Scaringed!

[MinnR1S]

They have 18.6 billion in cash on-hand and literally zero people are looking for them to be profitable any time soon. Everyone is looking at one thing - production ramp.

IMO, this is about one thing only - maximizing production.

Honestly, they should have foreseen some of this and simplified their production expectation out of the gate. Making a simple EV would have been a challenge for a new car brand. Making one as complicated and detailed as this one was a true challenge.
I am glad they are communicating the issues and delays.
The light-colored wood could be a supply or a quality issue.
Other makers run into issues when they use natural wood inlay.
Volvo recently eliminated a wood inlay color from a lineup for a year due to supply issues.

I would bet most in the forum would accept a wood swap on OC if they got their truck months earlier. The wood is the weak link on the OC interior. The other Woods are a better fit.

"Keep it simple" seems like a sane way to get through this.
Should also help with quality and consistency.

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[smiesguy]

What’s to prevent them from continuing just making the truck in BM or FE until all those orders are filled? That was my first take last night. Anxiously awaiting any delivery info on the R1S.

 

[mgc0216]

Suppliers being paid by Rivian, who then pay further down the supply chain.

Most of the supply chain is functioning on a "just in time" delivery model where goods aren't invoiced until received - typically with Net 30 (day) payment terms.

And this is relevant why?

I don't think this is a cash flow move by Rivian, certainly it increases cash flow, but that's a by product. Certainly flowing cash into the "supply chain" is definitely not a primary goal for Rivian.

Rivian's main goal needs to be showing they can ramp production in the face of the extraordinary challenges lest the market and consumers start to wonder if they are a viable entity long term.

 

[Gator42]

FWIW here’s my guide today…

…the PBA isn't tied to a timeline, however, it does move your process along. It helps our team prepare numbers for builds. Unless you have Ocean Coast, your delivery timing window will remain the same….

We’ll see how well that ages ?…

 

[Jac]

This forum represents the hardcore pre-order holders. The rest of the world (probably 95% of reservation holders) has no idea what a PBA is. So, you certainly don't want to break into jail by introducing confusion to the 95% (what's a pba, when will I get one, should I have one) by talking about a scenario that affects a few hundred folks (those with PBAs signed for vehicles with OC interiors).

That being said, there should have been a direct email to those with Signed PBAs with OC interiors explaining what that means - or guides should have reached out - but in no way should that have been covered in an email to 70,000 people when 69,500 don't have that concern.

So the blunder was not that they didn't include it in the original email, the blunder is not covering off w/ the affected folks.

Exactly! They might also start embedding a link in these communications to a more detailed Q&A document that would address obvious questions from certain affected customer segments.

 

[R_1_T]

And this is relevant why?

I don't think this is a cash flow move by Rivian, certainly it increases cash flow, but that's a by product. Certainly flowing cash into the "supply chain" is definitely not a primary goal for Rivian.

Rivian's main goal needs to be showing they can ramp production in the face of the extraordinary challenges lest the market and consumers start to wonder if they are a viable entity long term.

As much as we, the customer, think there is goodwill to be gained by Rivian delivering vehicles to those who've waited years for them, don't underestimate how much goodwill could be burnt if you screw over your supply base who've been waiting even longer to get their ROI.

Keeping the supply base healthy/happy is critical as a new OEM. Getting paid makes the supply base happy. You're fooling yourself if you don't believe Rivian wants to fund as much of their operations from cash flow as possible.

The cash on hand is a buffer - a huge one, but a buffer nonetheless. This buffer will be required to "eat" the losses on the first round of pre-order vehicles, which could last 2 years worth of production. Think of taking ~$15k and setting it on fire as each vehicle is produced, and you've torched $375M just in the first year of production, assuming they actually deliver 25k. For each Max pack vehicle they would build in 2023 that number is more like $20k. Based on typical margin targets, that would likely eat their entire margin and then some. I'm assuming they would have targeted ~20% margin which needs to also cover warranty, OTA updates, AND future development.

Tell me that's not a huge sucking sound coming from that cash on hand buffer.

The ability of a business to operate off cash flow rather than credit is fundamental in order to be viable long term. This is even more true now, based on where lending rates are heading. The rising rates will also push some potential customers out of the market going forward.

Rivian is literally in a race against the clock to get to a place where they can actually sell vehicles for a profit in what will be an increasingly crowded marketplace and tougher financial conditions.

 

[lostpacket]

I once singed my hand on a hot stove and it left a small scar.

I guess you could say that I, too, have been scaringed

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