Delays in delivery can prove costly for a revian

When Jeff Wells made a reservation for a Rivian R1T pickup in early 2019, he was in the first line for a truck from Inc.-backed electric vehicle startup that promised to tap into a niche that was not served at the time. By other automakers.

But Wales, an accountant in Southern California, is increasingly frustrated because he sees others who placed their orders a few years later get the truck while he waits.

“It’s just annoying and there seems to be no order in how they work,” he said of Rivian.

Wales is one of dozens of reservation holders who have complained of unreliable delivery timelines and delays in online groups and forums in recent weeks.

In late April, Rivian Automotive said it was mounting allegations that it was changing the car’s production order by giving priority to specific interior and exterior color and wheel options.

“Creating a few build combinations with our suppliers and at the plant reduces complexity and allows us to build more vehicles,” Rivian told customers in an email.

This means that many early reservation-holders have delayed their orders to stick to their original color choice.

Rivian said in a statement to Reuters that delivery dates are not based solely on the timing of a pre-order and that customers are exploring new ways to expedite delivery.

The delivery headache of the revision did not attract the same attention as the California company’s low production plan or the haphazard communication of car price increases, which it initially announced across the board, but was later canceled for existing reservation holders following the response.

But delivery problems can be just as damaging.

While all automakers are grappling with global supply-chain snarls, including semiconductor shortages and rising raw material costs, startups like Rivian have less room to fix things. Major investors, including Ford and Tiger Global Management, have offloaded Rivian stock after the post-IPO lockup expired.

Proponents of her case have been working to make the actual transcript of this statement available online. Even after the price increase, pre-orders have increased to 90,000 vehicles, which now only applies to new reservations.

But delivery delays can be costly as other automakers launch their own electric pickup trucks, which include Ford’s F-150 Lightning.

On May 11, Rivian said it was working to modify its ordering system to separate reservations from the configuration process in a seemingly effort to address customer criticism of supply shortages in its ordering system.

In a statement, Rivian said the change was approved for pricing and transparency over time.

‘The world has changed’

The struggles to overhaul Rivian’s ordering system also reflect a wide range of industry challenges. Inflation and supply-chain snarls have dampened financial forecasts and investors have put pressure on EV Upstart to cut costs while closing their check books.

“The market is closed for every company, good or bad. You have to lean down and set your priorities, and do whatever it takes to get to the other side,” said Daniel Ninivigi, chief executive of EV startup Lordstown Motor Corporation. Taiwanese contract maker Foxconn has sold its plant due to declining stocks.

Rivian says it is constantly monitoring the capital market and “optimizing its product roadmap and operating costs” and plans for an increasingly difficult environment.

At 16 16 billion, Revian boasts significantly more cash than Lordstown and other smaller EV startups, such as Canoe, which issued a worrying warning this month.

But Revian burned about $ 1.2 million per car delivered in the first quarter and is expected to spend a total of $ 7 billion in cash this year, according to Morgan Stanley analyst Adam Jonas.

“I certainly wouldn’t put Rivian in the same basket as these other companies, but I think they have a lot more burden and they need to show that they can deliver,” said Vitaly Golamb, a partner at investment bank Drake Starr, who leads. Its EV and mobility practice and also a revian investor and conservation holder.

Although Rivian has told investors it has enough cash on hand to open its second U.S. plant at $ 5 billion in 2025, there could be a lack of patience.

“Since your IPO, the world has changed dramatically. Investors are reluctant to finance companies with negative EBITDA growth in this environment,” Jonas said in a recent earnings call with investors.

Chief executives RJ Scarring and McDonough said the company would simplify its car lineup and bring costs under control.

Pricing Journey

Scaringe added that Rivian, like some automakers, believes the worst of the semiconductor deficit was behind it. However, other carmakers say the deficit could last until 2023.

Rivian did not say when it expects to build vehicles at a profit margin. The price increase, which raises its basic-level pickup sticker from $ 67,500 to $ 79,500, is expected to boost the economy and offset higher raw material costs. They apply for orders issued after March 1.

But industry competitors say it would be challenging to make a profit at that price.

Peter Rawlinson, CEO of luxury EV maker Lucid Group and a former engineering executive at Tesla, estimates that Revian costs about $ 22,000 for his entry-level battery pack and Robert Bosch costs about $ 20,000 for a 950-car drive provided by GmbH. To return the profit.

He told Reuters in March that “the only way they can work is if they lose money on every truck they sell.”

Rivian said he was confident about the “price journey”. It added that it was working on a low-cost in-house motor and new battery design.

For Wales, the holder of the revision reservation, the profit margin is less important. She just wants to get her hands on a truck as soon as possible. Although he said he liked the Rivian’s R1T, Wells also made a reservation for the F-150 Lightning made by Ford last year.

“Right now, if Ford comes first, I think I’ll go with them,” Wells said.

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