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Though the same was said about Tesla. My understanding is that Rivian has a LOT of cash in the bank. ($16B? Don't recall the exact amount.) It seems like they have a couple years to ramp up and achieve economies of scale, not to mention they could raise more money -- especially if at the time it's clear they're close and they just need a bridge to ramp up a bit more.

I guess the thing to keep an eye on for me is going to be their margins. They will need to get to positive margins or else all is lost, and then continue to show progress thereafter. But I expect it to be slow; it's not like we'll see big changes week to week or month to month.

My wife will be disappointed if they go under; she wants an electric minivan people-carrier bigger than the Model X, and right now the R1S looks like it. Hopefully we'll see more solid entries in that space in the coming years.
Thing is, after their disaster decision to keep prices rolled back for the first 55,000 customers, their margins are likely to be negative for the next two years. They see so afraid of upsetting customers that they don’t make basic business decisions properly. We shall see how far this gets them. Money does not grow on tree forever.
 
Thing is, after their disaster decision to keep prices rolled back for the first 55,000 customers, their margins are likely to be negative for the next two years. They see so afraid of upsetting customers that they don’t make basic business decisions properly. We shall see how far this gets them. Money does not grow on tree forever.
I would argue that not alienating your most ardent customers is the correct business decision. We know that their margins will be negative at the original prices but we don’t know how negative. If we knew that, together with their cash-on-hand, their decision might make more sense to us. They obviously feel they can weather 2 years worth of losses in order to maintain a good reputation, but only time will tell.
 
We know that their margins will be negative at the original prices but we don’t know how negative. If we knew that, together with their cash-on-hand, their decision might make more sense to us.

But we do know that from what they reported for Q1:

1655303853952.png


Their current margin is -528%. (That is likely to improve as they scale, but it isn't a good starting point.)

And cash on hand:

1655303915985.png


So they have enough cash to keep going for a while, but they have to get the volume up and the costs down if they are going to make it. I think the Q2 results will give us a better idea how things are going.
 
Though the same was said about Tesla. My understanding is that Rivian has a LOT of cash in the bank. ($16B? Don't recall the exact amount.) It seems like they have a couple years to ramp up and achieve economies of scale, not to mention they could raise more money -- especially if at the time it's clear they're close and they just need a bridge to ramp up a bit more.

I guess the thing to keep an eye on for me is going to be their margins. They will need to get to positive margins or else all is lost, and then continue to show progress thereafter. But I expect it to be slow; it's not like we'll see big changes week to week or month to month.

My wife will be disappointed if they go under; she wants an electric minivan people-carrier bigger than the Model X, and right now the R1S looks like it. Hopefully we'll see more solid entries in that space in the coming years.

They have a lot of cash in the bank, but they are spending it at something like 5X was Tesla did at similar size, with not the same results in ramp speed. Their production ramp has been painfully slow.
 
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They have a lot of cash in the bank, but they are spending it at something like 5X was Tesla did at similar size, with not the same results in ramp speed. Their production ramp has been painfully slow.
Yes, it's the production ramp that is doing damage to Rivian. You can make all sorts of excuses why (and Rivian has), but it doesn't matter. If they don't start exponentially ramping soon, they will continue to eat up cash very quickly. One of three things is going to happen in the next quarter or two. 1) They fix their ramping problems and start to ramp, 2) they don't fix the ramping issue, and throw in the towel, laying off production workers until they can figure out how to ramp, or 3) they don't fix the ramping issue and continue hemorrhaging cash at an alarming rate.

I'm betting on 3). I'm still buying a Rivian, because in the worse case analysis, Toyota comes in and buys them for pennies.
 
My wife will be disappointed if they go under; she wants an electric minivan people-carrier bigger than the Model X, and right now the R1S looks like it. Hopefully we'll see more solid entries in that space in the coming years.

The chances of Rivian liquidating at this point are approaching ZERO. The brand has too much value.

IF Rivian is hemorrhaging money and Bezos taps out some Chinese automaker will buy Rivian and either assemble Rivians in the USA with Chinese parts and/or just manufacture them in China to slash cost.

Ford planed to manufacture 25k Mach-e and 25k Explorer/Aviator EVs in 2021 but where swamped with Mach-e orders. Ford initially planned to manufacture 16k F150 Lightnings and 16k Expedition "Lightnings" this year but were swamped by F-150 Lightning orders.

GM has approved Escalade EVs. As soon as capacity exceeds demand for Escalade EV GM will almost certainly bring Tahoe EV and Suburban EV to market.

Eventually, in the not too distant future, someone will fill demand for full size three row electric SUVs. And, no, that is not a Model X. Maybe a CyberSUV.
 
Thing is, after their disaster decision to keep prices rolled back for the first 55,000 customers, their margins are likely to be negative for the next two years.
Even if all 55k convert that's 55k * ~10k = $550m. It's a rounding error in terms of Rivian's survival. And investors will look forward to margins at the new prices.

The real issue is why their COGS are so high. Even if I make extreme assumptions for fixed costs I still get variable costs above 150k per truck. That's what Elon is going on about. Scaling doesn't reduce variable costs. If it's all parts and materials they're screwed, but I can't imagine they're that dumb. So I'm hoping it's something like unprecedented scrap and rework levels. We can only guess, though, because they aren't talking.
 
Even if all 55k convert that's 55k * ~10k = $550m. It's a rounding error in terms of Rivian's survival. And investors will look forward to margins at the new prices.

The real issue is why their COGS are so high. Even if I make extreme assumptions for fixed costs I still get variable costs above 150k per truck. That's what Elon is going on about. Scaling doesn't reduce variable costs. If it's all parts and materials they're screwed, but I can't imagine they're that dumb. So I'm hoping it's something like unprecedented scrap and rework levels. We can only guess, though, because they aren't talking.

No surprise on COGS prices if you watch the Rivian teardown that Munroe is doing. It's not a "bad", but there are so many redundancies that are just not needed and cost extra, and several design choices that cost lots of money. It's pretty obvious that there is still a lot of "legacy auto" thinking in how they did many things.

One can only hope that Rivian will have a serious sit-down with Munroe and pay them to help them streamline production and reduce COGS.
 
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Even if all 55k convert that's 55k * ~10k = $550m. It's a rounding error in terms of Rivian's survival.
The increase was a minimum of $12k, and some past $20k. Also, I think there were closer to 75k pre-orders. So figure if everyone followed through it would be closer to over $1B. (Though they can afford it if they actually start making a profit after they get through the pre-orders.)

And investors will look forward to margins at the new prices.

A ~$15k increase in revenue per vehicle isn't going to be anything for investors to look forward to right now. Costs are going up even more than they were when they raised the prices.
 
The real issue is why their COGS are so high. Even if I make extreme assumptions for fixed costs I still get variable costs above 150k per truck. That's what Elon is going on about. Scaling doesn't reduce variable costs. If it's all parts and materials they're screwed, but I can't imagine they're that dumb. So I'm hoping it's something like unprecedented scrap and rework levels. We can only guess, though, because they aren't talking.

"I can't imagine they're that dumb". Honestly, we can't discount the possibility. We already know that before the IPO there was an executive trying to sound the alarm bell about negative margins. It is a fact that they were "that dumb" about not raising prices until way too late.

Investor management has been a disaster. Anytime you have big institutional shareholders dumping huge blocks on the exact day the lockup expires, you've got a problem.

No surprise on COGS prices if you watch the Rivian teardown that Munroe is doing. It's not a "bad", but there are so many redundancies that are just not needed and cost extra, and several design choices that cost lots of money. It's pretty obvious that there is still a lot of "legacy auto" thinking in how they did many things.

One can only hope that Rivian will have a serious sit-down with Munroe and pay them to help them streamline production and reduce COGS.

Yes indeed. Tesla has always optimized the snot out of their vehicles from the get go. And now five years after delivering the first model 3, Tesla has incredibly awesome COGS through five years of further optimization. Meanwhile the R1T doesn't look like it has had ANY cost reduction optimization anywhere. Somewhere along the way, Rivian forgot that EVs are naturally expensive due to the battery and you have to work really damn hard to get them anywhere near cost competitive with an ICE.

And with the issues of production ramping, supply chain, design optimization for cost reduction, inflation, worker shortages, and a bad financial environment (possible recession and certainly an investment winter), they think that spending executive time on starting a new factory is the thing to do?

I've asked in previous screeds for evidence that Rivian management has their *sugar* together. I haven't seen it yet.

Having said all that, @RobStark is correct that the vehicles and brand aren't going to go away. In the worst case scenario, someone with deeper pockets and better management will buy them. So I wouldn't have (and don't have) any problem buying a Rivian vehicle. Just stay away from the stock 😁
 
The chances of Rivian liquidating at this point are approaching ZERO. The brand has too much value.
I would not be so optimistic, the product is certainly great but Rivian don't have enough control of the supply chain.

Contrary to Tesla at the time of the production of the first Model S, in the case of Rivian, a lot of components are outsourced,
so it's very difficult to alter requirements given to suppliers to stream down the design and the costs.


Rivian spent already about ten year to develop the RT1, but when watching Sandy Munro teardown videos,
I noticed a succession of red flags after red flags. The issue was not too much about the quality but about the manufacturing cost.
It seems that every team tried to provide the best possible solution without looking at a more simple solution providing similar results.

The whole product seems to be over engineered, from an ultra sophisticated dash board, showing that Rivian
searches to be a luxury vehicle, to justify it's price, and to be also an ultra reliable utilitarian vehicle, by having
for example, two 12 V batteries without any real justification of this requirement.

I really think Rivian should have designed the RT1 version more like an utilitarian vehicle and the RS1 as a more luxurious vehicle.

If you look at the overall Tesla production, the Model S and X represent about 10% of total Tesla production of the Model 3 and Y.
This shows that the market for luxury EV is very limited, so Rivian really needs to deliver a smaller version, similar price to the Model Y.
 
"I can't imagine they're that dumb". Honestly, we can't discount the possibility. We already know that before the IPO there was an executive trying to sound the alarm bell about negative margins. It is a fact that they were "that dumb" about not raising prices until way too late.

Investor management has been a disaster. Anytime you have big institutional shareholders dumping huge blocks on the exact day the lockup expires, you've got a problem.



Yes indeed. Tesla has always optimized the snot out of their vehicles from the get go. And now five years after delivering the first model 3, Tesla has incredibly awesome COGS through five years of further optimization. Meanwhile the R1T doesn't look like it has had ANY cost reduction optimization anywhere. Somewhere along the way, Rivian forgot that EVs are naturally expensive due to the battery and you have to work really damn hard to get them anywhere near cost competitive with an ICE.

And with the issues of production ramping, supply chain, design optimization for cost reduction, inflation, worker shortages, and a bad financial environment (possible recession and certainly an investment winter), they think that spending executive time on starting a new factory is the thing to do?

I've asked in previous screeds for evidence that Rivian management has their *sugar* together. I haven't seen it yet.

Having said all that, @RobStark is correct that the vehicles and brand aren't going to go away. In the worst case scenario, someone with deeper pockets and better management will buy them. So I wouldn't have (and don't have) any problem buying a Rivian vehicle. Just stay away from the stock 😁

You bring up a lot of great points and insights. Though, are you making that advice based on being objective or subjective (and partial towards Tesla)? I've found comparing any company to Tesla just doesn't make a lot of sense as it's a once in a lifetime company. Rivian isn't Tesla; though, it is a good company that you admit you want to buy it's product and, consequently, services.

The people that invested in Tesla back in 2012-2013 got early adoption to either buy or experience a Model S and, then, bought the stock as an investment. The same process seems to, admittedly to you and a number of others here, be happening with Rivian too.
 
You bring up a lot of great points and insights. Though, are you making that advice based on being objective or subjective (and partial towards Tesla)? I've found comparing any company to Tesla just doesn't make a lot of sense as it's a once in a lifetime company. Rivian isn't Tesla; though, it is a good company that you admit you want to buy it's product and, consequently, services.

The people that invested in Tesla back in 2012-2013 got early adoption to either buy or experience a Model S and, then, bought the stock as an investment. The same process seems to, admittedly to you and a number of others here, be happening with Rivian too.

As you point out Rivian isn’t Tesla. But even Tesla went through at least three near death experiences, none of which was due to anything overtly wrong. Ie. It wasn't obvious to us on these forums that they were trending towards insolvency at the time.

It is hard to tell whether or not Rivian is getting its act together. Unlike Tesla and Elon, Rivian doesn’t say much. The only thing guiding us is meager publicly available information in sec filings, production rates via forums like rivianforum.com, and things like their pricing debacle. Based on that, it does not look, at this point in time, that Rivian has turned their ship around. Could they already have, or could they in the future? Sure. But “investing” based on such a hope is like putting your money on red in Vegas.

People see Tesla and think others can do that. I see Tesla and think, wow, they threaded that once in 100 years needle. Starting a car company is really really hard and you’ve got to approach all these startups with the eye that they aren’t going to make it unless they have a lot of things going for them. Tesla was unique in that they had the EV market to themselves for 16(!) years. Now, Tesla didn’t have the funding that Rivian has, so that’s a plus for Rivian, kinda. I say kinda because an investing maxum is that too much money makes you stupid.

Anyways, did you see that Tesla raised prices across the board significantly today? That’s because they have a 6-12 month backlog and are projecting input cost increases. Rivian has a 3 year backlog. Where’s their price increases? Tesla did almost monthly increases last year…

So, I ask you again, what has Rivian done in the last year which gives evidence of good execution?
 
As you point out Rivian isn’t Tesla. But even Tesla went through at least three near death experiences, none of which was due to anything overtly wrong. Ie. It wasn't obvious to us on these forums that they were trending towards insolvency at the time.

It is hard to tell whether or not Rivian is getting its act together. Unlike Tesla and Elon, Rivian doesn’t say much. The only thing guiding us is meager publicly available information in sec filings, production rates via forums like rivianforum.com, and things like their pricing debacle. Based on that, it does not look, at this point in time, that Rivian has turned their ship around. Could they already have, or could they in the future? Sure. But “investing” based on such a hope is like putting your money on red in Vegas.

People see Tesla and think others can do that. I see Tesla and think, wow, they threaded that once in 100 years needle. Starting a car company is really really hard and you’ve got to approach all these startups with the eye that they aren’t going to make it unless they have a lot of things going for them. Tesla was unique in that they had the EV market to themselves for 16(!) years. Now, Tesla didn’t have the funding that Rivian has, so that’s a plus for Rivian, kinda. I say kinda because an investing maxum is that too much money makes you stupid.

Anyways, did you see that Tesla raised prices across the board significantly today? That’s because they have a 6-12 month backlog and are projecting input cost increases. Rivian has a 3 year backlog. Where’s their price increases? Tesla did almost monthly increases last year…

So, I ask you again, what has Rivian done in the last year which gives evidence of good execution?

Tesla went through at least three near death experiences going at breakneck speed in a hostile environment. It's a radically different company and its progress is incredible. The environment Rivian is in is far more positive towards EV manufacturers than 2012-2019. They're a good company with a lot of support; way different scenario. I don't think the two can be compared, tbh, other than they're building electric vehicles.

Further, is Tesla going to take the entire EV SUV market in the next 5 years (i.e. completely replace the entire SUV ecosystem)? or is there space available for other players?

I'm not trying to sell you on Rivian or recommend you to invest in them (I'll leave that strictly to Tesla lol); though, I invested in a $23B company in Rivian (right now) and trying to reiterate that it's certainly not a gamble.
 
The environment Rivian is in is far more positive towards EV manufacturers than 2012-2019. They're a good company with a lot of support; way different scenario.

Oh, the environment is great for EVs. But can Rivian deliver into that environment with positive margins? We simply don't know.

Further, is Tesla going to take the entire EV SUV market in the next 5 years (i.e. completely replace the entire SUV ecosystem)? or is there space available for other players?

Sure, lots of space, for whoever can manufacture at volume. It isn't even clear that the majors (Ford, VW) can manufacture at volume due to battery supply constraints, but we shall see. If Rivian can get the R1T and R1S and EDV out the door in real volume AND do it at positive margins, then, sure, Rivian will do well. Sales backlog is not the issue.

I'm not trying to sell you on Rivian or recommend you to invest in them (I'll leave that strictly to Tesla lol); though, I invested in a $23B company in Rivian (right now) and trying to reiterate that it's certainly not a gamble.

I'm still waiting for anyone to show me something that Rivian has done in the last year which demonstrates good execution. Because I can show you a 10 point list of things that demonstrate poor execution.
 
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I'm still waiting for anyone to show me something that Rivian has done in the last year which demonstrates good execution. Because I can show you a 10 point list of things that demonstrate poor execution.

Quite honestly, they've made a solid product and service that you, and many others based on their backlog, want to buy. That's pretty difficult in of itself. It's compelling. They've delivered a couple thousand of these vehicles and that's very difficult to do too. Investments aren't easy, as you probably know, even if we're living in the environment of easy 10x'ers to anyone that pays enough attention to public software companies in the past 10 years.

This is a different situation post-10-year-bull-run and requires a different mindset and framework that I'm still building myself.
 
Quite honestly, they've made a solid product and service that you, and many others based on their backlog, want to buy. That's pretty difficult in of itself. It's compelling. They've delivered a couple thousand of these vehicles and that's very difficult to do too. Investments aren't easy, as you probably know, even if we're living in the environment of easy 10x'ers to anyone that pays enough attention to public software companies in the past 10 years.

This is a different situation post-10-year-bull-run and requires a different mindset and framework that I'm still building myself.

Youre aren’t listening or responding to what I’m saying, so there’s no point continuing. Hint: sell at volume with positive margins.
 
Quite honestly, they've made a solid product and service that you, and many others based on their backlog, want to buy.

And that's great, BUT financial fundamentals still apply, and the fact is Rivian is currently burning through a LOT more cash than they are making. Hopefully that trend reverses in the next two years because if it doesn't then they could be at very serious risk of going under.

Many businesses in history have made fantastic products, but if they do so while losing tons of money they always fail.
 
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How many times has Tesla gone to the capital markets to grow? Rivian has raised money once.

Production returns cash even if not profitable. Early in the production ramp the burn rate will always look terrible.

I'm more concerned about Rivian's management than the product or current cash burn. Their customer management has been atrocious.