It’s also not really the product that matters. It’s service centers, parts, repairs, manufacturing capacity. The traditional companies have entrenched supply chains to get parts, and cars, across the country and into hands. All the new companies have to build that from scratch. Producing a couple of something great is an achievement, it is not a lead.
It is much much easier to catch up on the product side than it is to innovate. And because the actual product is only a portion of total value, the companies that are “way ahead” with the most futuristic cars are really the ones playing catch up.
And, with EVs, the rules of the business have changed, pretty much overnight.
https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
IMO: Rivian is ripe for a major investment from an outsider with a lot of cash, (like Amazon,) or for acquisition from a major automaker. An acquisition will only work if they are generally allowed to be independent and run with little interference. Given how direct sales without independent dealers are major part of the rule changes, it's very hard for Rivian to leverage an acquiring company's dealer network.
These are both hard to build, and require not only a monumental capital investment but also a lot of organizational experience to get right especially around QA and also can easily be a handicap for example established automakers often base their design choices on their existing supply chain and part availability as they often want to maximize part commonality between various models.
That said I do agree that as far as design goes it’s far easier for an established automaker to catch up to a contender than the other way around.
At least if they are willing to give up on some of the optimizations they squeezed out of the process over decades.
They not only put a lot of thought in to their trucks to make them some of the best EV trucks in the world, but if they stay focused they can continue to bring that level of care and attention to all their future vehicles. At that point the cloned features look cheap and are already behind by the time they hit the market. You see this kind of pattern play out all over the place.
Anyway, they’re competing more with range rover and jeep than trucks, which is fine (and also a mostly-unaddressed segment).
Why not? I’ve done “truck stuff” in a Rivian, like towing a 5 ton car trailer over the Sierra Nevadas. They have the same towing capacity and the Rivian has better battery range. They also cost the same similarly equipped. What’s the issue?
It’s good for typical suburban pickup truck uses though and could be a good farm truck since you could just charge it at home.
The F-150 Lightning is also a very good truck, and it gets to capitalize on the F-150 brand and customer base.
They addressed a gap in the market (smaller electric truck) rather than trying to go head-to-head with the biggest full-size truck brand in the industry.
Smart move.
How good the vehicle is becomes irrelevant if you can't make it at a price people want to pay. I still think Rivian can get there, but there is so far to go. They only delivered ~20k cars in 2022.
They did raise prices around 1 year ago but I've seen no evidence that they've prioritized orders for those who purchased after the price increase or who equipped more expensive options (options like tents and racks are shipping separately).
If you need a truck to haul stuff reasonable distances, EV isn't for you (at least not right now). If you want to save the world, then an electric car gets much better ranges with much smaller batteries and a fraction of the power usage.
This leaves EV trucks in a "why bother?" category.
And the reality is the waste majority of people simple don't drive long distances with trailers. Study after study shows how that simply not why most people buy trucks.
I guess don't say "The L-word" is some attempt to paint a rosy picture? "This is not use losing money! We're making a negativeprofit by investing!"
Negative gross profit means they are selling the cars for less than it costs to make them, which is like 'mega-loss.'
It's one thing to make $5k per truck, but then spend a lot on advertising to get the word out (eventually the word is out and you can slow down advertising/spread it across more sales).
It's another thing to lose $5k per truck and still have to spend money on advertising it.
EDIT: To be fair, this is because Rivian built big/expensive factories and still only makes a small amount of cars in those factories. A big question will be their ability to actually use those factories to their full potential.
If you know what Gross Profit is - negative Gross Profit is a fine concept. Why have a separate line item & term for positive and negative?
Building an auto manufacturer from scratch is pretty up there as one of the hardest/most expensive business challenge that exists. The fact that they have survived through the "burning money" stage to get to the other side at all is pretty powerful.
All the examples of car startups that failed only did so because they struggled to drum up sales in their day (DeLorean, Fiskar, Tucker, etc). On the other hand, I am seeing Rivians EVERYWHERE. They are selling them as fast as they can make them. On top of that, they seem to be doing a great job of releasing new models pretty quickly and skipping over the years of QC problems that plagued early Tesla.
If there's actually consumer demand for the car, and the marginal costs to manufacture are favorable - you can probably ignore all of the sunk development costs. SOMEONE would want to carry on the business. But we will probably see all parties involved eating or writing off as much of the debt as possible right now that they are transitioning to cash flow.
An important distinction. Otherwise selling cars would cost them money.
It gets especially bad when you are a new electric car company presenting yourself as a tech company so that you can get tech-company like speculators throwing money at things that make no logical sense whatsoever.
That also creates a timing mismatch - Rivian's revenue in Q4 was $663M and its cost of revenue was $1663M, but most of the $1663M is associated with vehicles that they haven't delivered or even manufactured yet, so they'll recognize that revenue in future quarters. I don't know what it actually costs them to manufacture one vehicle, but I bet it's a lot less than 2.5x the revenue they get from that vehicle.
Leaving aside the accounting and addressing your real question: From a quick search it looks like Rivian has raised a total of $23B of capital between VC rounds and its IPO, and it has $13B of current assets (mostly cash + inventory) as of 12/31, so that gives it a fairly long runway even at its current burn rate. But its burn rate - loosely, revenue minus expenses - is expected to slow over time, assuming that (1) its revenue grows faster than expenses (it's expecting deliveries to ~double this year, which should increase revenue at a similar rate) and (2) its unit economics work out, i.e., its "true" cost of revenue is less than its revenue.
Tesla didn't turn a profit for 8 years, until 2020, and from 2016-2018, regularly had 12 trailing months of $1B losses or more.
(It's pretty much impossible to start a car company without outside investment. Just look at its factory.)
They will probably run at a loss until they can figure out how to lower their costs, and then make more volume. Pretty typical stuff, really.
I also suspect they will need outside investment. Given their relationship with Amazon, I could see Amazon supporting them until they're profitable.
Sometimes this succeeds wildly: Amazon.
Sometimes the vision fails to materialize: Uber.
Sometimes the vision was fatally flawed from the start: Carvana, MoviePass, ...
But they have the advantage that the IPO at the exact right moment and have absurd amounts of cash to burn.
Like... I'm not going to load this up with fence posts and go out for a 12 hour day... plugging in the fence post digger to the battery... I'd be afraid that since I can't just toss in an extra gas tank that I'd be walking home.
And I can't see this pulling a horse trailer across the Great Plains stopping every 300 miles to recharge for several hours. (But I know North Dakota did finally get a Tesla charging stating!) Just feels like it's not quite setup for "real" use.
I can totally see some suburban guy using this to go camping. But... even that, like I don't want to leave this parked at the trail head for a week, when I'm hiking. I bet the battery would hold a week, but like what if it didn't? I couldn't just bum a jump from another camper.
One of the joys to being out in nature, is being away from "it all" -- including being away from the population density required to make charging stations viable. I think that's always going to be a fundamental flaw with electric "adventure" vehicles.
Cool to look at. Promising tech. But EVs are still "toys" in my mind.
Every single stastic and analysis shows that the waste majority of truck drivers barley ever use trailer and haul stuff in the extreme minority of case. And even then they mostly haul locally.
> But EVs are still "toys" in my mind.
By that definition, most F-150 are toys.
The reality is there is a 2 million a year truck market and EV trucks are totally reasonably for 70% of that market and that is growing fast.
But I legit spend a month a year on my family ranch... I still have relatives who live out there full time. 20,000 acres, nearest neighbor is 10 miles away, nearest gas station is 30 miles away, nearest grocery store is 70 miles away.
There aren't a lot of ranchers left, but it's not a fantasy for them. They need stuff that works. I don't know why you find that hilarious.
And for that matter... CA and TX both have energy production issues. We can't keep our homes powered during a blizzard, or during August, and I have serious doubts that adding more EVs to the grid will be sustainable.
Love to be proven wrong, but all the EVs come across as "rich man toys" to me still. Would the light stay on if everyone had a Tesla to virtue signal in?
> Revenue: 663 > Cost of Revenues: 1,663 > Gross Profit: (1,000)
Operating Expenses (Totals 795):
> R&D: 402 > Selling, general, administrative: 393
Loss from Operations: (1,795)
Interest income: 99
Interest expense: 33
Other net income: 6
Loss before taxes: (1,723)
Remember, all of these are in millions. So Rivian managed to lose 1.7 billion dollars in 3 months. That comes out to nearly 19 million dollars lost every single day.
