Rivian (RIVN) drastically cuts costs as push for first profit ramps up: What to expect in Q2
Rivian (RIVN) is learning from its past as it looks to turn its first profit. The cost of building its vehicles has “improved dramatically” as Rivian slashes costs on its path to profitability.
After establishing itself as a true luxury EV brand, Rivian is looking to control costs as it moves toward the next chapter.
Rivian delivered over 50,000 vehicles last year, more than doubling from 2022. The R1S was the fourth best-selling EV in the US through Q1 2024, behind only Tesla’s Model Y, Model 3, and the Ford Mustang Mach-E.
Meanwhile, Rivian delivered 13,588 vehicles in the first quarter, a slight decrease from the 13,972 handed over in Q4 2023.
Rivian expected deliveries to slall after announcing plans to shut down production at its Normal, IL plant last year. Rivians CEO and founder RJ Scaringe said during a recent fireside chat that the planned shutdown in April “introduced a dramatic cost reduction in material costs.”
Scaringe warned, “From an investor perspective, the second quarter’s going to be messy,” following a month-long shutdown.
Rivian looks past “messy” Q2 as it cuts costs
Although new supplier contracts and production upgrades will drastically lower Rivian’s bill of materials into 2025, we may not see much of the impact until Q3.
“We will deliver a very small percentage of these newer vehicles [in terms of cost] in Q2,” Scaringe explained, adding, “You won’t see a lot of those benefits until you get to Q3.”
These changes have been negotiated with suppliers over the past two years, so Rivian isn’t “hoping or wishing costs were lower.” Rivian also added hundreds of new robots, increasing the line rate by 30%.
The EV maker has eliminated 100 steps from battery making, 52 pieces of equipment from the body shop, and over 500 parts from the design of the R1T and R1S.
Scaringe told Reuters during a recent factory tour that the upgrade earlier this year resulted in a 35% cost reduction of materials for its vans. The new changes provide savings of a “similar magnitude” for its other vehicles.
Rivian’s cost of building vehicles has “improved dramatically,” Scaringe said. “The design of the parts and the design of the plant facilitate making the vehicle easier to build.”
The next chapter
Rivian’s gross vehicle margins have improved over the last year after it lost around $39,000 on each EV built in Q1 2024. That’s down from the +$67,300 loss in Q1 2023 but up slightly from the $32,594 and $30,500 losses in Q2 and Q3 2023, respectively.
| Q3 ’22 | Q4 ’22 | Q1 ’23 | Q2 ’23 | Q3 ’23 | Q4 ’23 | Q1 ’24 | |
| Rivian loss per vehicle | $139,277 | $124,162 | $67,329 | $32,594 | $30,500 | $43,372 | $38,784 |
The EV maker expects the cost savings to help it reach a positive gross margin by the end of the year. Rivian ended Q1 with just under $8 billion in cash and equivalents, which is enough to launch its smaller, more affordable R2 model.
Rivian expects R2 to greatly expand its market after the $45,000 electric SUV earned over 68,000 reservations in less than 24 hours.
The R2 will be built at its Normal plant starting in early 2026. Rivian initially planned to begin R2 production at its new GA facility, but the move helped save $2.25 billion while accelerating the launch.
Rivian’s R2 will account for 155,000 of the 215,000 future capacity at Rivian’s Normal plant. The plant’s current capacity is around 150,000 vehicles.
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With the launch of the first-ever Class 8 vocational EV in the North American market, PACCAR Kenworth is raising the battery-electric bar and underscoring just how far the market has come since the Tesla Semi made its debut nearly a decade ago.
When Tesla pulled the wraps off its all electric Semi truck all the way back in November of 2017, the rest of the industry was hardly thinking about BEVs. Nearly a decade later, the world is still waiting for the Semi to begin regular production, and PACCAR is launching its second generation of HDEVs with the debut of this, the all-new Kenworth T880E vocational truck.
“The Kenworth T880E marks a groundbreaking milestone in Kenworth’s history as we bring to market the first Class 8 battery-electric solution built for vocational applications,” explains Kevin Haygood, Kenworth assistant general manager for sales and marketing. “The T880E is engineered to meet the evolving needs of operators and vocational fleets while still providing the durability, reliability and customization our customers expect.”
The new electric K-whopper is motivated by PACCAR’s in-house ePowertrain platform, capable of putting up to 605 hp and 1,850 lb-ft of peak torque to work, while delivering the same levels of drivability and dependability fleets expect from a Kenworth – but power and torque are only part of the T880E’s work-ready résumé.
Open to work
In addition to a stout, Class 8 electric chassis fitted with heavy-duty Kenworth brakes and axles, the T880E’s central drive eMotor allows for significant wheelbase flexibility so fleet buyers can spec out exactly the machine they need to get the job done. The T880E was also designed to enable lift axle installations from trusted Kenworth upfitters for a vocational-friendly BEV integration.
Additionally, the T880E features a wide selection of factory-installed options that include both high- and low-voltage ePTO (electric Power Take Off) ports, mechanical ePTOs, and the same wide array of body configurations as the ICE version.
Speaking of the ICE version, the electric T880E also can also be had in the same set-back front axle and set-forward front axle configurations with the same multi-piece hood construction. Inside the cab, the latest in driver-focused technology includes the Kenworth SmartWheel and a new 15″ DriverConnect digital touchscreen. Dash and vocational features like RAM Mounts and factory-installed PTO switches are available. The T880E is also offered with Kenworth ADAS packages for customers interested in DigitalVision Mirrors, Bendix Fusion, and Lane Keeping Assist.
It’s so big, you guys
The T880E was on static display at last week’s ACT Expo in Anaheim, California. Check with your local Kenworth dealer for availability.
SOURCE | IMAGES: Kenworth.
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The tire-blistering SU7 Ultra has been the Xiaomi brand’s flagship super sedan since its launch, but a controversial software setting has limited the car to “just” 900 hp in regular driving – resulting in an outcry from owners who ponied up for the big boy numbers. With its latest software update, that missing 648 hp is back on tap!
The SU7 Ultra made waves throughout the performance car world when a bright yellow striped example lined up alongside a white quarter mile king, the 1,000+ hp Tesla Model S Plaid, and promptly smoked it.
That wasn’t all. A preproduction SU7 Ultra prototype lapped the legendary Nürburgring circuit in just 6 minutes and 46.874 seconds, firmly stamping the 1,500+ hp Xiaomi’s alphanumeric into the track’s record books with a time nearly fifteen seconds quicker than a Rimac Nevera or, on the ICE front, either a Corvette ZR1, Viper ACR, or Porsche 918 (take your pick).
It’s hardly any wonder, then, that the customers who signed up – in droves, too – were disappointed to learn that the SU7 they were allowed to buy had been neutered by the safety nannies to the tune of nearly 650 hp. (!)
We’re so back
The outrage from SU7 Ultra owners was immediate. And, facing mounting pressure online and on social media, Xiaomi ultimately decided to withdraw the performance-limiting features while acknowledging the need for more transparent communication about future software updates they messed up, saying in a statement, “we appreciate the passionate feedback from our community and will ensure better transparency moving forward.”
So, rich people can rocket themselves down the road in 9 second hypercars again and all is right with the world. A happy ending – but one that sort of illuminates a fresh set challenges for automakers peddling “software-defined vehicles” to a market that still thinks of their cars as very much hardware defined products.
That’s evidenced by the resistance to pay for features by subscription and complaints by more informed customers that “software locked” range and convenience features just subsidize the cost of more expensive trim levels and pad profits for manufacturers and suppliers.
The new reality is playing out in real time now, and the Jeff Bezos-backed $20,000 electric compact pickup from Slate Auto is going the other way entirely – time will tell whether more, or less tech is the answer.
SOURCE | IMAGES: Xiaomi, via CarNewsChina.
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Tesla (TSLA) has started offering reduced interest rates on the new Model Y in the US — this equates to a direct discount on the brand new vehicle that was supposed to spark Tesla’s demand back.
The automaker has announced “1.99% APR or $0 Due at Signing available for well-qualified buyers” on the new Model Y in the US for the first time:
This amounts to a direct discount worth a few thousand dollars. It is the first widely available discount on the new Model Y coming just weeks after the cheaper non-Launch Edition launched in the US.
It follows a $2,000 direct discount that Tesla offered to early Model Y owners last week.
These discounts and subsidized financing point to soft demand for the updated best-selling vehicle in the US. Tesla just delivered a disastrous first quarter, which it mostly blamed on the Model Y changeover, resulting in lower inventory.
However, industry watchers, including Electrek, noted many signs that the Model Y changeover was not the only issue. Tesla added significantly to its inventory in the first quarter, and the wait times for the new Model Y were extremely short.
Now, the discount weeks after launching the new Model Y confirm the soft demand in the US.
It’s not as bad as Europe and China, where Tesla has already been offering 0% financing on the new Model Y for weeks.
Electrek’s Take
I think it’s clear by now: the new Model Y is not coming to save Tesla.
Let’s be honest: It will still be a significant vehicle program by volume. It just won’t help Tesla return to growth this year.
The RWD Model Y is still coming and has a chance to help in the US. It is already available in China, and it’s not helping Tesla much there, but that’s in a hyper-competitive market, especially at lower prices where the RWD Model Y operates.
Tesla’s performance in Q2 in China will be interesting since it is basically back to its regular lineup for the whole quarter.
The US appears to have been Tesla’s least affected market, but Q3 will be the real test with the full lineup and no backlog of demand for new Model Y.
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