Article: EV startups burn through cash (except Rivian)

[DuoRivians]

Good to see Rivian getting more positive recognition

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[WorldComposting]

I'd like to believe this, but from https://www.rivianforums.com/forum/threads/georgia-plant-update-what-i-saw-on-my-visit.13443/ all I see of the R2 is dirt. I don't think they're constructed buildings, purchased any of the capital equipment, begun to pay suppliers, hired line workers, etc. So, how is the R2 costing Rivian a billion dollars a quarter at this point?

Even if they haven't broken ground they need to start hiring and lining up building supplies and materials. Most companies won't sign on without getting some cash in advance. So yes I could see a large portion of cash going out the door for hiring before even breaking ground.

If you don't have this lined up it will delay the process even longer.

 

[evguy]

Um, Rivian negative free cash flow of $1.8 billion in the first quarter of 2023 alone and burned through $6.4 billion in 2022. For the upcoming quarter cash flow is expected to be negative $1.19 billion. So, the editorialized title of this thread does not match reality. Rivian is still very much burning through cash, just like others.

It's true they are still burning cash, and that's to be expected for an automotive startup. My takeaway is that they are trending toward a cash burn rate of zero, perhaps even before cash on hand and existing credit facilities run out. That's good reason for optimism.

 

[iansriv]

Yea, quality and capability are quickly becoming Rivian’s hallmarks.

Thanks for sharing. It's amazing that Rivian has been able to produce a relatively great car as a start-up.

 

[Arnie1]

If they can get that GA plant online and start selling the R2 on schedule they should be in pretty good shape.

Ga would take 2 years to be on line and 3-5 Bln if done right. Rivian cant continue with a burn rate of 6.8 Bln for F22.
The better alternative would be to have the Ss contract built by Magna in one of their 3 plants.
Magna has the experience building 3.8 mln vehicles over 32 models for 11 companies and a sterling reputation for quality execution.
Magna is currently scoping a NA site to build BEVs also.
This way Rivian would save the huge capital investment, gain access to offshore markets, access state of the art assembly technology, and potentially build vehicles at a profit versus 150 - 300k per unit losses.
Besides Rivian now has former Magna Steyr President Frank klein as COO and that could help.

 

[NineElectrics]

Engineers cost money, and lots of it.

But Rivian isn’t hiring engineers for R2. If anything, they are laying off. It’s the same engineers who designed the R1 designing the R2. You can’t layoff the engineers designing and updating your products going forward. I definitely agree with that.

 

[NineElectrics]

I am, he is, and he's now on my ignore list.

That’s not my intent. However, I do see a lot of inaccuracy and hopium here among the more naïve. I can’t help but be realistic.

If it’s easier to make up boogeymen than accept a nuanced view—well, maybe it’s best to ignore me if you’re coming here for your “all, good times, all the time” fix. You should instead get your updates from biased sources, like long stock owners and Rivian management, with no critical thinking inserted. That’s not cultish, no, not at all.

 

[COdogman]

Ga would take 2 years to be on line and 3-5 Bln if done right. Rivian cant continue with a burn rate of 6.8 Bln for F22.
The better alternative would be to have the Ss contract built by Magna in one of their 3 plants.
Magna has the experience building 3.8 mln vehicles over 32 models for 11 companies and a sterling reputation for quality execution.
Magna is currently scoping a NA site to build BEVs also.
This way Rivian would save the huge capital investment, gain access to offshore markets, access state of the art assembly technology, and potentially build vehicles at a profit versus 150 - 300k per unit losses.
Besides Rivian now has former Magna Steyr President Frank klein as COO and that could help.

I guess I don't see the logic in making a move like that. By the time Magna would be ready to start producing Rivians the GA plant would be nearing completion.

And what does the IL plant get used for if Magna makes Ss since that is the most in demand vehicle they sell? They don't need an entire plant for Ts.

Plus how much would an arrangement like that cost including shipping the vehicles from Magna? If they can't afford to wait for GA they surely can't afford to hire Magna, build the GA plant AND keep IL running.

I'm not questioning Magna's capability - it just doesn't make sense to me. The time to start that process would have been years ago instead of building a GA plant. Now they would be best served by getting GA up and running ASAP.

 

[Guy]

That’s not my intent. However, I do see a lot of inaccuracy and hopium here among the more naïve. I can’t help but be realistic.

If it’s easier to make up boogeymen than accept a nuanced view—well, maybe it’s best to ignore me if you’re coming here for your “all, good times, all the time” fix. You should instead get your updates from biased sources, like long stock owners and Rivian management, with no critical thinking inserted. That’s not cultish, no, not at all.

Agreed there are some who are panglossian. Reality is normally nuanced and just being universally positive or negative is rarely constructive or accurate. Shame some like Craig have a thin skin and don’t want anything to puncture their reality.

 

[NineElectrics]

I'm not questioning Magna's capability - it just doesn't make sense to me. The time to start that process would have been years ago instead of building a GA plant. Now they would be best served by getting GA up and running ASAP.

Rivian started out frugal, but then the Fed pumped dollars into the economy during COVID and the market went gonzo for EV stocks. So instead Rivian changed course and went for “too big to fail” based on the premise of cheap money, spending their way to growth. Now everyone who invested needs that growth to get the stock price back to where it was, and they can’t go back to being penny wise. Unfortunately everyone wants to make EVs now, and there are no batteries. If I were Rivian I would raise again and secure that battery supply.

 

[usofrob]

But Rivian isn’t hiring engineers for R2. If anything, they are laying off. It’s the same engineers who designed the R1 designing the R2. You can’t layoff the engineers designing and updating your products going forward. I definitely agree with that.

But you could certainly have a smaller staff if you were only maintaining one line of vehicles. Let's say they have 1000 engineers avg salary 100k, overhead of like 2.5x. That's at least $250Million per year. To maintain the R1 is probably only 1/10 of the engineers for development.

 

[McBogey]

Yes, there’s still negative cash flow. And obviously that’s to be looked at closely to know if our favorite EV company will still be around 5 years from now. If RIvian can maximize Normal’s output (I think I read 150K vehicles/year is target? 3x this year?), and continue to impress/lure R1 customers (which have a very high ASP), that should buy enough time/improve cash flow to get GA plant rolling before cash runs out. (And yes, secure that battery supply!)

I’d recommend Rivian keep the focus on the flagship qualities of R1 for the next year. Steal those Range Rover, Audi Q7, etc. and USA pickup customers now. Many of those customers truly don’t need low interest rate loans. (Though whenever rates do come down, that will help too.) Don’t advertise R2 too much and don’t give prospective customers a reason to wait. Keep the focus on R1, it’s still a unique and premium product with a great image it projects.

Then when GA and R2 are online, look to mass market production and profit! Just need a path to get there.

 

[Acoustic71]

We should have a "Do Not Feed Trolls" sign here.

But not for the reason you suggest.

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