Rivian Pausing Georgia Plant

[Twitter Fingers]

Hope Rivian did not lose any of the GA taxes breaks with this move.

Pretty certain the contract they signed with Georgia gives them 10 years to complete their promised $5 billion investment.

Sponsored

 

[BigSkies]

It's believable, but they have to demonstrate they can make the R1 cash flow positive to convince me and most investors that they can do it with the R2. So far, every R1 they produce causes them to burn even more cash.

The "refresh" of the R1 that is supposed to happen this Spring has to focus on making the R1 cash flow positive, by reducing material cost and improving manufacturing efficiency. They have said they can do it. They better, and they better be cash flow positive on each R2, or it won't matter how cool it is. The company will go bankrupt.

Agreed. They need to show that they can generate gross profits. They need a lot of cost savings. I believe they have a path to get there based on their public statements, but only time will tell.

Just to clarify, there's a massive difference between negative gross margins and negative contribution margins. Their gap in gross margins should not imply that every vehicle sold contributes to a greater loss.

On the contrary, every incremental vehicle sold should be narrowing the gap between negative gross margins and positive margins.

 

[Zoidz]

Even in the last earnings call a few weeks ago, RJ didn’t say R2 would be produced in Normal. If that’s the case, I feel this decision to produce in Normal was made very very recently.

I don’t think so. It’s more likely they have been analyzing this option for a few months and chose to make the announcement part of the R2 reveal. Lack of significant progress at the GA facility the past 8 weeks is also a clue that it’s not a very recent decision.

 

[Golfer04]

They're not killing R1. It's their flagship, they have said that over and over again.

If I remember correctly, when Normal was a Mitsubishi plant, it had a yearly capacity somewhere around 250k. They're currently building 50k, and have expanded parts of the plant.

In recent interviews and earnings calls, they have said that the updates to R1 coming this spring are both manufacturing efficiency and parts-sharing upgrades. My guess is that there will be a lot of hidden components of the R1 and R2 that are shared. We know things like drive units will be shared, and the wiring harnesses are closely related.

In short, the R2 means they can build the R1 more efficiently and get closer to profitability on each one.

You are correct about Normal plant capacity. I said the same on here a few months ago and got hammered for it. GA plant never made any sense (at least now). I've financed so many start ups that went broke because they didn't swallow one expansion before starting the second that I lost count. One went public at $39/share rocketed up to $169, and was delisted in a little over two years. They got bought with their own cash just like Rivian could be if stock goes much lower (market cap shrinks to less than company cash position).

Great news all the way around. Waiting on my demo to arrive in Normal and ordered an R2 today!

 

[Grabs10]

Georgia was dumb from the beginning cause they hadn’t even produced a vehicle and were going to spend billions to not produce any vehicles for many years. They would be better to turn it into an offroad park until they run out of room for tents at Normal and can turn profits. If they lose out on Georgia tax incentives no big deal. Once they show they can make a profit other states/countries might be willing to up the incentive even further…. Actually from a pure cost perspective Mexico makes way more sense for next expansion.

This was the biggest announcement today that will actually give them a fighting chance to keep there head above water.

 

[Redline]

The R3 seems designed for EU in many ways. I do wonder if they'll focus on that more so than GA.

 

[electruck]

The length of the pause on the Georgia factory will likely depend on just how much demand materializes for R2. Wise move to evaluate demand before spending billions. Are they taking reservations globally or just from North America? If there is significant global demand, they will surely want to ship internationally out of the Georgia plant ASAP.

 

[Epicloop]

Wise move to evaluate demand before spending billions. Are they taking reservations globally or just from North America? If there is significant global demand, they will surely want to ship internationally out of the Georgia plant ASAP.

Agreed on assessing demand. I believe the International demand will be for the R3/X. Wait to build Georgia after assessing R3 demand.
I would gladly putt down a $1K deposit on the R3X now.

 

[electruck]

The length of the pause on the Georgia factory will likely depend on just how much demand materializes for R2. Wise move to evaluate demand before spending billions. Are they taking reservations globally or just from North America? If there is significant global demand, they will surely want to ship internationally out of the Georgia plant ASAP.

Per Rivian:

R2 is available to reserve today in the U.S.

So R2 reservations are currently US only.

 

[R1TS]

I mean when GA was first announced, there were no delays. People weren't protesting. Interest rates were much lower. EDVs were still exclusive to Amazon and R1T/S were ramping well. There wasn't a ton of upside to Normal. The landscape has shifted dramatically in the last 12-24 months.

Of course there were people arguing against the Georgia plant from the beginning. Rivian had to have filed for use permits with the county planning long before they even purchased the land.

 

[electruck]

Of course there were people arguing against the Georgia plant from the beginning. Rivian had to have filed for use permits with the county planning long before they even purchased the land.

They didn't exactly purchase the land. The land is owned by the JDA and Rivian essentially has a complex 50 yr rental agreement.

 

[pricedm]

The Georgia vs Normal comments/news were the biggest of the event, IMO. I’m surprised it’s not being talked about more.

Yes! As a $RIVN shareholder, I am very happy (given the sad, difficult economic conditions of high interest rates) that Rivian will bring the Normal factory up towards max capacity/ efficiency (key to profitability) by building the initial rounds of R2 at Normal, Illinois.

Launching a new vehicle is a massive, billion$ expense. A factory is multi-billions. Together, could be doom for Rivian. Remember, Tesla launched the S, X, 3, Y in the legacy Freemont factory. Austin and Berlin and China came online when the company wasn't hanging on for dear life.

I put in a reservation today to boost the numbers and hopefully the trend will be well-recieved by Wall Street and parts suppliers.

Go, Rivian, go!

 

[pricedm]

215,000 units per year is #HUGE

Yes! like approx. 4x current production. Imagine $RIVN and the landscape of USA roads with 4x more Rivians in customer hands

 

[Hillbilly]

Georgia was dumb from the beginning cause they hadn’t even produced a vehicle and were going to spend billions to not produce any vehicles for many years. They would be better to turn it into an offroad park until they run out of room for tents at Normal and can turn profits. If they lose out on Georgia tax incentives no big deal. Once they show they can make a profit other states/countries might be willing to up the incentive even further…. Actually from a pure cost perspective Mexico makes way more sense for next expansion.

This was the biggest announcement today that will actually give them a fighting chance to keep there head above water.

That's short sighted. Georgia will be important for long term production volume and viability. Shitty economy, inflation and interest rates have likely stifled flagship sales and it makes sense to repurpose Normal for the time being. The ground work laid in getting government cooperation and working through legal red tape in an area with access to good labor and favorable labor laws is important.

 

[Robin]

At least give the R1 the new steering wheel controls and the gloveboxes

please

Sponsored