“That doesn’t feel awesome,” Gibson admitted. But as one of many uncommon homeowners of Rivian’s maiden product, the R1T Launch Edition with a beginning value of $79,500, his enthusiasm for the five-seat pickup truck he’s been driving for practically a month — his first EV — has soothed his anxiousness about his inventory portfolio.
“The truck itself is better than it has any right to be. The build quality is head and shoulders above similarly priced (or more expensive) EVs,” he mentioned.
After the corporate’s glowing debut, the inventory market has taken a dim view of Rivian’s prospects — and provide chain disruptions have slashed its manufacturing estimates. In addition, in a letter to the National Highway Traffic Safety Administration, the corporate mentioned it’s recalling 502 of its RT1 vans, or about 10 p.c of its complete manufacturing so far, for a defect within the deployment of its air bag that would injure a toddler in a automobile crash.
But in an earnings name on Wednesday, Rivian CEO R.J. Scaringe mentioned the start-up EV truck maker is assured it might overcome manufacturing hurdles and put the worst of its issues within the rear view mirror. Rivian reported 90,000 preorders for its R1-series truck and SUVs as of May 9, signaling continued robust demand.
“Let’s call it like it is, Rivian has been a train wreck since its IPO and an overall black eye for the EV industry,” Wedbush analyst Dan Ives wrote in a analysis word Wednesday night time. “The company has potential to change the EV and auto industry with much hype coming out of the gates, and instead has been a massive disappointment.”
Frustrations apart, Ives continues to be bullish on the corporate, noting loads of curiosity as expressed within the preorders.
“This quarter was not without issues, but it does finally appear that Rivian is on the right track,” he wrote.
The curler coaster experience for the Irvine-based start-up culminated on this previous week’s staggering share value drop after Ford offered about 8 p.c of its holdings, or 8 million shares, when the post-IPO lockup interval expired.
Ford nonetheless holds about 94 million shares. Amy Mast, director of company communications for Rivian, mentioned: “It’s not unusual to see investors take an opportunity like this after a successful IPO. We’re grateful to them for supporting our journey to bring the first EV truck to market.”
However, Ford’s dumping of a few of its Rivian shares comes proper as the primary batch of consumers obtain its personal iteration of the electrical pickup truck, the Ford F-150 Lightning. Developed in-house, the truck hits the market at about half the worth of its start-up competitor.
On Wednesday, Rivian reported lower-than-expected income of $95 million for the primary quarter, towards a lack of $1.6 billion.
In March, the corporate bungled the announcement of great value will increase for its R1T vans and R1S SUVs — $12,000 and $14,500 respectively — solely to reverse course after extreme backlash from prospects who had already put down $1,000 deposits. Rivian shortly mentioned it could honor the unique value for these prospects.
The similar month, the corporate introduced it could produce solely half of the 50,000 automobiles it had deliberate this yr due to logistical and provide chain considerations.
Yet even after the worth will increase and manufacturing delays, the corporate acquired over 10,000 R1T preorders within the United States and Canada, regardless of a comparatively hefty common value of over $93,000, Scaringe mentioned within the earnings name.
“We’ve done all this in one of the most challenging operating environments in decades. We have $17 billion of cash and believe we have a clear path to launch R2 in Georgia in 2025 with our current cash on hand,” Scaringe mentioned, referring to the corporate’s midsize SUV.
The firm additionally hoped to ramp up in its Normal, Ill., plant to its full capability of 150,000 automobiles a yr, Scaringe mentioned. From January to March, the corporate produced 2,553 automobiles and delivered 1,227 to prospects like Gibson.
“We’ve seen really the worst of it, or sort of the valley if you will, of the supply constraints,” Scaringe mentioned.
Like different carmakers throughout the pandemic, Rivian has been hit with large provide chain points, elevated materials prices affecting battery manufacturing and logistical hurdles.
But Jessica Caldwell, government director of insights at Edmunds, famous that the shortages of semiconductors and microchips over the previous yr have been significantly humbling for start-up carmakers.
Although automakers and producers typically have scrambled to take care of pandemic disruptions, it’s been that a lot more durable for smaller firms like Rivian which can be nonetheless attempting to ramp up manufacturing.
In addition to beginning the method from scratch, a start-up wouldn’t essentially have the clout or relationships with producers or the promise of huge volumes of the extra established gamers.
“Production in general is largely underestimated — it almost bankrupted Tesla when they started to ramp up and try to go mass market,” Caldwell mentioned.
“For somebody like a Ford or Toyota, it could seem fairly easy and straightforward, but only because they’ve been doing it for decades,” she mentioned.
Meanwhile, one other flashy EV maker bursting onto the scene, Lucid Group Inc., has suffered comparable setbacks leading to chopping manufacturing forecasts and likewise having to boost costs for its luxurious sedans, which have been initially poised to compete straight with Tesla.
“A lot of start-up companies are going to realize that it’s pretty cool to create that concept and a niche vehicle that has low volumes, and is very expensive,” Caldwell mentioned. “But frankly, for a company to survive in the long term, they have to appeal to the mass market. That means producing thousands upon thousands of vehicles,” she mentioned.
Rivian debuted with robust monetary backers like Ford, Amazon, T. Rowe Price and BlackRock.
Ford initially invested $500 million in Rivian. Amazon owns a couple of 20 p.c stake within the firm and positioned an preliminary order of 100,000 of Rivian’s custom-made industrial supply vans. (Amazon founder Jeff Bezos owns The Washington Post.)
But whereas start-ups like Rivian and Lucid struggled to convey their fashionable guarantees to actuality, conventional carmakers developed their very own electrical vans and SUVs. These at the moment are coming onto the market in larger numbers and at largely cheaper price factors, Caldwell mentioned.
“Ford has a lot riding on the truck market. They’ve been king of it for years. So they don’t want the new up and comer to come and take their crown away,” she mentioned.
Its first electrical pickup, the Ford F-150 Lightning, is on its option to dealerships at about half the worth of the Rivian RT1. But that’s not the one competitors. General Motors Silverado EV is predicted to return out in early 2023, GMC’s Hummer EV is at present accessible, and General Motors is planning to launch each the Chevrolet Equinox EV and Blazer EV subsequent yr.
“A lot of people in the United States can’t afford that price point of over $70,000. But a Ford 150 Lightning for $40,000 is maybe something that they can afford,” she added.
Gibson, a senior supervisor at Google, stays all in on Rivian. He mentioned he has zero regrets concerning the $85,392.99 he spent (minus his $1,000 deposit and earlier than factoring within the $7,500 federal tax rebate).
The giant dimension is useful as he strikes into a brand new residence and for storing his snowboard and tenting gear, in addition to touring with a husband, a Great Dane and a Weimaraner. He’s additionally the moderator of the Rivian subreddit.
As for the corporate’s future and his personal inventory holdings, he’s taking a protracted view: “It might be a bumpy ride, but the product itself is incredible.”