Rivian has moved quickly to become a market leader in the electric vehicle (EV) space, launching its innovative EV truck (R1T), SUV (R1S) and numerous delivery vehicles for Amazon customers. Its success was highlighted with a blockbuster IPO earlier this year.
Unfortunately, the company's skateboard chassis design is
contributing to what are already high production costs – Rivian is losing money
on every vehicle it sells. The situation has put into question Rivian’s
financial uncertainty: can they survive selling at a loss?
Even despite these challenges, Rivian still managed to win MotorTrend Truck of the Year in 2022; however, further developments will shed light on whether or not the company’s current business model will be sustainable over time.
Rivian Lost around $32,595 for Every Vehicle Sold in Q2 2023
Rivian’s financial troubles are increasingly in the
spotlight as the electric vehicle startup revealed that it has lost an
incredible sum of money for every vehicle sold.
In Q2 2023, Rivian reported a stunning net loss of $32,595
per car produced and sold in that quarter!
At such a vast difference between cost and sale price, many
have begun to question if Rivian is utilizing expensive engineering practices
despite being strapped for cash during its attempt to release two models this
year: The R1T truck and R1S SUV.
The report suggested that one of the reasons for these high
costs could be linked to Rivian’s tedious crash tests which require greater
amounts of additional metal and weight for vehicles.
This increases production cost as well, making it tougher for Rivian to stay afloat when selling at a loss like this.
Rivian's Skateboard Chassis is a Major Contributor Towards Higher Costs
Rivian’s skateboard chassis, as complex and impressive as it
may be, is a major contributor to its current high costs.
Areas of the chassis have to be welded twice - once by a
robot, and then again manually - which makes production more time consuming
than in traditional vehicle-building processes.
Although costs are expected to go down per vehicle with
increasing production, the numbers have yet to reach that level.
In Q2 2023, 13,992 vehicles were produced; the Wall Street
Journal reported on Rivian producing 16,034 vehicles in Q3 – contradicting
analyst assertions expecting 14,000 for that quarter alone. This raised total
expected production from 52K up to 60K units across 2020–2021 combined.
Rivian still has a lot of improvement to do before reaching
even half of Ford’s production figures from 2022 (1.8 million vehicles) – let
alone achieving similar success in terms of overall output.
The complications that come with building Rivian’s skateboard chassis are only part of the challenge that lies ahead for them, but it’s definitely an important one to take into account none the less.
Learn More: Tesla Cybertruck Sets the Bar High with Perfect Fit and Finish!
Rivian CEO RJ Scaringe says Rivian Can Become Profitable Soon!
Rivian CEO RJ Scaringe believes the company can achieve
profitability soon thanks to strong customer demand and improved losses per
vehicle. On an appearance on CNBC, Scaringe noted that “Rivian has seen strong
demand for its services, as well as improved losses per vehicle over a
quarter-wise basis.”
The company’s public shareholder letter shows just how much
of an improvement in losses there has been. The electric crossover maker
reported a Q2 loss per vehicle at $32,500—down from $67,329 in Q1 and even lower
than the $124,162 they reported way back in Q4 2022.
Rivian has made steady progress toward its goal of becoming
a profitable EV start-up. The company noted that the increasing production
volume combined with the introduction of new models will help them on their
path to profitability.
With costs going down and customer demand rising, it’s no wonder CEO Scaringe is so optimistic about Rivian’s future.
Learn More: VinFast Debuts Revolutionary EVs at the Geneva International Motor Show 2023!
The Bottom Line
Rivian is one of several electric vehicle startups
attempting to break into the industry and make a profit as a business.
The key to their success will be ramping up production,
while avoiding the fate of other EV truck start-ups such as Lordstown Motors
that failed due to financial hardship.