When Jeff Wells booked a Rivian R1T pickup in early 2019, he was one of the first in line for a truck from an electric car startup supported by Amazon.com Inc., which at the time promised to enter a niche that is not serviced. other automakers.
But Wales, an accountant from Southern California, becomes increasingly frustrated when he sees others who made the order years after it get trucks while he waits. “It’s just annoying, and it feels like there’s no order in the way they do things,” he said of Rivian.
Wales is one of dozens of booking owners who in recent weeks have complained about unreliable delivery times and delays in online groups and forums.
The complaints came after Rivian Automotive Inc said in late April that it was changing the sequence of car production, giving priority to cars with certain interior and exterior colors and wheel options.
“Building in multiple combinations reduces the complexity with our suppliers and in the factory and allows us to create more vehicles,” Rivian told customers in an email. This meant that many early booking owners who adhered to their original color preferences delayed orders.
(Also read | Rivian is recalling the 2022 R1T EV due to a problem with the airbag sensor calibration )
A statement from Reuters Rivian said the delivery dates were based not only on pre-order terms, but also on finding new ways for customers to speed up deliveries.
Rivian’s delivery headaches did not attract as much attention as the California-based company’s reduced production plans or its chaotic announcement of rising vehicle prices, which it first announced everywhere but later dropped out of existing booking owners.
But delivery problems can be just as harmful.
While all automakers are struggling with global supply chains, including shortages of semiconductors and rising commodity prices, startups like Rivian have fewer opportunities to adjust. Major investors, including Ford Motor Co and Tiger Global Management, unloaded shares of Rivian after the end of the blockade period after the IPO.
Rivian supporters have remained largely loyal, despite the company’s chaotic price changes. Pre-orders have increased to 90,000 cars even after price increases, which now apply only to new bookings.
(Also read | Ford sells Rivian shares for $ 214 million )
But delivery delays can be costly as other automakers release their own electric pickups, including Ford Motor Co.’s F-150 Lightning.
On May 11, Rivian said it was working on rebuilding the ordering system to separate the booking from the configuration process, in a clear attempt to combat customer criticism due to a lack of deliveries in the ordering system.
A statement from Rivian said the change had allowed for transparency in pricing and timing.
“THE WORLD HAS CHANGED”
Rivian’s struggle to overhaul its ordering system also reflects the broader challenges of the industry. Inflation and disruptions in supply chains have worsened financial forecasts and increased pressure on upstarts with EVs to cut costs at a time when investors are closing their checkbooks.
“Markets have closed for every company, good and bad. You need to get stuck and set your priorities and do your best to move to the other side, ”said Daniel Ninivagi, CEO of EV Lordstown Motors Corp. sold its plant to Taiwanese contract maker Foxconn this month as cash reserves fell sharply.
Rivian said it is constantly monitoring capital markets and planning in an increasingly challenging situation, “optimizing its product roadmap and operating costs.”
The $ 16 billion Rivian boasts far more cash than Lordstown and other small EV startups such as Canoo Inc, which issued a continuity warning this month.
But Rivian burned about $ 1.2 million for one car it delivered in the first quarter, and is estimated to spend a total of $ 7 billion in cash this year, according to Morgan Stanley analyst Adam Jonas.
“I would definitely not put Rivian in the same basket with other companies, but I think they have a big burden on them and they need to demonstrate that they can supply,” said Vitaly Golomb, partner at Drake Star Investment Bank, which heads it. practices EV and mobility, and is an investor and booking holder for Rivian.
Although Rivian has told investors that it has enough money to open its second plant in the US for $ 5 billion in 2025, patience may run out.
(Also read | Fire at Riviané electric car plant, cause unknown )
“Since your IPO the world has changed dramatically, investors just don’t want to finance companies with negative EBITDA growth in this environment,” Jonas said during a recent conversation with investors about the company’s profits, cutting off Rivian CFO Claire McDonough.
CEO RJ Scaringe and McDonough said the company would control costs by simplifying the car model range and minimizing costs.
Scaringe also said that Rivian, like some automakers, believed that behind this was the biggest shortage of semiconductors. However, other automakers said the deficit could continue until 2023.
Rivian did not say if he expects to produce vehicles at a profit. The price increase, which increases the sticker of its base-level pickup from $ 67,500 to $ 79,500, should improve the economy and offset higher raw material costs. They apply to orders placed after March 1st.
But industry rivals say making a profit even at that price will be difficult.
Peter Rollinson, CEO of luxury EV Lucid Group Inc. and former head of engineering at Tesla Inc., estimates that Rivian spends about $ 22,000 on a entry-level battery and about $ 20,000 on drives supplied by Robert Bosch GmbH – a price required. on the car sticker. $ 95,000 to return the profits.
“The only way they could make this business model work is to lose money on every truck sold,” he told Reuters in March.
Rivian said it was confident in its “price path”. He also said he was working on a cheaper own engine and a new battery design.
For the owner of the Rivian Wales reservation the profit margin is less important. He just wants to get his hands on the truck as soon as possible. Although he said he prefers the R1T Rivian, Wales last year also booked an F-150 Lightning manufactured by Ford. “At this point, when Ford comes out first, I think I’ll go with them,” Wells said.
Date of first publication: May 23, 2022, 4:18 PM IST