drstancpa
Active Member
- First Name
- Jason
- Joined
- May 12, 2022
- Threads
- 4
- Messages
- 28
- Reaction score
- 46
- Location
- Lafayette, IN
- Website
- www.bsu.edu
- Vehicles
- 2022 R1T, 2016 Camaro SS & 1992 Firebird T/A verts
- Occupation
- Education, Accounting
- Thread starter
- #1
No, I don't work for Rivian, no I'm not related to George Soros or Jeff Bezos, and no, I'm not even an investor (that I know of). I'm posting, at best, for education, and otherwise perhaps for cathartic release.
While the frustration is incredibly understandable, Rivian is losing battles to win a war. While Rivian has managed to maintain production despite the global component shortage and logistics challenge, they are not immune to it. Further, while Rivian had tens of thousands of preorders of R1 models, those preorders were based on a $1,000 refundable deposit for configurations that were not locked in. In short, Rivian had to order components months if not a year or more in advance in anticipation of what it expected the actual final orders would be for, a near impossible task for a new company with zero historical data to go on. I would wager a guess that more of us have at least slightly changed our configurations than not in the past 3 months, let alone the past year.
Inventory is expensive to hold, of any and all kinds. For starters if you have parts sitting on the shelf for long, you'll have to pay for those parts long before you get the money from selling the truck, meaning less cash flow to purchase other parts. And the space those parts are taking up while waiting to get to customer orders which need that inventory means less space for ordering the parts for other orders. Add in the fact that things tend to get broken, go obsolete, etc. while being stored, and it's easy to see why most manufacturing has moved closer to a Just-in-Time (JIT) inventory management system.
So, the best thing to do with inventory that doesn't match the orders you need to fill now is often to use that inventory to fill the orders now that you would have filled later. This way you deliver some orders and get cash flow while clearing room for the parts you will need to finish the most pressing orders as quickly as possible. And as a bonus, this is a way to quell investor concerns that vehicles aren't actually being delivered and payment collected. Sure, it's not the best for customer relations, as it certainly doesn't feel fair. But it's the best of some suboptimal choices.
Some of the parts I speculate are culprits, based on some of the order/delivery trackers online and forum posts? My guess is the primary issue right now is the wheels. It seems like the vast majority of people who've had orders for less than a year who are already getting trucks ordered the standard road wheels and tires. It also appears to me that the percentage of preorder holders who configured with the standard wheels who are going through with the purchase is much lower than those who configured with the 20" ATs, which makes some sense to me: I'd expect that those who ordered the road wheels and tires are less excited about some of the R1's most unique features than the general idea of an electric pickup truck, for which there are competitors inbound. If you are an off-road buyer though, I doubt anything on the horizon has you concerned you'll wish you hadn't bought the Rivian.
I also wonder if the power tonneau is not a bottleneck, or at least is expected to be, given they removed it from the standard Adventure package. Assuming they're not selling the cover at a loss (which, at $3000, I can't imagine they are), not "making" everyone buy it makes sense to me only if you're afraid you won't have enough to meet overall production targets. This might also be the case with the reinforced underbody shield, and of course we know this general idea applies to the OC interior color. Also notably, the first Compass Yellow R1Ts are just now getting customer deliveries.
Why, then, does it seem like some people with identical, ready to fulfill configurations are still waiting longer? The forums have more than a few instances of someone who ordered an R1T in 2021 receiving theirs before a 2020 preorder holder with the identical configuration. I'm almost certain this is best explained by delivery logistics. Anyone who drives on the interstates regularly knows that the volume of commercial haulers for most any good is the highest it's ever been, and a quick peak in the cabs says many experienced drivers have exited and been replaced with less experienced drivers. High demand and a decline in the capacity of the industry (new drivers, all else equal, will underperform experienced drives on average), make hard times for moving anything, let alone something as valuable and large as vehicles.
In other words, I don't think Rivian has a production problem, they have a delivery problem. If Rivian knows they have an R1T built for a customer in the middle of Wyoming who ordered in 2019, but they won't be able to deliver it for at least 90 days due to the current transportation market, it's only reasonable they'd find someone with an identical/near identical configuration where they can easily deliver and sell the truck to that second person. They can make the truck again for the person in Wyoming before the 90 days are up, and this way, they get the sale and cash flow, and eliminate the costs of holding the truck in inventory.
Again, no inside information and these are just guesses, but they're highly educated guesses based on observables at that. Always up for civil discussion and debate and am happy to admit when I'm wrong (21 years of marriage will do that to you).
While the frustration is incredibly understandable, Rivian is losing battles to win a war. While Rivian has managed to maintain production despite the global component shortage and logistics challenge, they are not immune to it. Further, while Rivian had tens of thousands of preorders of R1 models, those preorders were based on a $1,000 refundable deposit for configurations that were not locked in. In short, Rivian had to order components months if not a year or more in advance in anticipation of what it expected the actual final orders would be for, a near impossible task for a new company with zero historical data to go on. I would wager a guess that more of us have at least slightly changed our configurations than not in the past 3 months, let alone the past year.
Inventory is expensive to hold, of any and all kinds. For starters if you have parts sitting on the shelf for long, you'll have to pay for those parts long before you get the money from selling the truck, meaning less cash flow to purchase other parts. And the space those parts are taking up while waiting to get to customer orders which need that inventory means less space for ordering the parts for other orders. Add in the fact that things tend to get broken, go obsolete, etc. while being stored, and it's easy to see why most manufacturing has moved closer to a Just-in-Time (JIT) inventory management system.
So, the best thing to do with inventory that doesn't match the orders you need to fill now is often to use that inventory to fill the orders now that you would have filled later. This way you deliver some orders and get cash flow while clearing room for the parts you will need to finish the most pressing orders as quickly as possible. And as a bonus, this is a way to quell investor concerns that vehicles aren't actually being delivered and payment collected. Sure, it's not the best for customer relations, as it certainly doesn't feel fair. But it's the best of some suboptimal choices.
Some of the parts I speculate are culprits, based on some of the order/delivery trackers online and forum posts? My guess is the primary issue right now is the wheels. It seems like the vast majority of people who've had orders for less than a year who are already getting trucks ordered the standard road wheels and tires. It also appears to me that the percentage of preorder holders who configured with the standard wheels who are going through with the purchase is much lower than those who configured with the 20" ATs, which makes some sense to me: I'd expect that those who ordered the road wheels and tires are less excited about some of the R1's most unique features than the general idea of an electric pickup truck, for which there are competitors inbound. If you are an off-road buyer though, I doubt anything on the horizon has you concerned you'll wish you hadn't bought the Rivian.
I also wonder if the power tonneau is not a bottleneck, or at least is expected to be, given they removed it from the standard Adventure package. Assuming they're not selling the cover at a loss (which, at $3000, I can't imagine they are), not "making" everyone buy it makes sense to me only if you're afraid you won't have enough to meet overall production targets. This might also be the case with the reinforced underbody shield, and of course we know this general idea applies to the OC interior color. Also notably, the first Compass Yellow R1Ts are just now getting customer deliveries.
Why, then, does it seem like some people with identical, ready to fulfill configurations are still waiting longer? The forums have more than a few instances of someone who ordered an R1T in 2021 receiving theirs before a 2020 preorder holder with the identical configuration. I'm almost certain this is best explained by delivery logistics. Anyone who drives on the interstates regularly knows that the volume of commercial haulers for most any good is the highest it's ever been, and a quick peak in the cabs says many experienced drivers have exited and been replaced with less experienced drivers. High demand and a decline in the capacity of the industry (new drivers, all else equal, will underperform experienced drives on average), make hard times for moving anything, let alone something as valuable and large as vehicles.
In other words, I don't think Rivian has a production problem, they have a delivery problem. If Rivian knows they have an R1T built for a customer in the middle of Wyoming who ordered in 2019, but they won't be able to deliver it for at least 90 days due to the current transportation market, it's only reasonable they'd find someone with an identical/near identical configuration where they can easily deliver and sell the truck to that second person. They can make the truck again for the person in Wyoming before the 90 days are up, and this way, they get the sale and cash flow, and eliminate the costs of holding the truck in inventory.
Again, no inside information and these are just guesses, but they're highly educated guesses based on observables at that. Always up for civil discussion and debate and am happy to admit when I'm wrong (21 years of marriage will do that to you).
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