Q3 2024 Production / Delivery Numbers… Not good

[majorfriend]

Rivian is definitely not too big to fail.

Failure has many possible paths, but if they go bankrupt, the bankruptcy court won't allow it to continue to exist if it cannot make money producing the R1. Everyone Rivian owes money to will have to be paid first. If the restructured company is cash flow negative, there is no path forward for the company to continue to exist after bankruptcy. It will be an asset sale to pay off debt.

On the other hand, if the R1 production line is cash flow positive the court may allow the company to continue. But only if it is making enough to surivie on its own.

A cash flow positive production line is also attractive for an established auto company like Ford or VW. A cash flow negative production line is pretty much a dead end. Who wants that? In that case Rivian dies a permanent death, just like Scout did many years ago.

They've built a lot of brand loyalty and a good amount of proprietary technology that could be attractive to potential buyers beyond just the production line.

If the production line is nearly cash flow positive or a company believes they can put efficiencies in place to make it cash flow positive they'll have a buyer.

Sponsored

 

[mkhuffman]

They have $7.86 billion cash on hand, which at their current burn rate (which should improve as factory retooling is complete and G2 should provide better margins) would last a little over 1.5 years, or right to the R2 launch.

They have additional shares they can sell (not a good idea, would be something in desperation, but it is doable).

They have significant investments from Amazon and VW, two large companies which now have an interest in keeping Rivian going.

They've delivered over 100k vehicles, have 42 service centers and a charging network with 67 locations. Those aren't big numbers by any means, but they are respectable (for comparison Lucid has delivered around 15k vehicles).

Based on your numbers, they don't have enough cash.

Starting up a production line to mass produce the R2 will be very expensive. Your assessment indicates they have enough to start production, but not continue it for months while it ramps up and sales get started. They will be burning a ton of cash while the R2 line gets ramped up.

Can they get cash from other sources, like you said? I think they can. But will they? It is very risky for sure. It isn't a sure thing.

A sure thing would be cash from the R1 production line. That's why it is so critical. And if they can't get the R1 cash flow positive, why does anyone think the R2 will be cash flow positive? That makes no sense at all.

 

[mkhuffman]

They've built a lot of brand loyalty and a good amount of proprietary technology that could be attractive to potential buyers beyond just the production line.

If the production line is nearly cash flow positive or a company believes they can put efficiencies in place to make it cash flow positive they'll have a buyer.

I agree. Which is why I keep harping on the performance of the R1 production line. So far, it is a big cash burner.

 

[majorfriend]

Based on your numbers, they don't have enough cash.

Starting up a production line to mass produce the R2 will be very expensive. Your assessment indicates they have enough to start production, but not continue it for months while it ramps up and sales get started. They will be burning a ton of cash while the R2 line gets ramped up.

Can they get cash from other sources, like you said? I think they can. But will they? It is very risky for sure. It isn't a sure thing.

A sure thing would be cash from the R1 production line. That's why it is so critical. And if they can't get the R1 cash flow positive, why does anyone think the R2 will be cash flow positive? That makes no sense at all.

It's borderline to get to R2 production to be sure, but they could take on additional debt to build that line out, they don't necessarily have to burn cash. Plus, they are building that out now, so I don't think the burn rate will increase.

I also think it is very possible for the R2 line to be cash flow positive while the R1 line isn't (though hopefully with G2 it is). There were a lot of challenges thrown their way while building the R1 line, Covid and the insane inflation that came after it. I'm sure that put a giant wrench into their projections and has heavily contributed to the R1 being cash flow negative to this point. Hopefully, they won't face similar challenges with the R2 and their projections will be more accurate.

If the R2 doesn't do well they'll be in serious trouble, but I think they have a fairly safe path to get to R2, and if they can get R1 cash flow positive they'll be in really good shape.

I totally understand how you could take a more pessimistic view, what I don't understand is the idea that they could be gone in 6 months, which is what I was originally replying to.

 

[mkhuffman]

It's borderline to get to R2 production to be sure, but they could take on additional debt to build that line out, they don't necessarily have to burn cash. Plus, they are building that out now, so I don't think the burn rate will increase.

I also think it is very possible for the R2 line to be cash flow positive while the R1 line isn't (though hopefully with G2 it is). There were a lot of challenges thrown their way while building the R1 line, Covid and the insane inflation that came after it. I'm sure that put a giant wrench into their projections and has heavily contributed to the R1 being cash flow negative to this point. Hopefully, they won't face similar challenges with the R2 and their projections will be more accurate.

If the R2 doesn't do well they'll be in serious trouble, but I think they have a fairly safe path to get to R2, and if they can get R1 cash flow positive they'll be in really good shape.

I totally understand how you could take a more pessimistic view, what I don't understand is the idea that they could be gone in 6 months, which is what I was originally replying to.

I don't have a time-frame in mind. I do think 6 months is shorter than the rope they have will last.

For me it isn't pessimism. Emotionally I want Rivian to survive. But I try not to let emotions cloud my thought process. I try to let the data be the guide. And so far the data is not good. However, Rivian has said they understand what is needed to survive and they have a plan to get there.

It worries me they don't seem as focused on the bottom line as I think they should be. So Q3 and Q4 data are the critical data points that will get me to buy the R1T, or not. I am not going to buy a truck from Rivian if I think there won be a Rivian to service my vehicle in 2-3 years. I don't waste money like that.

 

[Electron]

I don't have a time-frame in mind. I do think 6 months is shorter than the rope they have will last.

For me it isn't pessimism. Emotionally I want Rivian to survive. But I try not to let emotions cloud my thought process. I try to let the data be the guide. And so far the data is not good. However, Rivian has said they understand what is needed to survive and they have a plan to get there.

It worries me they don't seem as focused on the bottom line as I think they should be. So Q3 and Q4 data are the critical data points that will get me to buy the R1T, or not. I am not going to buy a truck from Rivian if I think there won be a Rivian to service my vehicle in 2-3 years. I don't waste money like that.

Nailed it. Well said.

Emotions definitely cloud judgment and often makes people play down the hard facts/numbers.

What happens in Q4 will be a big determining factor for the future of Rivian, in my opinion. We just won't know until we can see the hard numbers for Q4.

If crap hits the fan, a 6 month rope is not unreasonable. If everyone pulls out their investment all at once or at a rapid pace, the writing is more than on the wall at that point.

Also, I don't think Amazon or VW will be too enthusiastic to catch a falling ball of Razer blades (a failing company). However, in terms of assets it could paint a different scenario that's hard to pin point at this moment.

There's a lot of TBD in the air.

 

[Zoidz]

When compared to Rivian, they rocked it. Rocked it so hard that it makes Rivian look like a nat on the wall that just hatched from a banana.

When isolated to just Tesla and within their own projections, they didn't rock it, but when the Juniper launches I think they'll rock it for sure.

The volume that Tesla is able to move as solely an EV car company is insane regardless. So they're rocking it in more ways than not.

But I get your point.

We definitely define "rocking it" differently. Volume comparisons between companies is not rocking it. It's business/financials performance. To me it's about the singular organization and their significant change/improvement, defying adversity, etc. and beating expectations, whether it is cars, cell phones, toilets, or cans of soup. By your measure, compared to Lucid, Rivian rocked it, and Ford (EV Sales up 12%) rocked it while Tesla sucked eggs comparitively.

 

[Electron]

We definitely define "rocking it" differently. Volume comparisons between companies is not rocking it. It's business/financials performance. To me it's about the singular organization and their significant change/improvement, defying adversity, etc. and beating expectations, whether it is cars, cell phones, toilets, or cans of soup. By your measure, compared to Lucid, Rivian rocked it, and Ford (EV Sales up 12%) rocked it while Tesla sucked eggs comparitively.

My definition of rocking it was in the context of who's struggling and who's not right now. So by your definition, it doesn't relate to what I was referring to.

So let me ask. Is Rivian rocking it or are they struggling? How about Tesla?

It's okay for our definitions to differ, but I'm pretty sure the answer is obvious.

 

[Zoidz]

My definition of rocking it was in the context of who's struggling and who's not right now. So by your definition, it doesn't relate to what I was referring to.

So let me ask. Is Rivian rocking it or are they struggling? How about Tesla?

It's okay for our definitions to differ, but I'm pretty sure the answer is obvious.

i think it's pretty clear that I and others in the thread have acknowledged that RIvian is challenged. In my definition Telsa would be rocking it if they had a nice bump in sales, or reported strong prospects for Q4, analysts had strong projections, etc. None of that happened. Telsa is flat, not rocking it, Rivian is challenged.

I also see no industry posts or analysts saying that Tesla is "Rocking it". To the contrary even Elon Musk says they are in a trough, he's not claiming they are "Rocking it".

Tesla’s Q3 deliveries of 462,890 exceeded average analyst projections of 462,000, according to FactSet, but fell well short of forecasts of 470,000 from Barclays and UBS.

Shares of Tesla fell more than 3% to about $250by midday, on pace for its worst day in almost a month.

Shares of the automaker are down about 0.5% year-to-date, far underperforming the S&P 500’s 35% bounce.

Consensus estimates call for 485,000 deliveries during the fourth quarter for Tesla, which would bring its 2024 total to 1.78 million. That’s comfortably below last year’s 1.81 million, which would make this Tesla’s first annual contraction in vehicle deliveries since at least 2015, when FactSet data dates back to for the company. Tesla CEO Elon Musk, the richest man in the world, has characterized the company as riding “between two major growth waves,” pointing to the company’s autonomous driving initiatives as the next driver of growth.

 

[Electron]

i think it's pretty clear that I and others in the thread have acknowledged that RIvian is challenged. In my definition Telsa would be rocking it if they had a nice bump in sales, or reported strong prospects for Q4, analysts had strong projections, etc. None of that happened. Telsa is flat, not rocking it, Rivian is challenged.

I also see no industry posts or analysts saying that Tesla is "Rocking it". To the contrary even Elon Musk says they are in a trough, he's not claiming they are "Rocking it".

Tesla’s Q3 deliveries of 462,890 exceeded average analyst projections of 462,000, according to FactSet, but fell well short of forecasts of 470,000 from Barclays and UBS.

Shares of Tesla fell more than 3% to about $250by midday, on pace for its worst day in almost a month.

Shares of the automaker are down about 0.5% year-to-date, far underperforming the S&P 500’s 35% bounce.

Consensus estimates call for 485,000 deliveries during the fourth quarter for Tesla, which would bring its 2024 total to 1.78 million. That’s comfortably below last year’s 1.81 million, which would make this Tesla’s first annual contraction in vehicle deliveries since at least 2015, when FactSet data dates back to for the company. Tesla CEO Elon Musk, the richest man in the world, has characterized the company as riding “between two major growth waves,” pointing to the company’s autonomous driving initiatives as the next driver of growth.

I think you're taking it too literally. Read the first sentence in my previous reply.
Keyword: Context.

The industry as a whole is struggling, some brands much more than others. As for EV only brands, if you isolate it to Tesla, Rivian, and Lucid (purposely excluding crap brands like VinFail etc.) in this group Tesla is doing pretty alright compared to the rest.

No need to put too much stock into micro picking what it means to Rock it. But since we're already here with micro analysing, which is fine, let's talk about it.

If you want to isolate it further to only Tesla and Rivian, Tesla in comparison is Rocking it lol.

Guess who isn't rocking it? Rivian. To say it's only a "challenge" is putting it lightly.

Tesla only missed the mark by ~7,110, which at the level of units we're talking about here isn't terrible.

What about Rivian recently revising its annual production guidance to be between 47,000 and 49,000 vehicles from the original 57,000?

The whole parts shorage excuse I call B.S. as with many here who agree. This is a demand issue and Rivian conveniently used "that" card to lower its numbers.

That's a 15% reduction if you base it off of the original 57K to 49K. At 47K that's a ~19% reduction. So what gives?

57K - 49K (being generous) is a difference of 8,000

57K - 47K = 10,000

Tesla was just shy of hitting their mark by 7,110, yet still selling 463,000 cars.

Just trying to keep the perspective balanced here, because it's easy to get blind sided and fall into the double standard bubble.

Relax. We're all on the same team here.

 

[Donald Stanfield]

I think you're taking it too literally. Read the first sentenced in my previous reply.
Keyword: Context.

The industry as a whole is struggling, some brands much more than others. As for EV only brands, if you isolate it to Tesla, Rivian, and Lucid (purposely excluding crap brands like VinFail etc.) in this group Tesla is doing pretty alright compared to the rest.

No need to put too much stock into micro picking what it means to Rock it.

If you want to isolate it further to only Tesla and Rivian, Tesla in comparison is Rocking it lol.

Guess who isn't rocking it? Rivian. To say it's only a "challenge" is putting it lightly.

Relax. We're all on the same team here.

I can see what you are saying they all aren't doing great but least worst is still best and that's Tesla right now in your opinion. I disagree, because you aren't taking trajectory into account. Tesla is doing best because they were doing really great, but are now doing worse. Rivian continues to more towards more profit and Tesla is moving away from profitable.

The Tesla designs are pretty stagnant, and as more EVs from legitimate manufacturers enter the marketplace, the contrast is striking. You get good software, but that's it from Tesla, and just like a good car with lousy software sucks, so does a mediocre car with great software. It comes down to who you think will win first. Will the legacy manufacturers figure out how to make decent software or will Tesla figure out how to make cars people will buy in volume?

Right now companies like Rivian are good at both. I like the Ascend interiors, it feels like the 111K dollar truck that it is. The software is also improving and is second only to Tesla.

 

[Electron]

I can see what you are saying they all aren't doing great but least worst is still best and that's Tesla right now in your opinion. I disagree, because you aren't taking trajectory into account. Tesla is doing best because they were doing really great, but are now doing worse. Rivian continues to more towards more profit and Tesla is moving away from profitable.

The Tesla designs are pretty stagnant, and as more EVs from legitimate manufacturers enter the marketplace, the contrast is striking. You get good software, but that's it from Tesla, and just like a good car with lousy software sucks, so does a mediocre car with great software. It comes down to who you think will win first. Will the legacy manufacturers figure out how to make decent software or will Tesla figure out how to make cars people will buy in volume?

Right now companies like Rivian are good at both. I like the Ascend interiors, it feels like the 111K dollar truck that it is. The software is also improving and is second only to Tesla.

My replies were mainly based on quarterly performance (context), between the legit EV players. As for trajectory that's a whole different discussion and I think we'd agree on most of what that entails.

The question is though, will Rivian be profitable by Q4? No one knows that answer, but based on the hard numbers and data that we do have, we can get a pretty good idea of where things could possibly end up.

So to use the Tesla example that you've mentioned, with Telsa going from Great to doing what I would call slightly missing the mark instead of saying Worse, where would that leave Rivian if they miss the mark in Q4? Wouldn't that actually be Worse?

Let me clarify and we can agree to disagree, but I wouldn't call missing the mark by only 7,110 (470,000 - 462,890) as holding the same weight as the survival issues that Rivian is facing with having only 3 months left to prove themselves.

To answer your question about if Tesla can make cars in volume that people will buy? - That's already a reality. ~440,000 deliveries YTD. The Model Y is the best selling car in the World. I don't think this needs any further explanation?

As for Tesla moving away from being profitable, I think that's the furthest from the truth as they are continusouly refining their operating costs, doing far better than Rivian, which so happens to be the very thing that Rivian is strugging with. There's no comparison here.

Design is also subjective, but in my opinion the design of the Model S for example is Timeless. It was way ahead of its time and it still looks furturistic even today.

The Cybertruck is far from being stagnant, design wise. It's quite the opposite, but love it or hate it, it's still producing numbers selling a lot and making a significant dent in the truck category. Results are results. Opinions are opinions.

Sure the S/X pretty much stayed the same with minor refreshes, but in my opinion I think those are examples of a design that didn't need much tweaking as it was really good from the get go. You can say the same for our Rivians could you not?

Plus the S/X are not the primary focus of Tesla right now and they're not the volume sellers. They only exist really for sentimental reasons says Elon himself. YTD, Tesla sold ~23,000 Model X and S, with their lowest moving models, while the actual volume movers with the 3&Y sold ~440,000. Just for some perspective.

I do agree that there are some great EVs (design wise) entering the market from some of the legacy auto makers. The KIA EV9, IONIQ 5, GMC Denali EV Truck, our very own R2 and R3 etc., are among some of the stand outs. Competition is great.

Is Rivian really good at both though? (software and hardaare?) - Let's be honest, hardware wise, excellent. It's solid. Software wise, it's no where near good, yet. It's second best, but it's far from being close to what Tesla has, which is the best SW in the business. Tesla has way more data, much more refined and it just works without all the SW Gen 2 issues we're seeing now with the R1x.

Software is one of Rivian's greatest culprits right now. Let's just be glad that it's software issues and not hardware. It'd be much worse if it was the other way around.

 

[Donald Stanfield]

Let me clarify and we can agree to disagree, but I wouldn't call missing the mark by only 7,110 (470,000 - 462,890) as holding the same weight as the survival issues that Rivian is facing with having only 3 months left to prove themselves.

Where are you getting that Rivian only has 3 months left to prove themselves from? Even if they don't make profitability this quarter that's not make or break for Rivian. There are lots of tricks left in the bag. Rivian has cash on hand to take them to 2026 and the launch of the R2. That's if they do nothing else at their current rate of cash burn. I'd say the odds of them getting financing, securing a grant, merging or being acquired, or getting a few lucrative fleet deals before then are pretty good.


Is Rivian really good at both though? (software and hardaare?) - Let's be honest, hardware wise, excellent. It's solid. Software wise, it's no where near good, yet. It's second best, but it's far from being close to what Tesla has, which is best SW in the business. Tesla has way more data, much more refined and it just works without all the SW Gen 2 issues we're seeing now with the R1x.

I only drove a Tesla a few times but I have to say that their software isn't that far ahead IMO. They don't even have an overhead camera view for backing up. My 2018 Subaru Forester had that FFS. That is an essential feature that I would use way more than fart sounds or romance mode or a computer game on infotainment. That's just one example. I don't care for their buttons for turn signals or yokes or not having a dashboard gauge screen. I think those are all downgrades from any standard car today. I prefer the Rivian software experience because they retain all of those features I find important and that pushes them over the slight advantage in speed and app availability. I only need so many apps on my car's screen when I have a cellphone and a laptop for charging stops. Not to mention the styling and interior quality is miles ahead of Tesla. Another thing that makes up for the software.

 

[Electron]

To clarify, what I meant about there only being 3 months left for Rivian to prove themselves is that at the current cash burn rate, the days are numbered. Being in net profit and following through on meeting expectations is going to be important for Rivian in so many ways. I hope they get there.

Rivian won't go belly up like Fisker did and I don't doubt that there will be a life line available if it came to that, but it just sucks to even think about this being a possibility. You and I both want Rivian to be able to stand on their own feet.

As for the software, we can agree to disagree, but if you get a chance, just go drive a Cybertruck (I have several times) and experience the software and driving dynamics. I do agree about the areas where Tesla lacks, but when talking about purely software, Rivian is far behind.

Going all button-less is annoying, but keep in mind that Rivian practically modeled the R1x after Tesla's design and concept. Imitation is the homage which mediocrity pays to superiority. Tesla is far superior in a lot of the essential areas, but Rivian is catching up at a great pace.

 

[Donald Stanfield]

To clarify, what I meant about there only being 3 months left for Rivian to prove themselves is that at the current cash burn rate, the days are numbered. Being in net profit and following through on meeting expectations is going to be important for Rivian in so many ways. I hope they get there.

Rivian won't go belly up like Fisker did and I don't doubt that there will be a life line available if it came to that, but it just sucks to even think about this being a possibility. You and I both want Rivian to be able to stand on their own feet.

As for the software, we can agree to disagree, but if you get a chance, just go drive a Cybertruck (I have several times) and experience the software and driving dynamics. I do agree about the areas where Tesla lacks, but when talking about purely software, Rivian is far behind.

Going all button-less is annoying, but keep in mind that Rivian practically modeled the R1x after Tesla's design and concept. Imitation is the homage which mediocrity pays to superiority. Tesla is far superior in a lot of the essential areas, but Rivian is catching up at a great pace.

I disagree that they used Tesla's stying as Rivian has a much better style than Teslas do. Tesla looks like a generic melted jelly bean or a weird brutalist sculpture. The reason they had a foothold was despite the design not because of it. That's changing as alternatives enter the market and we are seeing that.

Does the Cybertruck have overhead camera view, a normal steering wheel and a turn signal stalk? If not why would I care about features that I MIGHT like in the CT when the CT doesn't even have the features that I DO like?

Sponsored