Reservations placed AFTER March 2022

[ImAI]

read the f...g posts before asking stupid question

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[jebinc]

So heres the thing - Rivian productized the Large pack first, making everything else they put forward as ambitions to produce exponentially more expensive. SO - we are seeing them produce the options and colors in batches that are *easiest and more profitable to produce* right now, and frankly will be into the near future. A lot of this mirrors the issues Tesla had during the production ramps of every single car they have ever produced. There is also an awful lot of similarity in the actual products. As time goes on, I find it humorous and expected that Rivian adds in features that Tesla already has and eventually catch up and gain parity. They are even trying to duplicate the Tesla Supercharger network as 'adventure network' or whatever its called - totally a copy.

Anyway - I think Rivian will figure this out, but its a question of whether or not they figure it out before they run out of cash. Its a great and unique product, clearly, but the process needs a lot of work. I would not be surprised if they end up acquired or in tight manufacturing partnership with someone to get past this. Great product, but manufacturing is Mt Everest - not something everyone can do.

Cheers
J

Couldn’t agree more. As an aside, it should be noted that many ex-Tesla employees work for Rivian.

 

[VSG]

SO - we are seeing them produce the options and colors in batches that are *easiest and more profitable to produce* right now

That's not how I interpret it. Evidence is that the batching and out-of-order delivery is based on supply issues, not profitability calculations. They have to ship the loss-leaders at some point (pre-March 1 orders), so better to ship them now when they have plenty of cash (not going to burn through $15B any time soon) than to put it off and depress their future performance. The market is currently focused on them hitting their production numbers, and they are on track to do so this year. Rivian *expects* and *is expected* to lose money during the ramp-up - that's part of the business plan and the forward-looking statements. But by the end of 2023 that expectation is going to start to change because they've promised to finish off LE deliveries for example and because they've forecasted they will be able to run their line at a rate of 150k/year by the end of 2023 (even if supply issues don't allow them to actually produce at that rate). If they reach that but haven't significantly reduced the burn rate then there might be problems. But again, no one expects them to reach profitability for several years. They're already running at a rate of 30k/year right now (Q3 numbers x four), and when the 2nd and 3rd shifts are fully running that translates to 90k for next year, even if there are no improvements in the manufacturing process. A rate of 150k/year by the end of the year should be quite do-able. This is all subject to supply constraints, of course.

I think the biggest factor in their success next year will be the delivery vans - if they can meet their numbers on those and we see them on the street every day then Rivian will be doing great even if the R1 production doesn't ramp as fast as they predict.

I don't see any prospect that they're bought out in the next few years, because they have so much cash. They're not in any financial distress at all.

I also don't think the RAN is an attempt to copy Tesla's supercharger network. That is a dead-end model - every manufacturer simply cannot have their own proprietary network. And they don't. The future is many independent networks running off a common standard (including plug) competing against each other on price and convenience and location. It is only through these market forces that the public charger infrastructure will grow fast enough. Rivian's business model for the RAN is to be able to manufacture their own chargers, which is absolutely necessary for their fleet business but also a great way to get a piece of the public charging network. Emphasizing "adventure" locations is part marketing, part making a play for an under-served sector of the market. Partnering with parks and getting Federal grant money to deploy chargers not only lets them do this economically, but also earns them tax credits. Rivian isn't throwing tens of millions of dollars at television advertisements like Ford etc., but is instead building a brand in part by spending the dollars on infrastructure. Regardless, that money is going to be spent, they've just chosen a different way to spend it which will bring them indirect revenue now and direct revenue when they have enough L3 chargers to start charging for them.

Tesla's network was more a chicken-and-egg proposition - they weren't going to sell a lot of vehicles until the infrastructure existed to support those vehicles, and they weren't going to lose their competitive advantage of being the first by letting everyone else use their infrastructure. At some point Tesla will open up their network and become a major player in the public infrastructure because they have a widespread and reliable network, and they will have to do this because they will have an ever-decreasing percentage of the EV market and will want to make money off of the 100 other models of EVs that that will be available over the next few years.

 

[JaMa]

That's not how I interpret it. Evidence is that the batching and out-of-order delivery is based on supply issues, not profitability calculations. They have to ship the loss-leaders at some point (pre-March 1 orders), so better to ship them now when they have plenty of cash (not going to burn through $15B any time soon) than to put it off and depress their future performance. The market is currently focused on them hitting their production numbers, and they are on track to do so this year. Rivian *expects* and *is expected* to lose money during the ramp-up - that's part of the business plan and the forward-looking statements. But by the end of 2023 that expectation is going to start to change because they've promised to finish off LE deliveries for example and because they've forecasted they will be able to run their line at a rate of 150k/year by the end of 2023 (even if supply issues don't allow them to actually produce at that rate). If they reach that but haven't significantly reduced the burn rate then there might be problems. But again, no one expects them to reach profitability for several years. They're already running at a rate of 30k/year right now (Q3 numbers x four), and when the 2nd and 3rd shifts are fully running that translates to 90k for next year, even if there are no improvements in the manufacturing process. A rate of 150k/year by the end of the year should be quite do-able. This is all subject to supply constraints, of course.

I think the biggest factor in their success next year will be the delivery vans - if they can meet their numbers on those and we see them on the street every day then Rivian will be doing great even if the R1 production doesn't ramp as fast as they predict.

I don't see any prospect that they're bought out in the next few years, because they have so much cash. They're not in any financial distress at all.

I also don't think the RAN is an attempt to copy Tesla's supercharger network. That is a dead-end model - every manufacturer simply cannot have their own proprietary network. And they don't. The future is many independent networks running off a common standard (including plug) competing against each other on price and convenience and location. It is only through these market forces that the public charger infrastructure will grow fast enough. Rivian's business model for the RAN is to be able to manufacture their own chargers, which is absolutely necessary for their fleet business but also a great way to get a piece of the public charging network. Emphasizing "adventure" locations is part marketing, part making a play for an under-served sector of the market. Partnering with parks and getting Federal grant money to deploy chargers not only lets them do this economically, but also earns them tax credits. Rivian isn't throwing tens of millions of dollars at television advertisements like Ford etc., but is instead building a brand in part by spending the dollars on infrastructure. Regardless, that money is going to be spent, they've just chosen a different way to spend it which will bring them indirect revenue now and direct revenue when they have enough L3 chargers to start charging for them.

Tesla's network was more a chicken-and-egg proposition - they weren't going to sell a lot of vehicles until the infrastructure existed to support those vehicles, and they weren't going to lose their competitive advantage of being the first by letting everyone else use their infrastructure. At some point Tesla will open up their network and become a major player in the public infrastructure because they have a widespread and reliable network, and they will have to do this because they will have an ever-decreasing percentage of the EV market and will want to make money off of the 100 other models of EVs that that will be available over the next few years.

You've got some good points here. I guess it's just a matter of "we shall see" which direction it actually goes. I personally hope Rivian gets its "poop in a group" soon so I can drive their product and not some other half-a$$ imitation from one of the big three.

I have to tell you - please don't think I am a Tesla fanboy. I'm not. I think it's a sparse, badly built golf kart on wheels. I have one right now. My daughter's Ford Maverick has better build quality, and it's 1/3 the price. But, they are definitely the best in the industry at a couple of things:

- Their software wipes the floor with everyone else. I see Rivian trying hard to emulate it. This is not a bad thing, as Elon Musk has said "patents are for the weak" a number of times. Copy away, Rivian. If their software ends up being half as good as Tesla's it will be 500% better than the next 5 competitors trying to emulate them.

- The Supercharger network really is the game changer. Ive used EA, Tesla, Chargepoint, and a couple in the UK and the SC network really sets the standard. The connector is a moot point - they can retrofit them as easily as they did overseas and open them to the world (they are planning to do this in the next 12-24 months in the US) and then these other "ghetto" charging networks will be struggling to keep up. The Rivian network, in my eyes, is going to be a blip on the radar.

Yes, I get your point about parks and marketing etc. But, it seems like if you're buying an electric vehicle you at least care *a little bit* about the environment. So, encouraging your customer base to go drive up into the mountains and leave their mark on nature is, IMHO, not the most responsible tactic. Sorry for the rant - I lived in Colorado for many years and I watched the parks and open spaces there turn from pristine, responsibly maintained spaces to trashed campgrounds full of beer cans and marijuana cigarette butts because of this kind of thing. It has become glamorous to go "off road" but apparently not glamorous to clean up your mess and put mother nature back the way you found it. This is not just a Rivian problem, but the messaging is there and it bugs me a little.

Anyhow, Just my opinions, and thanks for yours!

Cheers
J

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