My unsolicited five step plan for saving Rivian

[Mr_T]

my 2 cents to save money, which it may or may not be worth: service center communication from service tech to us as owners or via a service manager to owners. when i take my Toyota in for service the service advisor or tech depending on where i take it, calls me and goes over EVERYTHING they are doing, gets more color or details of the complaint from me or if something doesn't need work, they let me know. For example, I have asked them to take a look at my rear driver side seat 3 times and the first time they just replaced it - which it didn't need replacing, and now the replacement seat has issues and damage that the first seat didn't (gouge in plastic and loose pleather/ripples). i just asked can they look at the trim and advise if it's supposed to look like it does (it was sticking our quite a bit, but it looks like this is the same with all R1S's and is part of the design or a design flaw). this is just one example, the money they spend on tech labor and putting in a new seat that was NOT needed. This could have been prevented if when i dropped the car off they went through the check list with me - i asked if they needed to look at my request, and they said no we already have your work order. if this happened to me, i would wager this is happening to at least another 50%+ of owners where things are being replaced when they don't need to or could just use a tweak. Don't get me wrong - i have LOVED the customer service experience so far, i like not needing to fight for something to be looked at or fixed, they just get it done. But there are some things that i fear are costing the company a lot of money unnecessarily.

Maybe my experience isn't the norm - anyone else go through the same type of thing?

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[SDH]

Well, burning $1.5+B in cash a quarter won't work. I've worked with many distressed businesses, including high-growth startups, that begin to run into cash crunches - sometimes they miss estimates of demand at a price point, sometimes it's a lack of attention to detail on the cost side, other times it's trying to invest in anything, everything, all at once (self-driving, subscription services, suspension turning, adding configs, new facilities/factories, staff that aren't really needed for 12-24 months, securing best marginal price on parts which often means larger order volumes and higher working inventory levels). You name it, I've seen it. The one that just about every company struggles with is forecasting working capital needs. If Rivian is sitting on excess finished goods inventory, as they are, that inventory has carrying costs and tends to depreciate the longer it sits on lots. Meanwhile, that's cash that is not available to support other business needs. Some of this is expected, they can/should build up ~15-30 days of inventory as shipping via rail takes time and they want some cushion to keep generating revenue while the factories are down for retooling/refitting. But here we are, and the picture isn't the worst, but it's difficult to support as a prospective vehicle buyer and investor.

Feel free to pick it apart, I don't work at Rivian nor do I know anyone who does. It's just a layman's plan from the outside, but one that will probably work.

1. Cut deeper/faster: 10%? Should start at 20-25% and monitor daily. 10% is a "we're not serious". Most companies will start at 15% and then add another 10-15% in six months. Every day these decisions is delayed is cash you can never get back. And every dollar saved increases probability of success, even if it takes a little longer to get there.
2. Innovate around the current offering: I'll give them credit here, dual-motor coming out last Fall was a great start as are the new Standard and Standard+ packs ...BUT.... the vehicles are effectively identical outside of motors and batteries. Sure, this worked for Tesla but it won't work for everyone coming after, that was a poor assumption. See what's coming to market in the R1 price band and you'll find different interior materials, things like HUD, different trim options, etc. My low-cost hack? Come out with a true "mall crawler+" edition that has five seats (third row extra $5K), 20" all seasons, steel wheels and maybe a tough-wearing fabric interior a la Polestar. Drop the gimmicky camp speaker and maybe even remove the air compressor. I'd also offer new paint flat paint colors, no metallics, to make it clearer to passers-by that this is the mall-crawler edition. Starting at $59,900, available today.
3. Build the R2 in tents in Normal in 2025: A la Tesla at Fremont, do NOT spend the capex now on the R2 facility. Basically slow roll the new factory and in the interim launch a R2 pilot production line in a sprung structure in spring 2025. Is that a rush job? Yes. May have to re-use the R1 front motor as the R2 rear motor in a single-motor config, go with a coil suspension and keep the Rivian looks. it's the Bronco Sport of the Rivian lineup. Re-using as many R1 parts as they can will hurt margins BUT it will accelerate time to launch - which is critical. Maybe the first vehicles are $60K models only with all the goodies and they build the cheaper configs once the second (real) plant is running. Putting a sprung structure in Normal, and re-using R1 parts, will make it easier for suppliers and much easier for Rivian's (now smaller) operations and logistics team to manage inflow/outlfow and quality at the single location. BTW, there is another hack here, and I shudder to mention it, but they can buy Ultium sleds from GM as are Honda/Acura and slap an R2 body on time simplifying the engineering dramatically.
4. Immediate salary/bonus freeze - probably through the R2 production launch, it's sink or swim. Everyone remaining gets additional option grants setting up a true win-win.
5. On the engineering side, find 2-4 things that Rivian can be exceptional at which will cause customers to pay attention. At 50-60k annual units Rivian is moving as many R1's as Tesla sells S/X - that's a monumental achievement, but it's insufficient for survival. They won't beat Tesla at FSD or GM's Supercruise (not yet, anyway) so for now Driver+ remains as adaptive cruise control. Full stop. I'd also take a hard look at the Apple Carplay contract and API's, this alone can get Rivian a demand bump in 2024. So Rivian is the outdoorsy company, check. Take a swat team of engineers, 4-6, and optimize the heck out of dual-motor offroad capabilities. Virtual lockers, crawl control, you name it. Make it as good or better than what anyone else has on the market. And then market the heck out of it. Rebelle Rally was a start, but most people have never heard of it. How about beating "Trail Rated" Jeeps on their own trails? And do it with solar and external battery packs - completely green.

That's it. Most organizations, no matter the size, have a hard time pulling on more than 3-5 strings if they have to go "all in". Sure, have departmental goals, etc. And delayer - no more than five layers from RJ to someone on the line or a service tech. Is this hard? Oh yeah, but less management helps the rest happen faster. Pick apart my plan or methods, I'd love to see Rivian succeed. But as a first-time CEO RJ may be an incredible engineer but is struggling with running a business. Claire is helpful, but he needs more. Not sure the recent hires have enough turnaround experience, and make no mistake this is a turnaround - now or by year-end. Best to take the bitter pill now, swallow hard, and dig in.

Send this to RJ and Claire

 

[Dark-Fx]

my 2 cents to save money, which it may or may not be worth: service center communication from service tech to us as owners or via a service manager to owners. when i take my Toyota in for service the service advisor or tech depending on where i take it, calls me and goes over EVERYTHING they are doing, gets more color or details of the complaint from me or if something doesn't need work, they let me know. For example, I have asked them to take a look at my rear driver side seat 3 times and the first time they just replaced it - which it didn't need replacing, and now the replacement seat has issues and damage that the first seat didn't (gouge in plastic and loose pleather/ripples). i just asked can they look at the trim and advise if it's supposed to look like it does (it was sticking our quite a bit, but it looks like this is the same with all R1S's and is part of the design or a design flaw). this is just one example, the money they spend on tech labor and putting in a new seat that was NOT needed. This could have been prevented if when i dropped the car off they went through the check list with me - i asked if they needed to look at my request, and they said no we already have your work order. if this happened to me, i would wager this is happening to at least another 50%+ of owners where things are being replaced when they don't need to or could just use a tweak. Don't get me wrong - i have LOVED the customer service experience so far, i like not needing to fight for something to be looked at or fixed, they just get it done. But there are some things that i fear are costing the company a lot of money unnecessarily.

Maybe my experience isn't the norm - anyone else go through the same type of thing?

I've had to fight with Rivian over a repair, but the circumstances around it were kind of out of their control. That problem was the one exception to my service experience. Most likely that particular issue is a design problem since I've since had it exhibited on my R1S and the R1T loaner they gave me.​

 

[COdogman]

I have a 1 step plan: Find and capture the "real" Gary and sell him to one of the creepy billionaires out there. That should be good for 2 billion right there.

 

[TexasBob]

Simpler recipe: pull a Volvo/Jaguar-Land Rover/Lotus/Aston-Martin/Bentley/Rolls...

Rivian can sell a majority interest to BYD (or CATL or SAIC or ....). Their COGS will immediately plummet, their technology access will jump, their cash problem goes away, and they can give one of those companies access to the US market and a strong brand. RJ can stay on as "CEO" just as Thomas Ingenlath is CEO of Polestar and Jim Rowan is CEO of Volvo.

The Auto industry is about to start consolidating again. You are either an acquirer, a target, or road kill. Rivian is not going to be an acquirer, so if it does not want o be road kill it needs to start looking for a buyer. RJ has built something valuable but it is not going to be able to get big enough fast enough to survive on its own.

 

[SDH]

If they have a decent stock of inventory, send them to high traffic service centers to use as loaners rather than writing blank checks to Enterprise rentals. That should save a some pennies.

 

[SDH]

The Auto industry is about to start consolidating again. You are either an acquirer, a target, or road kill. Rivian is not going to be an acquirer, so if it does not want o be road kill it needs to start looking for a buyer. RJ has built something valuable but it is not going to be able to get big enough fast enough to survive on its own.

100%. A lot of car companies struggling at the moment and no better time to consolidate. Bankers should be licking their lips.

RJ, I'm afraid this is the price your gonna have to pay.

 

[Dark-Fx]

That should save a some pennies.

Speaking of saving pennies, Rivian should switch to a cheaper windshield washing fluid supplier.

 

[TexasBob]

100%. A lot of car companies struggling at the moment and no better time to consolidate. Bankers should be licking their lips.

RJ, I'm afraid this is the price your gonna have to pay.

Rivian would also be a good fit with BMW. Price needs to drop another 50% unfortunately. I think Chinese willing to pay more. One thing for sure, first one out gets best acquisition premium.

 

[moosehead]

Feels like a debate between start-up growth funding with heavy capital expenditure needs vs a turnaround.

If they are not able to thread the needle on start up then turnaround will occur despite best efforts.

I would imagine R1 refresh is a combination of both value engineering (Munro) and incremental improvements.

The race continues between success and survival. Rooting for Rivian to win.

 

[ThatOneGuy]

All of this talk of acquisition and the need to seek out a foreign buyer is laughable. Rivian isn't anywhere close to this scenario and the sudden influx of this repeated assertion today is suspect. Pay little heed, folks..

 

[Supratachophobia]

Also would help to give preorder pricing people a firm deadline to order before that pricing goes away. Won't be popular (and I'm one of those people) but it would clear those cheaper vehicles off the books once and for all.

Also one of those people. Also ok with this idea.

 

[emoore]

Simpler recipe: pull a Volvo/Jaguar-Land Rover/Lotus/Aston-Martin/Bentley/Rolls...

Rivian can sell a majority interest to BYD (or CATL or SAIC or ....). Their COGS will immediately plummet, their technology access will jump, their cash problem goes away, and they can give one of those companies access to the US market and a strong brand. RJ can stay on as "CEO" just as Thomas Ingenlath is CEO of Polestar and Jim Rowan is CEO of Volvo.

The Auto industry is about to start consolidating again. You are either an acquirer, a target, or road kill. Rivian is not going to be an acquirer, so if it does not want o be road kill it needs to start looking for a buyer. RJ has built something valuable but it is not going to be able to get big enough fast enough to survive on its own.

I wonder how many would cancel orders or sell if that happened. I know I would be selling if Rivian sold to BYD.

 

[LetsgoRIVN]

RJ should do what Zuckerberg did with META was at $80, he came out and said it’s time to be efficient and get lean, he fired all the people that come to office to do selfies and marketing, he froze all unnecessary projects and demanded 200% from his employees. If the culture at Rivian is let’s go work and have fun I guess that should change and he should stop any unnecessary projects that won’t add any meaningful value to the car.

 

[Mark_AZR1T]

Why haven’t they started charging us for the LTE connection? As an owner I don’t want it but as a shareholder I’m wondering what the hold up is?

Timing. My general thought on this is that it comes across as 'petty', when they are taking on large amounts of water, fixing a leaky faucet isn't that helpful in perception at the moment....

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