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I see commentary that all their R1 vehicles so far are essentially for building their reputation, not financially beneficial, and Rivian will start making money

by bo1024 3y ago

I see commentary that all their R1 vehicles so far are essentially for building their reputation, not financially beneficial, and Rivian will start making money for real when the R2 releases in a couple years. And maybe on the Amazon van. I don't know if the numbers support that, but I think the R1 is definitely a steal even at the current prices for the amazing package you get. The problem for Rivian is that most people don't actually want all that value i.e. track racing ability and off roading ability at the same time. So the flagship vehicle builds their brand but a lower priced compromise vehicle would be needed to make money.

jillesvangurp 3y ago
Rivian is following a similar strategy as Tesla when they were perpetually running out of money but were growing rapidly. They don't have a demand problem and they don't need to worry about what "most people" want because more people want what they have right now than they can actually produce cars for. What they have right now is of course a premium car aimed at the most lucrative segment of the market and people are lining up to get one. Their core problem is building more cars and do it cheaper. Scaling production will eventually get them to the point where they become profitable. This requires reducing cost and working on manufacturing processes. That's a capital intensive business and the risk is that capital runs out before the company becomes profitable. That's why the stock is down. Several other EV startups have similar issues. And actually several legacy car manufacturers aren't doing much better but simply have more capital. Quite a few EVs in the market are being sold below cost price right now. Once Rivian nails profitability is when they can start worrying about mass market appeal. They are clearly starting to think about that. Tesla did the same thing until they went mass market with the model 3 and y. And even those had a waiting list. The model 3 ramp up nearly killed the company. But once they fixed that it became a revenue machine. Before that they did the model s in much smaller numbers and the roadster in even smaller numbers. They did not become profitable until just a few years ago. Now they are printing money of course and making millions of vehicles. And they are running circles around their competition in terms of cost. Rivian looks like it might be on track to replicate that success but they have some way to go.
local_crmdgeon 3y ago
I agree - they actually compete with Raptors, but people buy them to use them as grocery getters. They can, stock, run Baja trails and then beat a Ferrari. That is a lot of truck. Most people will never use that much truck. TFL has a great take on this: "Most people will never offroad beyond what a Z71 can do. You do not need a Rubicon, you are not that good at offroading" Matches my experience.
rnk 3y ago
They are steadily reducing their spending per vehicle each quarter, they published a production plan and cost reduction plan, they are exceeding it a little bit. They were the 5th biggest ev producer, ahead of multiple german companies. They have to continue improving cost efficiency, increase production, and design and produce a cheaper "2" model line, and they seem to be succeeding in all of those things. The R2 line will be announced in a year or so with details.

by bo1024 3y ago

jillesvangurp 3y ago

Rivian is following a similar strategy as Tesla when they were perpetually running out of money but were growing rapidly. They don't have a demand problem and they don't need to worry about what "most people" want because more people want what they have right now than they can actually produce cars for. What they have right now is of course a premium car aimed at the most lucrative segment of the market and people are lining up to get one. Their core problem is building more cars and do it cheaper. Scaling production will eventually get them to the point where they become profitable. This requires reducing cost and working on manufacturing processes. That's a capital intensive business and the risk is that capital runs out before the company becomes profitable. That's why the stock is down. Several other EV startups have similar issues. And actually several legacy car manufacturers aren't doing much better but simply have more capital. Quite a few EVs in the market are being sold below cost price right now. Once Rivian nails profitability is when they can start worrying about mass market appeal. They are clearly starting to think about that. Tesla did the same thing until they went mass market with the model 3 and y. And even those had a waiting list. The model 3 ramp up nearly killed the company. But once they fixed that it became a revenue machine. Before that they did the model s in much smaller numbers and the roadster in even smaller numbers. They did not become profitable until just a few years ago. Now they are printing money of course and making millions of vehicles. And they are running circles around their competition in terms of cost. Rivian looks like it might be on track to replicate that success but they have some way to go.

local_crmdgeon 3y ago

I agree - they actually compete with Raptors, but people buy them to use them as grocery getters. They can, stock, run Baja trails and then beat a Ferrari. That is a lot of truck. Most people will never use that much truck. TFL has a great take on this: "Most people will never offroad beyond what a Z71 can do. You do not need a Rubicon, you are not that good at offroading" Matches my experience.

rnk 3y ago

They are steadily reducing their spending per vehicle each quarter, they published a production plan and cost reduction plan, they are exceeding it a little bit. They were the 5th biggest ev producer, ahead of multiple german companies. They have to continue improving cost efficiency, increase production, and design and produce a cheaper "2" model line, and they seem to be succeeding in all of those things. The R2 line will be announced in a year or so with details.