When Jeff Well finished pre-ordering a Rivian RIT in early 2019, he was among the first in line to buy a truck from the Amazon-backed Rivian electric scooter company. At the time, Rivian held the promise of tapping into a niche that was underserved by any other automaker.
However, Wells, an accountant living in Southern California, became frustrated when he still could not receive the car he ordered. It is worth mentioning that many other people ordered a few years after Wells but they already received the car and he was still waiting.
“It’s so annoying and I feel like there’s not any order to how Rivian is doing things.”
Wells is one of dozens of placeholders in recent weeks who have complained about unreliable delivery times and delays in online groups and forums.
The complaints intensified after Rivian Automotive said in late April that it was changing the production sequence of its vehicles, favoring vehicles with specific interior, exterior and wheel color options.
“This reduces complexity with our suppliers and in the factory, and allows us to build larger numbers of vehicles,” Rivian told customers in an email.
This means that many early orderers who kept their original colors continued to have their orders delayed.
Rivian in a statement to Reuters said delivery dates aren’t just based on pre-order times, and it’s exploring new ways for customers to deliver.
It is worth mentioning that Rivian’s delivery “headache” has yet to attract attention with the company’s reduced production plans or the mixed information about car price increases. Initially, Rivian side announced a nationwide car price increase, but then said it didn’t apply to those who booked after the backlash.
However, late deliveries can have dire consequences.
While all manufacturers are struggling with global supply chains, including a shortage of semiconductors and rising prices of raw materials, startups like Rivian are struggling to get things going. Major investors here, including Ford Motor and Tiger Global Management, sold off Rivian shares after the IPO.
Rivian stock is under tremendous pressure.
Rivian supporters have largely remained loyal despite the tumultuous swings in car prices. Pre-orders have grown to 90,000 vehicles even after the price increase, which currently only applies to new pre-orders.
But delivery delays could prove costly as other automakers roll out their own electric pickups, including Ford Motor’s F-150 Lightning. Rivian said on May 11 that it was overhauling its ordering system to separate the ordering feature in an effort to address customer frustrations.
Rivian said in the statement that the change will make pricing and timing more transparent.
THE WORLD HAS CHANGED
Rivian’s predicament in revamping its order system also reflects a broader industry challenge. Inflation and supply-chain constraints have wiped out financial projections and increased pressure on emerging electric vehicle manufacturers to reduce costs at a time when investors are closing in.
“The markets are closed for every company. You have to pull yourself together and set priorities, do whatever it takes to get to the other side,” said Daniel Ninivaggi, CEO at EV startup Lordstown Motors – The company this month sold its factory to Foxconn due to a sharp drop in cash reserves.
Rivian said it is always monitoring capital markets and has planned for an increasingly challenging environment by “optimizing product roadmaps and operating costs”.
At $16 billion, Rivian boasts significantly more cash than Lordstown and other small EV startups, such as Canoo Inc. But Rivian burned through about $1.2 million per vehicle 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 certainly wouldn’t put Rivian in the same basket as the others, but I think they have a high financial burden and need to show that they can deliver,” said Vitaly Golomb, a partner at Drake Star investment bank.
Although Rivian has told investors it has enough cash to open a second factory in the US for $5 billion by 2025, patience may be waning.
“Since the IPO, the world has changed rapidly, and investors simply don’t want to pour money into negative EBITDA companies in this environment,” Jonas said during a recent investor meeting.
CEOs RJ Scaringe and McDonough say the company will bring costs under control by simplifying vehicle lines and reducing costs.
VALUATION JOURNEY
Scaringe also says that Rivian — like many other automakers — has come to believe the ugliness of semiconductor shortages is over. However, other automakers say the shortage could last until 2023.
Rivian did not say when it expected to be able to produce the car at a profitable rate. The price increase from $67,5000 to $79,5000 is expected to improve economics and offset higher raw material costs. The new price policy applies to orders placed after March 1. Rivian in an email to customers on March 3 said they could launch a simpler RIT model for $67,500, with delivery expected in 2024.
However, industry competitors say that being profitable at that price point is quite a challenge.
Peter Rawlinson, CEO of luxury electric vehicle maker Luvid and a former leader at Tesla, predicts Rivian will spend around $22,000 on imported battery packs and around $20,000 on a movement supplied by Robert Bosch GmbH. Those things make the selling price must be at 95,000 USD for them to make a profit.
“The only way they can make that business model work is by incurring a loss on every truck they sell.”
For its part, Rivian said it is confident about its “pricing journey”. It is also said to be working on a lower-cost internal motor and new battery designs.
For preorderers like Wells, profit margins don’t matter much. He just wanted to get the car as soon as possible. While Wells says he still prefers Rivian’s RIT, last year he also ordered a Ford R-150.
“Right now, if Ford delivers first, I think I’ll choose Ford.”
Source: Reuters
at Blogtuan.info – Source: autopro.com.vn – Read the original article here
