vehicles, prioritizing those with specific interior and exterior color and wheel options.

“Building in a few build combinations reduces complexity with our suppliers and in the factory and allows us to build more vehicles, Rivian told customers in an email.

This meant that many early reservation holders who stuck to their original color preferences had their orders delayed.

Rivian, in a statement to Reuters, said delivery dates aren’t just based on when a pre-order is placed and that it was exploring new ways for customers to speed up deliveries.

Rivian’s delivery headaches haven’t garnered the same attention as the California-based company’s scaled-down production plans or its haphazard communication of vehicle price increases, which it first announced at all levels, but which was later dropped for existing reservation holders following a backlash. Read more

But delivery problems could prove just as damaging.

As all automakers grapple with global supply chain issues, including a shortage of semiconductors and rising raw material costs, startups like Rivian have less leeway to get it right. . Major investors including Ford Motor Co (FN) and Tiger Global Management sold Rivian shares after the post-IPO lock-up period expired. Read more

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Rivian stock performance chart: https://tmsnrt.rs/3yIJVqA

Rivian supporters remained largely loyal despite the company’s chaotic price changes. Pre-orders rose to 90,000 vehicles even after the price increases, 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 (FN) F-150 Lightning.

On May 11, Rivian said it was working on revamping its ordering system to separate reservations from the setup process, in an apparent attempt to address customer criticism of supply shortages in its ordering system.

Rivian in the statement said the change allowed for price and timeframe transparency.

“THE WORLD HAS CHANGED”

Rivian’s struggles to overhaul its ordering system also reflect broader industry challenges. Inflation and supply chain issues have shredded financial forecasts and increased pressure on electric vehicle entrants to cut costs at a time when investors are closing their checkbooks.

“The markets have closed to all businesses, good and bad. You have to pull back and set your priorities, and do whatever it takes to get to the other side,” said Daniel Ninivaggi, chief executive of the EV startup Lordstown Motors Corp (RIDE.O), which this month sold its factory to Taiwanese subcontractor Foxconn (2317.TW) as cash reserves plummeted. Read more

Rivian said it is constantly monitoring capital markets and planning for an increasingly challenging environment by “optimizing its product roadmap and operating expenses.”

At $16 billion, Rivian has significantly more cash than Lordstown and other small electric vehicle startups, such as Canoo Inc (GOEV.O), which issued a going concern warning this month. Read more

But Rivian burned about $1.2 million per vehicle delivered in the first quarter and is expected 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 league as these other companies, but I think they have a heavy burden and need to show they can deliver,” said Vitaly Golomb, partner at the bank. investment Drake Star, who runs his EV and mobility practice and is also a Rivian investor and reservations holder.

As Rivian told investors it had enough cash to open its second US plant for $5 billion in 2025, patience could run out.

“Since your IPO, the world has changed dramatically, investors just don’t want to fund negative EBITDA growth companies in this environment,” Jonas said on the company’s latest earnings call with investors. investors, cutting Rivian’s chief financial officer, Claire McDonough.

Managing Director RJ Scaringe and McDonough said the company would control costs by simplifying its vehicle lineup and minimizing expenses.

TARIFF COURSE

Scaringe also said that Rivian, like some automakers, believes the worst of the semiconductor shortage is behind it. However, other automakers have said the shortage could last until 2023. read more

Rivian did not say when it plans to manufacture vehicles at a profit margin. The price increases, which raise its base pickup’s sticker from $67,500 to $79,500, are meant to improve economy and offset higher raw material costs. They apply to orders placed after March 1st.

But industry rivals say making a profit even at that price will be difficult.

Peter Rawlinson, CEO of luxury electric vehicle maker Lucid Group Inc (LCID.O) and former head of engineering at Tesla Inc (TSLA.O), estimated that Rivian spends around $22,000 on its entry-level battery range and about $20,000 for the running gear provided. by Robert Bosch GmbH (ROBG.UL) – requiring a vehicle sticker price of $95,000 to generate a profit.

“The only way for them to make this business model work is if they lose money on every truck they sell,” he told Reuters in March.

Rivian said he was confident about his “fare path”. He also said he was working on a lower cost internal motor and new battery designs.

For the Rivian Wells reservation holder, profit margins matter less. He just wants to get his hands on a truck ASAP. Although he said he preferred Rivian’s R1T, Wells also reserved Ford’s F-150 Lightning last year.

“At this point, if Ford goes first, I think I’m going to follow them,” Wells said.

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Reporting by Tina Bellon in Austin, Texas Additional reporting by Joseph White in Detroit Editing by Ben Klayman and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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