How is Rivian going to make up the loss?

[whyasky]

How is it that no one has yet mentioned the obvious : what they don't make in profits they can make up with volume!

Easy peasy. That's business 101.

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[eggpaul]

Haven't heard of anyone else getting guide contacts the last 2 days. There were a bunch right before the price increase, then silence. We'll see if it picks up again.

 

[ImAI]

Clearly they decided they can't do that, or they wouldn't have made the decision in the first place.

if the market will take it, a series of secondary offerings will give them a lifeline--look how many secondaries tsla did.

 

[Rico]

The inside “Star Chamber” at Rivian evidently has become arrogant. I feel betrayed, I may not return.

 

[yizzung]

Tesla lost money for the first 18 years of existence. They seem to have done ok.

 

[Tim-in-CA]

We’re being de-contented to one cup holder

Actually I heard that the extra cup holder can be unlocked via subscription service! It’s all about that sweet, sweet reoccurring revenue!

 

[Speedrye]

I haven't thought this fully through, so I could be off base, but-
What if Rivian kept the old pricing for the pre-3/1 crowd, but offered additional discounts for going to dual motors or the standard battery?

If they're saying each of those is a $6k upgrade now, then offering those "downgrades" to pre-3/1 folks for, say, a $3k reduction in their price for each, should net more profit, right? Of course, that assumes those items weren't marked up a LOT for profit.

I've seen a number of people in the last three days mentioning already being at the top of what they wanted to spend, so offering a way to decrease their costs further could be viable way to benefit Rivian and many customers that didn't need 800+hp or max range.

 

[sevengroove]

I haven't thought this fully through, so I could be off base, but-
What if Rivian kept the old pricing for the pre-3/1 crowd, but offered additional discounts for going to dual motors or the standard battery?

If they're saying each of those is a $6k upgrade now, then offering those "downgrades" to pre-3/1 folks for, say, a $3k reduction in their price for each, should net more profit, right? Of course, that assumes those items weren't marked up a LOT for profit.

I've seen a number of people in the last three days mentioning already being at the top of what they wanted to spend, so offering a way to decrease their costs further could be viable way to benefit Rivian and many customers that didn't need 800+hp or max range.

That's actually not a bad idea - but I think the biggest dealbreaker for folks is going to be the delivery timeframe of 2024 at the earliest. 2023 delivery I could work with, but 2024 is too far out for me personally. And I've been waiting only since mid 2020, there are folks on here who have been waiting far longer.

Edit: not to mention, I could take order of my LE R1S this year (hopefully), use it for two years, and trade it in for a dual motor at little to no loss if I wanted to.

It could be a good strategy to get more recent orders shifted over though.

 

[Speedrye]

That's actually not a bad idea - but I think the biggest dealbreaker for folks is going to be the delivery timeframe of 2024 at the earliest. 2023 delivery I could work with, but 2024 is too far out for me personally. And I've been waiting only since mid 2020, there are folks on here who have been waiting far longer.

Edit: not to mention, I could take order of my LE R1S this year (hopefully), use it for two years, and trade it in for a dual motor at little to no loss if I wanted to.

It could be a good strategy to get more recent orders shifted over though.

It'd definitely be a problem for those with orders due soon, but for those in 2023, I'll bet it'd be possible.

 

[Sdvictor]

I might have mentioned elsewhere, I used to be a pricing and profitability guy. So here's my speculation.

My guess is that their OPEX is high right now, and they wanted to be margin positive from the outset with a positive contribution margin on their cars.

I'm assuming that the vehicle price is still more expensive than the raw BOM and transformation (assembly) of making the vehicle itself. Maybe it's around 50-55k to build the vehicle? Which would be on the expensive side, considering that Tesla averages 36k/vehicle.

It won't cover the cost of running the business in the near term, salaries, etc. but they're hoping the goodwill will more than make up for the few hundred million they will have to eat. I'm guessing the trust cost will land between $200m to $300m. It might mean that they will have to flatten their ramp a bit in the short term (slow down hiring, development, etc) for the next year-ish.

Not all of the $20k x 70k cars is added cost. I'm guessing maybe approx $9k/car of it was to try to achieve an overall 10% net margin. Long story short, they'll be fine with all their cash on hand.

 

[garthkoyle]

They will make it up with customer loyalty and repeat customers. After they jacked up the price and broke our trust, I wouldn't have bought a Rivian product in the foreseeable future. Now, I plan to purchase, and will likely re-purchase in 5 years, etc. It's easier and more valuable to keep a customer than to acquire a new customer.

Plus, if I spend money with Rivian, then I'm not spending it with a competitor.

 

[Tim-in-CA]

How is it that no one has yet mentioned the obvious : what they don't make in profits they can make up with volume!

Easy peasy. That's business 101.

True, this has been proven to be a successful business model .... (the ultimate plan is in the end of the 2nd video)

 

[SANZC02]

Since we are just throwing crap on a wall here is mine.

Charge people an additional fee for a factory pickup, they would save on shipping cost and get the vehicles to the customers sooner putting money in the bank sooner.

Two optins

Option 1 $500 with a factory tour.
Option 2 $1500 with factory tour and instructional drive on the test track.

Add that to the 1075 destination charge they have listed but is most likely not covering the actual cost you could generate revenue. If 40k of the preorders accepted one of these 2 options it would generate 63-83 million dollars With very low overhead.

I’m sure many of the preorder holders would do this at the drop of a hat.

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