The big question is can Rivian reach break-even? They need a lot of cost cutting to achieve that. It doesn’t look like that scale will help them, so what will? Cutting features? There are only a couple of stalks and sensors they can eliminate. If they don’t do that (break-even) fast, they will need to raise a lot of money. They can only IPO once, and they got a lot of easy money with that IPO. I see nothing but dilution until they achieve break even. Dilution is not good if you already own Rivian.
Ferrari breaks even with small scale manufacturing, but with 52% gross margins.
Ferrari sell less than 10,000 cars per year. The starting price is over $250,000
Per car.
Rivian would need to charge a multiple of their MSRP to achieve that.
Clearly their sales would collapse at that price.
Scale manufacturing kicks in at probably over 100,000 units depending
On high the fixed costs are. Yearly amortized fixed cost divided by 100,000
Should be as low as possible.
As an example, a $5,000,000,000 fixed cost plant amortized over 10 years
Would be $500,000,000 per year, divided by 100,000
Cars would imply a fixed cost charge of $5000 per car.
A $50,000 price car with gross margins of 20%, would cover
The $5000 fixed cost with $5,000 left to cover the rest.
Rivian produced 57,000 trucks and delivered 50,000 trucks in 2023.
Rivian gross margins were minus 38% in the year 2023.
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