Far from winning a place as the “Tesla of Trucks,” EV startup and one-time Ford partner Rivian is losing approximately $33,000 per vehicle sold despite a robust $80,000 MSRP.
The Wall Street Journal reports Rivian has actually managed to reduce the loss per vehicle as economies of scale kick in with growing production, but it is still burning through roughly $1 billion of its cash reserves quarterly.
Rivian’s troubles stem from several sources. Despite being in business since 2009, the automaker is still running its single factory location at only one-third of its maximum capacity. Consulting firm AlixPartners managing director Mark Wakefield remarked “you should be able to start to make money after three to six months.” However, Rivian has only produced 50,000 vehicles so far.
Further, engineering firms that have taken apart Rivian R1T pickup trucks or R1S SUVs report the vehicle seems to be overengineered. The skateboard chassis is extremely complicated, with major components that nest inside each other in layers. Much of the skateboard needs to be welded twice, first robotically and then by a skilled human welder using a hand-held unit.
Third-party engineers also note that the massive amounts of metal in the front end exceed the necessary amount for safety and structure, though Rivian argues this is needed for the top-tier crash test ratings it seeks and for “supercar-level stiffness.” Manufacturing consultancy firm A2Mac1 CEO Frank Bunte pointed out “the more sophisticated the engineering is from day one, the harder it is to ramp up the manufacturing.”
Rivian also made getting production started as quickly as possible its primary objective, while also, in the words of founder RJ Scaringe, making its models “the best-driving truck or SUV in the world […] because if it’s not, why would somebody pick us over a Ford or over a BMW?”
Accordingly, Rivian engineers made production the main focus and solving problems with the design something to be attended to later. The vehicles are stuffed with systems that only have a single function, because Rivian didn’t take the time to consolidate these parts into multifunctional components.
This adds greatly to the complexity of each unit as well as its cost. Rivian chooses to, or is compelled to, use its own in-house components for everything in its vehicles rather than off-the-shelf third-party systems. Wells Fargo analysis pegs the extra cost per vehicle at $25,000 in components alone.
The GM strategic approach to the EV market stands in strong contrast to that of Rivian. The General developed its GM Ultium batteries, electric GM Ultium Drive motors, its highly scalable BEV3 and BT1 platforms, and related technologies thoroughly first, while keeping production of EV models low. With fully matured and tested technologies to serve as a springboard, it can now ramp up production while likely avoiding most of Rivian’s cost overruns.
With its different strategy, GM expects its EV portfolio to be profitable by 2025. The automaker is also continuing to support its ICE vehicle lineup to fund the EV transition, while Rivian has no profitable internal combustion portfolio to sustain its efforts.
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Comments
This is out of context and I hope GMA is smart enough to know that. It’s operational losses that are killing them. Taking their losses divided by vehicles sold is how they determined that figure. They need more production and further to that more sales. It’s not the per unit vehicle cost or the “robust” $80,000 price tag that’s the issue.
Of they were truly losing $33k per unit then no amount of production ramp up would change that. Sometimes I wonder if anyone thinks anymore or just regurgitates what someone else said and lose a piece along the way like the telephone game.
🙄
The article says that scale would reduce losses, and that as of today, have lost $33K per vehicle.
If they change nothing, they will probably continue to lose the same amount per vehicle. You can’t assume the won’t keep losing the same per vehicle if they haven’t changed manufacturing cost, manufacturing scale, operational cost or vehicle sales price.
No need to have hurt feelings over current facts. 😉
I thought Rivian went bankrupt!?
Seems to be a lot of hit pieces on EVs lately. They’re the future, whether people like them or not. Netflix and Amazon are two successful companies that were operating at a loss for a decade or so before they became profitable. This article is low-hanging fruit for the mouth breathers who’ll eat this up.
I think this is more of an indictment of how the company is doing as opposed to EV’s in general. (sort of how they say that GM shouldn’t have the same loss per unit issue because they don’t need to rush to market)
Also, saying EV’s are the future whether people like it or not is ignorantly ignoring other technology such as fuel cell’s, (which are technically hybrids) as well as ICE engine that burn hydrogen (or even biofuel made from landfill mass).
There are many options for reducing overall emissions, and forcing EV’s while ignoring other options is as ignorant as refusing EV’s because ICE IS LIFE.
Ford is losing over 30K per EV sold as well
“Over engineered” my rump. There’s constant complaints about how the vehicle has mechanical issues, particularly where it shreds front tires because the automatic lowering system was rushed into production and the alignment is terrible lowered. If anything, it’s a case of not enough engineering time and rush to production
I agree except about biomass: regulators will not approve burning anything, petroleum or biomass. They are worried about heating up the planet, and anything that generates heat or carbon is anathema to them.
If we would look at global earth health, and not just CO2 emissions, landfill mass turned into fuel makes some sense for a while anyway. We will minimize ground water and soil pollution. The thing that drives me crazy is the focus on only CO2 and not anything else. So we don’t burn fuel for heat because CO2, but we pollute ground water manufacturing solar panels (with no regulations about it in China), or go full EV to reduce CO2 but consume a majority of the fresh water in some countries mining Lithium. There are more issues that CO2, but CO2 is the one they can measure and therefore tax.
I’m more concerned about total global health, not just one particular emission.
What’s the point of stopping the earth heating if we have no water to drink, or food to eat? just my opinion.
Point taken. Perhaps the regulatory structure should deal with other pollutants as as well.
Netflix and Amazon deal in low cost/high volume.
Rivian, and the majority of EVs, are not that.
Netflix foots 200 million dollar show seasons and movies all the time and pays a ton in licensing other’s content.
i would think losing 2k to 3k per vehicle would be acceptable but 33k in losses is troubling ! Unless rivian could one day recoup this on after warranty repairs and replacement parts
B.S.
Seems like the match checks out. Are you offended by facts?
The EV price war has just begun. There will be casualties.
Mr Brady, no doubt where your political rhetoric stands.
I keep wondering why there are people who continue to say that “EV’s are the future, whether people like them or not.” I wonder, who has been appointed dictator to tell me what I will drive, effectively removing any freedom of choice I might still have. Sorry, not sorry, but I will never own an EV. They are impractical, not nearly as “clean” as the government would have you think, and without subsidies, the power generated by part time sources such as wind and solar would far outweigh the cost of fossil fuels, of which we have plenty. The naysayers have been saying that we are running out of natural gas and oil for over 50 years but new sources keep popping up all over. If you want an EV you should have one. I don’t, so stop trying to force me into that arena. As as far as them being “the future”, we’ll just have to agree to disagree.
Ev’s are the future whether people like them or not, that’s not dictating to you what you have to drive.
Gas cars will always be around and as of now, ev’s aren’t practical for everyone but that is changing rapidly each year. The first generation volt was released around 2011 and with a 149hp electric motor and took almost 5 hours to charge for a range of 35 miles.
Here we are now with evs that can gain hundreds of miles in 15 minutes with tons of hp and torque. Are they as clean as they might appear? No. That will also change over time, there are already companies that can fully recycle battery packs into fresh new batteries.
Battery technology will get better, batteries will get smaller, more power dense, and much cleaner. We’re just scraping the surface of whats possible here. Cellphones used to be huge bricks and gas cars used to be slower than a donkey.
We can have duality. We can realistically understand that ev technology isn’t fully here yet and that its impractical for many, while also realizing that things will improve rapidly and that we should provide our input since we’re here for the revolution. Gas will be there and you can drive what you want.
Not a good business model, ICE trucks make big profits.
It’s not just production and assembly cost, it the support behind it all. Engineering and Design, management, IT department atnd many more.
I’ve seen dozens of R1Ts and R1S’s on the road in the past year. Hummer EVs? 1. Yeah, GM can learn a lot by golly.
Nobody ever talks about our government financially penalizing the auto industry for building Hybrids, they are financially penalizing them for building ICE vehicles demanding they only build EVs. This green move by our government is going to go down in history as one of biggest mistakes in the history of the auto industry. Every automaker is losing billions investing and building EVs. More studies are coming out everyday that the electrical grid will never support all EVs. Reliable charging stations other than Tesla cannot is a disaster, and consumers don’t want them and or cannot afford them. As I stated many times, I am not against alternative powered vehicles but our government green mandated policy is going to destroy this country not save it. Wake up America!
Can’t wait for Rivian to go bankrupt! The sooner the better. Same for FORD and GM. Bunch of ass kissers to the Biden administration!🤣🤣🤣🤣
Then you must be Donald Trump ass kisser. How can you miss!!
Good one Hunter!
Se people who say communism is the future despite 99% of people not liking communism.
Take a hike, a$$hole.
Stupid math. Apply what projected volumes are intended and are they making a buck then……YES! How about you speak of ramps properly not out the gate setup samples.
Rivian is not going to make it. If you buy one, you will have an orphan soon.
Yeah good luck getting parts and service in the future.
I hear they’ll make it up in parts sold for collision repair.
Rivian will end up like DeLorean.
Someone needs to take accounting 101 and learn the difference between fixed and variable costs. Rivian has a positive margin on each vehicle sold but the total contribution is not nearly enough to cover all the fixed costs of operation. What’s their breakeven quantity? I don’t know, but any rookie journo should have that estimate handy… this gets a D+. Needs improvement.
Applying their 10 year research cost on the 50,000 + vehicles they sold so far is not a correct thing. wsj is anti-electric and they said the same for Tesla, BYD as well.
Rivian is ramping up their production, with every 1,000 extra vehicles sold, this 33,000 loss will keep diminishing.
Look at BYD, they are thrashing everyone in chinese market and have started exporting cars to Asia, Europe and now their cars are sold in Mexico as well.
Oh, now there are 5 electric only makes in USA/Can.
Tesla, Rivian, Lucid, Vinfast, Fisker. As their sales keep growing, OEMs will be compelled to sell more.
Probably electric cars are a big fraud. Just this.