Rivian’s price strategy holds strong as new orders push average sales prices higher
Rivian has been one of the few EV makers (or automakers in general) to avoid cutting prices. That trend will likely continue. According to Rivian’s CEO, RJ Scaringe, new orders are driving up the average sales price (ASP) on its vehicles.
A day after Rivian easily beat Q3 earnings expectations as several of its peers faltered, Scaringe said average selling prices continue to “trend upwards.”
In an interview with Bloomberg TV, Rivian’s CEO explained, “There’s an evolution of our average selling price which continues to trend upwards as we move in to new orders.”
Rivian’s gross profit per vehicle delivered has improved all year. The EV maker lost about $31K for every vehicle delivered in the third quarter. Although that’s still a big deficit, it’s a significant improvement from last year’s Q3 loss of $139,277 per vehicle.
“There’s a whole host of changes that are happening in our material costs,” Scaringe explained.
He attributed improvements in material costs, plant upgrades, and “fixed cost absorption from running higher volumes” to the narrowing losses.
| Q3 ’22 | Q4 ’22 | Q1 ’23 | Q2 ’23 | Q3 ’23 | |
| Rivian loss per vehicle | $139,277 | $124,162 | $67,329 | $32,594 | $31,000 |
After building 16,304 vehicles in the third quarter, Rivian raised its 2023 production guidance to 54,000. Rivian’s deliveries also rose 24% in Q3.
Meanwhile, Rivian is still working through its backlog of early orders, many of which were around $20K less than current prices.
Rivian’s average selling price per vehicle is higher
On Tuesday, Rivian’s CFO Claire McDonough explained on the company’s earnings call that we will see the “full impacts” of new technology (like its in-house Enduro motors) driving down material costs next year.
Following a shutdown in the second quarter of 2024, Rivian plans to introduce “a number of new technologies to the R1 platform.”
Rivian believes the changes will “meaningfully reduce our material costs and position Rivian to exit 2024 with a much-improved margin profile.”
The downtime will impact two quarters (Q2 and Q3), but Q4 will become the “run rate potential for the business.” Rivian will ramp up both R1 and commercial volumes.
Furthermore, “those elements come together in connection as well with Rivian fulfilling our pre-3/1/2022 preorders.” McDonough added, “which also results in a step change in our average selling price of the vehicle over that period of time as well.”
Rivian also ended its exclusivity deal with Amazon, enabling it to sell its electric delivery vans to anyone. Scaringe said the company was in talks with a “pipeline” of potential customers.
The EV maker will unveil a prototype of its R2 compact electric SUV in early 2024. The R2 lineup will be cheaper but “just as much as Rivian.”
Electrek’s Take
So, is the EV market “slowing,” as many media outlets claim? Rivian seems to be debunking that theory.
The automaker continues seeing higher demand for its vehicles despite the +$70,000 price tag. Not only that, it has consistently improved the profitability of its vehicles.
Other automakers, including Ford and GM, have delayed investments, but Rivian’s vehicles are unique. The automaker sells an electric adventure vehicle designed from the ground up as a functional all-electric workhorse.
Between rising interest rates and Tesla’s price cuts this year, many automakers are struggling to keep up.
With Tesla’s Model Y starting at $43,990 and leases starting at $399 per month, Tesla is squeezing other models like Ford’s Mustang Mach-E out of the segment.
Rivian and Tesla are driving up demand with unique products offered at a value to the customer. With new affordable electric models hitting the market next year, including the Volvo EX30 (see our review), expect EV demand to continue climbing even higher.
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GreenPower Motor Company says it’s received three orders for 11 of its BEAST electric Type D school buses for western state school districts in Arizona, California, and Oregon.
GreenPower hasn’t made the sort of headline-grabbing promises or big-money commitments that companies like Nikola and Lion Electric have, but while those companies are floundering GPM seems to be plugging away, taking orders where it can and actually delivering buses to schools. Late last year, the company scored 11 more orders for its flagship BEAST electric school bus.
As far as these latest orders go, the breakdown is:
- seven to Los Banos Unified School District in Los Banos, California
- two for the Hood River County School District in Hood River, Oregon
- two for the Casa Grande Elementary School District in Casa Grande, Arizona
Those two BEAST electric school buses for Arizona will join another 90-passenger BEAST that was delivered to Phoenix Elementary School District #1, which operates 15 schools in the center of Phoenix, late last year.
“As school districts continue to make the change from NOx emitting diesel school buses to a cleaner, healthier means of transporting students, school district transportation departments are pursuing the gold standard of the industry – the GreenPower all-electric, purpose-built (BEAST) school buses,” said Paul Start, GreenPower’s Vice President of Sales, School Bus Group. “(The) GreenPower school bus order pipeline and production schedule are both at record levels with sales projections for (2025) set to eclipse the 2024 calendar year.”
GreenPower moved into an 80,000-square-foot production facility in South Charleston, West Virigina in August 2022, and delivered its first buses to that state the following year.
Electrek’s Take
Since the first horseless carriage companies started operating 100 years ago (give or take), at least 1,900 different companies have been formed in the US, producing over 3,000 brands of American automobiles. By the mid 1980s, that had distilled down to “the big 3.”
All of which is to say: don’t let the recent round of bankruptcies fool you – startups in the car and truck industry is business as usual, but some of these companies will stick around. If you’re wondering which ones, look to the ones that are making units, not promises.
SOURCE | IMAGES: GreenPower Motors.
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While some recent high-profile bankruptcies have cast doubt on the EV startup space recently, medium-duty electric truck maker Harbinger got a shot of credibility this week with a massive $100 million Series B funding round co-led by Capricorn’s Technology Impact Fund.
It’s been a rough couple of weeks for fledgling EV brands like Lion Electric and Canoo, but box van builder Harbinger is bucking the trend, fueling its latest funding round with an order book of 4,690 vehicles that’s valued at nearly $500 million. Some of the company’s more notable customers including Bimbo Bakeries (which owns brands like Sara Lee, Thomas’, and Entenmann’s) and THOR Industries (Airstream, Jayco, Thor), which is also one of the investors in the Series B.
Other prominent investors include Tiger Global, the Coca-Cola System Sustainability Fund, and ArcTern Ventures.
As for what makes Harbinger such an attractive investment prospect, Dipender Saluja, Managing Partner of Capricorn Investment Group’s Technology Impact Fund explains that, “Harbinger has demonstrated a remarkable ability to reach significant milestones far quicker than other EV companies … the market has been impressed by their ability to develop large portions of the vehicle in-house to drive down unit costs, while remaining capital efficient.”
The company plans to use the funds to ramp up to higher-volume production capacity and deliver on existing orders, as well as build-out of the company’s sales, customer support, and service operations.
“Harbinger is entering a rapid growth phase where we are focused on scaling production of our customer-ready platform,” said John Harris, co-founder and CEO. “These funds catalyze significant revenue generation. We’ve developed a vehicle for a segment that is ripe for electrification, and there is a strong product/market fit that will help fuel our upward trajectory through 2025 and beyond.”
The company has raised $200 million since its inception in 2021.
SOURCE | IMAGES: Harbinger.
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There is no state more associated with cars and car culture than Michigan – and the state that’s home to the Motor City has just taken a huge step into the future with the deployment of its first-ever all electric police vehicle.
The 2024 Ford Mustang Mach-E patrol vehicle is assigned to the Michigan State Police State Security Operations Section, and will be to be used by armed, uniformed members of the MSP specializing in general law enforcement and security services at state-owned facilities in the Lansing, MI area.
“This is an exciting opportunity for us to research, in real time, how a battery electric vehicle performs on patrol,” says Col. James F. Grady II, director of the MSP. “Our state properties security officers patrol a substantially smaller number of miles per day than our troopers and motor carrier officers, within city limits and at lower speeds, coupled with the availability of charging infrastructure in downtown Lansing, making this the ideal environment to test the capabilities of a police-package battery electric vehicle.”
The MSP’s Precision Driving Unit is nationally renowned for its annual Police Vehicle Evaluation, which our own Scooter Doll participated in last year, driving the then-new Chevy Blazer EV Police Pursuit Vehicles in a game of “cops and robbers.”
In those tests, the EVs have impressed – but the MSP has been hesitant to commit to a BEV until now. “We began testing battery electric vehicles in 2022, but up until now hybrids were the only alternative fuel vehicle in our fleet,” said Lt. Nicholas Darlington, commander of the Precision Driving Unit. “Adding this battery electric vehicle to our patrol fleet will allow us to study the vehicle’s performance long-term to determine if there is a potential for cost savings and broader applicability within our fleet.”
Michigan joins other states like Wisconsin and California in deploying electric patrol cars and saving big money on fuel and maintenance, with many more out there and many more to come.
SOURCE | IMAGES: Michigan State Police.
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