Rivian’s R1T electric truck and R1S SUV have been showered with praise from reviewers, but the least expensive costs $74,800, meaning they’re not exactly bargains. Or are they? Factor in the $33,000 Rivian loses on each vehicle, and the R1S and R1T start to look like Cyber Monday deals that are available every day of the year.
That hit Rivian is taking on each EV – equivalent to the starting price of a base ICE Ford F-150, the Wall Street Journal points out in a recent analysis – is causing it to rapidly burn through much of the firm’s $18 billion cash pot. Some of that financial hurt can be put down to Rivian’s Normal, Illinois, plant running at just one-third of its full capacity to meet the 52,000-unit production estimate the company published for this year. The trucks are also more complicated to build than rivals like Ford’s F-150 Lightning.
That’s compounded by bad deals Rivian made with parts suppliers several years ago resulting in it being over-charged for components, the WSJ reports. The Journal says Rivian’s CEO, RJ Scaringe, has asked his engineers to cut $40,000 of costs from every vehicle by looking at both parts and production expenses, though the company didn’t confirm that target to the newspaper’s reporters.
Related: Paintless Dent Removal Magician Saved Rivian R1 Owner From $41k Bodyshop Invoice
However, Wells Fargo analyst Colin Langan suggested to the WSJ that Rivain would need to cut costs and raise its prices to achieve a target of gross profitability by the end of 2024. Rivian already raised prices by up to 20 percent on some models last year but Langan reckons that it would have to sell its vehicles for an average of almost $100,000 – up $20k on today – and have its factory running flat-out to make the financials stack up. At a time when Tesla has instigated an EV price war, and is getting ready to launch its own R1T rival, the Cybertruck, that might be a big ask.
Source: WSJ
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