carsly
Well-Known Member
- Joined
- Apr 19, 2023
- Threads
- 46
- Messages
- 740
- Reaction score
- 1,022
- Location
- Princeton, NJ
- Vehicles
- LR Defender, Tesla Model S
- Thread starter
- #1
Well, burning $1.5+B in cash a quarter won't work. I've worked with many distressed businesses, including high-growth startups, that begin to run into cash crunches - sometimes they miss estimates of demand at a price point, sometimes it's a lack of attention to detail on the cost side, other times it's trying to invest in anything, everything, all at once (self-driving, subscription services, suspension turning, adding configs, new facilities/factories, staff that aren't really needed for 12-24 months, securing best marginal price on parts which often means larger order volumes and higher working inventory levels). You name it, I've seen it. The one that just about every company struggles with is forecasting working capital needs. If Rivian is sitting on excess finished goods inventory, as they are, that inventory has carrying costs and tends to depreciate the longer it sits on lots. Meanwhile, that's cash that is not available to support other business needs. Some of this is expected, they can/should build up ~15-30 days of inventory as shipping via rail takes time and they want some cushion to keep generating revenue while the factories are down for retooling/refitting. But here we are, and the picture isn't the worst, but it's difficult to support as a prospective vehicle buyer and investor.
Feel free to pick it apart, I don't work at Rivian nor do I know anyone who does. It's just a layman's plan from the outside, but one that will probably work.
That's it. Most organizations, no matter the size, have a hard time pulling on more than 3-5 strings if they have to go "all in". Sure, have departmental goals, etc. And delayer - no more than five layers from RJ to someone on the line or a service tech. Is this hard? Oh yeah, but less management helps the rest happen faster. Pick apart my plan or methods, I'd love to see Rivian succeed. But as a first-time CEO RJ may be an incredible engineer but is struggling with running a business. Claire is helpful, but he needs more. Not sure the recent hires have enough turnaround experience, and make no mistake this is a turnaround - now or by year-end. Best to take the bitter pill now, swallow hard, and dig in.
Feel free to pick it apart, I don't work at Rivian nor do I know anyone who does. It's just a layman's plan from the outside, but one that will probably work.
- Cut deeper/faster: 10%? Should start at 20-25% and monitor daily. 10% is a "we're not serious". Most companies will start at 15% and then add another 10-15% in six months. Every day these decisions is delayed is cash you can never get back. And every dollar saved increases probability of success, even if it takes a little longer to get there.
- Innovate around the current offering: I'll give them credit here, dual-motor coming out last Fall was a great start as are the new Standard and Standard+ packs ...BUT.... the vehicles are effectively identical outside of motors and batteries. Sure, this worked for Tesla but it won't work for everyone coming after, that was a poor assumption. See what's coming to market in the R1 price band and you'll find different interior materials, things like HUD, different trim options, etc. My low-cost hack? Come out with a true "mall crawler+" edition that has five seats (third row extra $5K), 20" all seasons, steel wheels and maybe a tough-wearing fabric interior a la Polestar. Drop the gimmicky camp speaker and maybe even remove the air compressor. I'd also offer new paint flat paint colors, no metallics, to make it clearer to passers-by that this is the mall-crawler edition. Starting at $59,900, available today.
- Build the R2 in tents in Normal in 2025: A la Tesla at Fremont, do NOT spend the capex now on the R2 facility. Basically slow roll the new factory and in the interim launch a R2 pilot production line in a sprung structure in spring 2025. Is that a rush job? Yes. May have to re-use the R1 front motor as the R2 rear motor in a single-motor config, go with a coil suspension and keep the Rivian looks. it's the Bronco Sport of the Rivian lineup. Re-using as many R1 parts as they can will hurt margins BUT it will accelerate time to launch - which is critical. Maybe the first vehicles are $60K models only with all the goodies and they build the cheaper configs once the second (real) plant is running. Putting a sprung structure in Normal, and re-using R1 parts, will make it easier for suppliers and much easier for Rivian's (now smaller) operations and logistics team to manage inflow/outlfow and quality at the single location. BTW, there is another hack here, and I shudder to mention it, but they can buy Ultium sleds from GM as are Honda/Acura and slap an R2 body on time simplifying the engineering dramatically.
- Immediate salary/bonus freeze - probably through the R2 production launch, it's sink or swim. Everyone remaining gets additional option grants setting up a true win-win.
- On the engineering side, find 2-4 things that Rivian can be exceptional at which will cause customers to pay attention. At 50-60k annual units Rivian is moving as many R1's as Tesla sells S/X - that's a monumental achievement, but it's insufficient for survival. They won't beat Tesla at FSD or GM's Supercruise (not yet, anyway) so for now Driver+ remains as adaptive cruise control. Full stop. I'd also take a hard look at the Apple Carplay contract and API's, this alone can get Rivian a demand bump in 2024. So Rivian is the outdoorsy company, check. Take a swat team of engineers, 4-6, and optimize the heck out of dual-motor offroad capabilities. Virtual lockers, crawl control, you name it. Make it as good or better than what anyone else has on the market. And then market the heck out of it. Rebelle Rally was a start, but most people have never heard of it. How about beating "Trail Rated" Jeeps on their own trails? And do it with solar and external battery packs - completely green.
Sponsored
