$$$$ Georgia Plant Alternative!

[Arnie1]

Ga would take 2 years to be on line and 3-5 Bln if done right.
Rivian can't continue with a F22 burn rate of 6.8 Bln.
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, allow Normal to dial in production, bring new models to market quicker, gain access to offshore markets, access state of the art design and 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.

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[Zoidz]

Magna is a quality, respectable entity in the assembly business. I could be wrong, but I don't think Magnda has any vehicle assembly plants in the US? So they would currently have to be built abroad, negating the EV incentives. Magna has been tire kicking (pun intended) the possibility of a US assembly plant for a few years.

 

[Guy]

Magna is a quality, respectable entity in the assembly business. I could be wrong, but I don't think Magnda has any vehicle assembly plants in the US? So they would currently have to be built abroad, negating the EV incentives. Magna has been tire kicking (pun intended) the possibility of a US assembly plant for a few years.

They are looking to work with Foxconn at the Lordstown factory for the Fisker Pear from news reports. That is still two years out.

 

[Arnie1]

Magna is a quality, respectable entity in the assembly business. I could be wrong, but I don't think Magnda has any vehicle assembly plants in the US? So they would currently have to be built abroad, negating the EV incentives. Magna has been tire kicking (pun intended) the possibility of a US assembly plant for a few years.

I said Magna is currently scoping a NA site to build BEVs also.
Someone doesnt chose a 100K vehicle for the 3750 incentive so thats not a mitigating factor.

 

[Ralph]

Ga would take 2 years to be on line and 3-5 Bln if done right.
Rivian can't continue with a F22 burn rate of 6.8 Bln.
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, allow Normal to dial in production, bring new models to market quicker, gain access to offshore markets, access state of the art design and 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.

Frank Klein came aboard Rivian in June of 2022. Based on his resume, I would assume his job is to apply his experience in operations, production, automation, etc. to scale production.

I personally would assume that since he came aboard, he has given Rivian his best advice. And that his advice has been, in part, based on his direct experience from inside Magna - and what value they might or might not be to Rivian.

Perhaps the management group as a whole has a slightly longer term plan for growth than contract manufacturing implies? Perhaps they as a group have insight we do not?

 

[Autolycus]

Ga would take 2 years to be on line and 3-5 Bln if done right.
Rivian can't continue with a F22 burn rate of 6.8 Bln.
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, allow Normal to dial in production, bring new models to market quicker, gain access to offshore markets, access state of the art design and 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.

First, The Normal plant isn’t big enough for the volume they want for the produce for R2s, which is what will be built in GA. Second, Magna doesnt have a plant in NA, so they’d have to build a factory just like Rivian. Magna isn’t going to just eat the capital costs. They will recoup all of that , and more, from customers. That means Rivian would spend more, making the vehicles more expensive and possibly priced out of the planned market segment. And Rivian’s margins would be lower.

Finally, the tax incentives are critical for the success of the R2 line, which will be well under $100k.

 

[SASSquatch]

First, The Normal plant isn’t big enough for the volume they want for the produce for R2s, which is what will be built in GA. Second, Magna doesnt have a plant in NA, so they’d have to build a factory just like Rivian. Magna isn’t going to just eat the capital costs. They will recoup all of that , and more, from customers. That means Rivian would spend more, making the vehicles more expensive and possibly priced out of the planned market segment. And Rivian’s margins would be lower.

Finally, the tax incentives are critical for the success of the R2 line, which will be well under $100k.

Pay the man!

 

[COdogman]

That $100k S will cost $120k if they have Magna build them.

 

[crashmtb]

Ga would take 2 years to be on line and 3-5 Bln if done right.
Rivian can't continue with a F22 burn rate of 6.8 Bln.
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, allow Normal to dial in production, bring new models to market quicker, gain access to offshore markets, access state of the art design and 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.

if Rivian were to sub out to Magna abroad, costs would go up. If Rivian were to sub out to Magna in NA they’d still have to wait for them to spin up a plant.

and then there is the whole headache of contracting out a basic function. It’s always better to do things in house if possible. It is more flexible, it’s faster, cheaper over all.

 

[Zoidz]

I said Magna is currently scoping a NA site to build BEVs also.
Someone doesnt chose a 100K vehicle for the 3750 incentive so thats not a mitigating factor.

If Magna would build a factory in NA and produce for Rivian, it’s 4 years or more away. By that time, it’s very possible that the R1S would qualify for the full $7500 tax credit. That tax credit would be enough to coerce someone’s decision away from a similarly priced foreign built vehicle (Land Rover, etc) that is not qualified for a tax credit.

 

[SANZC02]

My personal rule of thumb for outsourcing.

If you are doing something part time pay someone to do it, the middleman cost is worth it.

If you need something full time, it is never cheaper to pay someone else that just adds another layer of cost taking away the profit.

 

[R1TS]

If Magna would build a factory in NA and produce for Rivian, it’s 4 years or more away. By that time, it’s very possible that the R1S would qualify for the full $7500 tax credit. That tax credit would be enough to coerce someone’s decision away from a similarly priced foreign built vehicle (Land Rover, etc) that is not qualified for a tax credit.

Very few build configurations, especially for the R1S, even qualifies currently for $3,750 tax credit under the $80K car price limit.

 

[Zoidz]

Very few build configurations, especially for the R1S, even qualifies currently for $3,750 tax credit under the $80K car price limit.

That's why I said "it’s 4 years or more away. By that time, it’s very possible that the R1S would qualify for the full $7500 tax credit."

Rivian is very likely going to work with suppliers for US sourced batteries and design configurations that will qualify for the full credit. They would be stupid not to. It give thems a $7500 consumer price advantage over foreign built vehicles.

 

[Arnie1]

if Rivian were to sub out to Magna abroad, costs would go up. If Rivian were to sub out to Magna in NA they’d still have to wait for them to spin up a plant.

and then there is the whole headache of contracting out a basic function. It’s always better to do things in house if possible. It is more flexible, it’s faster, cheaper over all.

So if Rivian currently loses 300K/vehicle and if Magna charges 300k/vehicle to build it Rivian breaks even at current state.
Id bet Magna can produce a Rivian at a profit for less than 300k/unit..
Magna builds vehicles for top brands Mercedes, BMW, Jaguar and Toyota and somehow these industry leaders have found a way to make a profit contracting.
Contract manufacturing allows these builders maximum flexibility with profitability.
Contract manufacturing is used extensively by fortune 100 food & beverage and pharmaceutical companies Kraft, Pepsico, General Mills, Bauch & Lomb, BMS and they all seem profitable.
As for flexibility Magna factories have FMS , Rivian Normal does not. As for faster Normal builds an R every 2.75 minutes while the industry average is 55 secons, and Toyota does 47 at Georgetown.
The Ga plant has not even broken ground and Rivian projects no vehicles till 2026 thats 3-4 years while Magna gets a plant up in just over 2 years or less if they buy and retool an existing factory so thinking Ga will be a sooner bet is flawed..
Each of the current Magna plants have a capacity of around 200,000 vehicles per year.
Its doubtfull that Rivian Normals current configuration can ever reach that number.

 

[Arnie1]

That's why I said "it’s 4 years or more away. By that time, it’s very possible that the R1S would qualify for the full $7500 tax credit."

Rivian is very likely going to work with suppliers for US sourced batteries and design configurations that will qualify for the full credit. They would be stupid not to. It give thems a $7500 consumer price advantage over foreign built vehicles.

Dont know if you noticed that the "foreign" brands are building battery and BEV assy plants in NA.
BMW -SC - batteries
VW - worlds largest LI battery plant St Thomas, Ont, Canada
Toyota - NC batterise
KY - Assy
Honda - batteries
So there goes the price advantage!

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