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BigSkies
Well-Known Member
Stepping back a bit, Rivian clearly made the Model Y a baseline of comparison. It’s very similar in overall size, range, etc.
Margins would be roughly comparable to the Model Y when made in comparable volumes. Although it would take many years to get to that scale.
Tesla’s gross margins were around 18% last year. Ford and GM were around 10%.
Margins would be roughly comparable to the Model Y when made in comparable volumes. Although it would take many years to get to that scale.
Tesla’s gross margins were around 18% last year. Ford and GM were around 10%.
zapp
Member
The car looks high quality with many little features that probably cost extra. I was expecting it to be more simple and basic overall for 45k. However, if they sell the naked base model car with just a very small margin or even with 0%, they should be OK. The R2's higher trim levels and extras need to create the good margins..
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drivetorun
Well-Known Member
Has anyone seen the % split of Model Y RWD vs. AWD? I'd guess that the RWD has a significantly lower take rate, and that'd probably be the same for R2. Most will probably upgrade for ~$5k to AWD (not sure how many will go up to tri-motor).
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Rob Stark
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Almost no car is profitable with ZERO options.
The base car is just the bait. Usually sold at cost. Or even less.
A very low percentage of the production mix is a base car with ZERO options.
A standard sales mix for R2 with various trims should be quite profitable.
The base car is just the bait. Usually sold at cost. Or even less.
A very low percentage of the production mix is a base car with ZERO options.
A standard sales mix for R2 with various trims should be quite profitable.
White Shadow
Well-Known Member
Of course Tesla makes a profit on their base models. This info is widely available.
manitou202
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Keep in mind that includes Tesla's China factory which likely has the highest margins. They probably have similar margins to GM and Ford at their US plants. So Rivian will be in a similar situation.
Many automakers don't make a profit on the base trim. They rely on the vast majority of buyers purchasing a more premium trim. That will likely be the case for the R2. I bet the average selling price will be $50k-$55k.
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White Shadow
Well-Known Member
Right, but keep in mind that Tesla took a long time to get to the point that they were profitable selling cars.
LoneStar
Well-Known Member
Dominant version will be the Dual Motor AWD.
Probably around $55K
Tri-motor version likely around $65K
That's where the "real money" will be generated.
Probably around $55K
Tri-motor version likely around $65K
That's where the "real money" will be generated.
JerseyGreens
Well-Known Member
I'm thinking 52,500 for the dual motor, AWD, 300mi battery pack.
sphereobject
Well-Known Member
Bottom line is delaying the Georgia plant is a bad strategic move for the future of RIvian as a standalone company. Delaying the Georgia plant is likely just a move to plan an exit in the form of a takeover.
Even if Rivian could pull 20% gross margins on R2 (there is no way they will pull gross margins of 20% on R2) at a $60,000 price point (it is unlikely the average price of the R2 at volume will be $60k) and they sold 100,000 units per year (it is unlikely they will be able to ramp to 100,000 units in the foreseeable future at Normal), they still will not be cash flow positive as an enterprise.
$60,000 x 20% = $12,000 gross profit per R2
$12,000 x 100,000 = $1,200,000,000 ($1.2 Billion)
I don't understand why financial analysts can't do simple math.
Assuming Rivian's costs stay stagnate as they ramp production of the R2 (not possible), even with these numbers they would not even be able to cover one single quarter of losses with a year of R2 gross profit, at full production volume! Because they will burn all remaining cash from now until the end of 2025, and when they introduce R2 it will not meaningfully decelerate operating losses, the future is clear.
If Rivian wants to continue its existence as a standalone company, it should take advantage of today's frothiest market of all time to raise another $5+ billion now, TODAY, and use that capital to quickly ramp the Georgia plant so it can manufacture R2s and R3s at a volume sufficient to support Rivian as a going concern. By not doing so they are throwing in the towel now and planning a strategic exit. Anyone with 45 seconds and a spreadsheet (leaving hopes and dreams outside) would reach the same inevitable conclusion.
The only light at the end of the tunnel by delaying Georgia is it makes Rivian a more attractive pre-bankruptcy takeover target (Mercedes-Benz?).
PS: I own a R1S Quad and hope there is a company there in 4.6 years to honor the 5 year warranty.
Even if Rivian could pull 20% gross margins on R2 (there is no way they will pull gross margins of 20% on R2) at a $60,000 price point (it is unlikely the average price of the R2 at volume will be $60k) and they sold 100,000 units per year (it is unlikely they will be able to ramp to 100,000 units in the foreseeable future at Normal), they still will not be cash flow positive as an enterprise.
$60,000 x 20% = $12,000 gross profit per R2
$12,000 x 100,000 = $1,200,000,000 ($1.2 Billion)
I don't understand why financial analysts can't do simple math.
Assuming Rivian's costs stay stagnate as they ramp production of the R2 (not possible), even with these numbers they would not even be able to cover one single quarter of losses with a year of R2 gross profit, at full production volume! Because they will burn all remaining cash from now until the end of 2025, and when they introduce R2 it will not meaningfully decelerate operating losses, the future is clear.
If Rivian wants to continue its existence as a standalone company, it should take advantage of today's frothiest market of all time to raise another $5+ billion now, TODAY, and use that capital to quickly ramp the Georgia plant so it can manufacture R2s and R3s at a volume sufficient to support Rivian as a going concern. By not doing so they are throwing in the towel now and planning a strategic exit. Anyone with 45 seconds and a spreadsheet (leaving hopes and dreams outside) would reach the same inevitable conclusion.
The only light at the end of the tunnel by delaying Georgia is it makes Rivian a more attractive pre-bankruptcy takeover target (Mercedes-Benz?).
PS: I own a R1S Quad and hope there is a company there in 4.6 years to honor the 5 year warranty.
zapp
Member
I don't think the Georgia delay is bad news - maybe just for my wish get the R3X asap.. 
They start R2 in Normal and scale with the new plant. That is a very good strategy and they are even showing the product roadmap for the new plant with the R3 - R3 will not start production in Normal imho.
Fingers crossed that Rivian can already break even or create a small profit with the production volume of R1 & R2 in Normal. However, the total number of produced units might still be too low to leverage the scaling effects in procurement of larger batches of parts from their suppliers.
One foundational challenge on the sales side they just made some real progress on though:
The new portfolio is much more likely to generate and maintain a robust customer demand.
I assume the R2 pre-order volume is strong and that is important for potentially getting new investor money.
Btw, their current pricing strategy is also very good and it shows that they are optimizing for sales at scale. The sale of demo and 1 year old vehicles is an approach that many european automakers are using to provide for all the steps on the price ladder. They give cheap 10month leasings to their employees (it's also a benefit to the employees) and sell those lightly used vehicles at a lower price point, without causing discount war on the new units.
R1 new 70-100+k
R1 demo 65-90k
R2 new 45-70K(?)
R2 demo..
R3..
+ Some sales from the Delivery Vans - which could sell very well in Europe.
Overall Rivian is doing the right things and if they keep pushing like this, the financial success will come as a result.
They start R2 in Normal and scale with the new plant. That is a very good strategy and they are even showing the product roadmap for the new plant with the R3 - R3 will not start production in Normal imho.
Fingers crossed that Rivian can already break even or create a small profit with the production volume of R1 & R2 in Normal. However, the total number of produced units might still be too low to leverage the scaling effects in procurement of larger batches of parts from their suppliers.
One foundational challenge on the sales side they just made some real progress on though:
The new portfolio is much more likely to generate and maintain a robust customer demand.
I assume the R2 pre-order volume is strong and that is important for potentially getting new investor money.
Btw, their current pricing strategy is also very good and it shows that they are optimizing for sales at scale. The sale of demo and 1 year old vehicles is an approach that many european automakers are using to provide for all the steps on the price ladder. They give cheap 10month leasings to their employees (it's also a benefit to the employees) and sell those lightly used vehicles at a lower price point, without causing discount war on the new units.
R1 new 70-100+k
R1 demo 65-90k
R2 new 45-70K(?)
R2 demo..
R3..
+ Some sales from the Delivery Vans - which could sell very well in Europe.
Overall Rivian is doing the right things and if they keep pushing like this, the financial success will come as a result.
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