Tesla rival Rivian posts losses of $1.7B, with worse to come

Rivian needs something like Tesla's profitable 2H2018 where they showed that they could be profitable just selling S's and X's just before they endured massive losses while ramping up the 3 and Y.

For a company, making a profit is the company saying across all of our divisions, on all the work that we do, we couldn't find a single initiative that we believe will return a higher risk adjusted ROI than paying down debt/putting money in a bank account/investing in index funds/returning money to shareholders.

When you have an order book 100,000 vehicles deep, the last thing on your mind should be making profits. There's obviously thousands of different projects at the company that are going to be returning wildly higher ROI than public markets and you should be spending your money on exploiting those opportunities.

IMO, the powered tonneau was an unforced error. They could have shipped a manual one first, but instead went ahead with a finnicky design that has been problematic.

Beyond that, I don't have a problem with the decision making. From watching the forums, the issues look like normal growing pains for a startup to me.

Choosing might be the wrong word, but I would say "accepting", as I sincerely doubt the CEO is unknowledgeable of product delivered vs (expensive) rework required and demanded. One monkey on their back is the ever short-sighted demands of Wall Street, and they always want (too) rapid return on investment, which is made visible by the quantity of shipping product. A lot of people will be initially accepting of imperfection, happy to be engaging with the newly hot marque. But not all, and not forever, and especially when others may begin delivering that quality.

A company targeting quality needs to be delivering it from the outset (shades of Phaedrus). Tesla got away with, and still does to a huge extent because of customer buy-in, in delivering shoddy assembly because of the newness and strong desire for their initially niche product. Those EV manufacturers coming after Musk will not get such customer forgiveness, at least not as for long, and well, Tesla's no longer riding so high in valuation either. My opinion is that to be around for the long run, you need to be trusted and desirable - or to grow too big to fail - i.e. have the right kind of influence invested in your success for reasons other than the company's mission.

I absolutely believe the CEO's stated mission of building EVs for a climate focus reason is his actual goals, but he has to juggle delivering ROI sooner rather than later because that's what his early investors demanded, against producing product people will want to buy today and ten years from now. The already limited by $80K price customer base though is slowly becoming more discerning, mostly because they can, and those early company acceptances of unforced errors won't make it easier to become and remain the climate influencer he wants to be.

All said, RJ's job is a lot of electrified barbed wire fence straddling.

Amazon is almost more of a logistics company than a tech company. I'd bet they own more square feet of infrastructure than any auto company.

If BEVs won't go down with those prices, you can be sure they will fail in same way as biofuels did in EU - slowly forgotten.

What are you basing these claims on? What ICE cars is the Leaf outperforming?

Nobody considers an 8 second 0-60 time to be fast. The MSRP on the Leaf starts at $28,000. And for that price, you can get a base model Accord that is 2 seconds faster 0-60.

What other ICE cars did you drive to compare the driving experience? (I bet you didn't even drive any.)

Please tell me how you came to the conclusion that your Leaf is more reliable than an Accord. I don't want to hear how there are less moving parts. Stats on your reliability claim.

What the hell is "overall performance"? The Leaf outperforms ICE cars on "overall performance?" What does that mean?

Decided I don't need a truck, buying a mid-size electric SUV.

The Lightning Pro seems positioned really well for price; I did see a Platinum trim at a show which I liked a lot but it's way more cost and vehicle than I need.

I had an order for an R1T and a cybertruck but just got a 2003 LX 470 instead. At least the kinks have been worked out. lol

A lot of electric buses in North America, and worldwide, are made by BYD.

for something like seats, yes, Ford has both its processes, and market understanding pat down (it knows just how luxurious it seats need to be for the segment it's targeting, which material or stitch features are not worth investing on, for example) and can have those seats made in the best possible way.

Rivian is making more luxurious seats, so some costs to account for that is understood, but when you four differently sized plastic pieces for each end of the seat, when one same piece could do, (which means four different supply chains instead of one) it really does show the inexperience of new manufacturers.

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But give a point for the EV side of things too, where old manufacturers are wasting material weight due to legacy frameworks etc (Munro has videos on that too)

It is really funny when EV fans are slowly discovering Kaizen and lean production. Wait until they will figure out what is FMEA.

If you don’t make 500+ mile trips frequently, why is the size of the battery so important (honest question)?

If you use the car for 100k miles, you’ll spend anywhere from 70 to 270 straight 24 hr days sitting in that seat, depending on your mix of average speeds. (60 to 15 mph for these examples)

I can’t imagine a more sure fire way to hate past you than having bad and/or unergonomic seats. But hey, we all have different priorities.

You are talking about the wrong segment of cars, neither Rivian nor its competitor the Ford F150L are trying to capture your segment, if I understand it correctly.

but the issue is about the manufacturing process for the seats.

Rivian would have five different plastic pieces, for say, the underside of the seat, all requiring individual painting, whereas Ford has learnt that that piece could be one single textured molded piece, ready to go, so that is process engineering, and neither effect the luxuriousness of the seat, but there are still cost savings to be had.

If I am spending $75k on a vehicle it better have fancy seats. What you are describing is a budget EV, in that case then yes, don't add fancy seats. But in this price range luxury is expected.

Exactly, Elon might be a nitpicking boss from hell, but it does result in some excellent efficiencies in tesla manufacturing process, from the super bottle to the octovalve, some amazing stuff has come out of it.

Raleigh area I've been seeing them almost daily.

> This will not be a single company market.

Exactly! Not only that, but "second movers" like Rivian have some advantages too. They don't have to build out their own charge network to support coast to coast travel. They don't have to invent their own charge standard because the industry one was limited to 50KW.

That also have lots of intangible benefits. In the early days of Tesla, reviews focused heavily on range and the lack of charging. Rivian reviews have been able to focus more on the vehicle, since people are more accustomed to EVs now. I see far fewer "oh noes, where will a customer charge" stories in the vehicle's reviews.

The challenges that are similar are all around scaling the business. Launching a car company is hard. Rivian is exceptionally well capitalized, though.

There are two big barriers to large-scale vehicle production that make disruption in the sector very difficult.

(1) huge capital investment required at scale — $billions

(2) regulation compliance — you have to follow the rules or you can’t sell in the US. You have to follow a different set of rules in Europe. This is expensive and time consuming.

The only way you could say that there will be dozens of whole-vehicle EV companies is if one or more of them are producing white label versions of the same vehicle for other companies.

The government, if it wanted to, could incentivize electric car production more directly than they have been so far, and with even more dollars. But it’s still going to be an easy business in which to lose vast sums of money.

The best case scenario is that VW, Toyota, etc get their shit together on software, whether separately or collectively.

>The way that Rivian competes is by making a better product

Or they can sell an image like Toyota Jeep, Caddilac, etc. do with certain product lines (that said, all these OEMs have other product lines that compete on merit) and spend all their money on marketing and astroturfing.

Ford's "boring, me-too cars that happen to be electric" strategy on the F-150 Lightning was absolute genius. The F-150 has been the best-selling truck since 1977, and the best-selling vehicle since 1981. Why would one ever mess with that?

GM is taking a different approach on the Silverado EV. Still looks like a normal truck, but it's been designed around the electric powertrain. So we'll see who wins that race.

I'm sure I'm not the only person in the world that just wants a normal car or truck, but electric.

True. I suppose it could be considered "context" for the headline, since readers are more likely to know Tesla than Rivian, although that's also true for Ford.

Sure, but they don't sell into the same market segments.

No overlapping market segments. Rivian makes an SUV, pickup, and delivery van. Tesla makes none of those.

Nope. I'm just a regular human being who does not profit from the use of a truck

Are you asking if he has a car dealership?

They've been missing their production targets by a fairly large margin. Ultimately if they can actually build the trucks they should be in a decent spot, but that is apparently difficult.

Yes, they are supply and production constrained; not demand constrained. Like most players in this industry in the current market they actually struggle to satisfy demand. That can only be fixed over time by investing in production capacity and supply chains.

Luckily, they have plenty of cash in reserve to survive the next few years. So, if they start addressing those issues, their revenue situation should improve as their production volume stabilizes.

It baffles me that they didn't come up with a better plan for getting a second factory online. If anything kills them, it will be the time taken to get to their second generation, high volume products.

Independent car companies don't survive without getting to hundreds of thousands of units a year. Tesla couldn't be profitable with less than 350k/year.

> Tesla received $465 million in DOE loans, which it paid back.

Why is "they paid the loan back" always a talking point?

Spot me $465 million for a couple of weeks and I will get it right back to you.

To anyone else confused while reading this. They lost 1.7 BILLION, the author of this comment mistakenly wrote 1.7 million. It's a simple typo.