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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Wind energy powered 20% of all electricity consumed in Europe (19% in the EU) in 2024, and the EU has set a goal to grow this share to 34% by 2030 and more than 50% by 2050.
To stay on track, the EU needs to install 30 GW of new wind farms annually, but it only managed 13 GW in 2024 – 11.4 GW onshore and 1.4 GW offshore. This is what’s holding the EU back from achieving its wind growth goals.
Three big problems holding Europe’s wind power back
Europe’s wind power growth is stalling for three key reasons:
Permitting delays. Many governments haven’t implemented the EU’s new permitting rules, making it harder for projects to move forward.
Grid connection bottlenecks. Over 500 GW(!) of potential wind capacity is stuck in grid connection queues.
Slow electrification. Europe’s economy isn’t electrifying fast enough to drive demand for more renewable energy.
Brussels-based trade association WindEurope CEO Giles Dickson summed it up: “The EU must urgently tackle all three problems. More wind means cheaper power, which means increased competitiveness.”
Permitting: Germany sets the standard
Permitting remains a massive roadblock, despite new EU rules aimed at streamlining the process. In fact, the situation worsened in 2024 in many countries. The bright spot? Germany. By embracing the EU’s permitting rules — with measures like binding deadlines and treating wind energy as a public interest priority — Germany approved a record 15 GW of new onshore wind in 2024. That’s seven times more than five years ago.
If other governments follow Germany’s lead, Europe could unlock the full potential of wind energy and bolster energy security.
Grid connections: a growing crisis
Access to the electricity grid is now the biggest obstacle to deploying wind energy. And it’s not just about long queues — Europe’s grid infrastructure isn’t expanding fast enough to keep up with demand. A glaring example is Germany’s 900-megawatt (MW) Borkum Riffgrund 3 offshore wind farm. The turbines are ready to go, but the grid connection won’t be in place until 2026.
This issue isn’t isolated. Governments need to accelerate grid expansion if they’re serious about meeting renewable energy targets.
Electrification: falling behind
Wind energy’s growth is also tied to how quickly Europe electrifies its economy. Right now, electricity accounts for just 23% of the EU’s total energy consumption. That needs to jump to 61% by 2050 to align with climate goals. However, electrification efforts in key sectors like transportation, heating, and industry are moving too slowly.
European Commission president Ursula von der Leyen has tasked Energy Commissioner Dan Jørgensen with crafting an Electrification Action Plan. That can’t come soon enough.
More wind farms awarded, but challenges persist
On a positive note, governments across Europe awarded a record 37 GW of new wind capacity (29 GW in the EU) in 2024. But without faster permitting, better grid connections, and increased electrification, these awards won’t translate into the clean energy-producing wind farms Europe desperately needs.
Investments and corporate interest
Investments in wind energy totaled €31 billion in 2024, financing 19 GW of new capacity. While onshore wind investments remained strong at €24 billion, offshore wind funding saw a dip. Final investment decisions for offshore projects remain challenging due to slow permitting and grid delays.
Corporate consumers continue to show strong interest in wind energy. Half of all electricity contracted under Power Purchase Agreements (PPAs) in 2024 was wind. Dedicated wind PPAs were 4 GW out of a total of 12 GW of renewable PPAs.
Read more: Renewables could meet almost half of global electricity demand by 2030 – IEA
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss the official unveiling of the new Tesla Model Y, Mazda 6e, Aptera solar car production-intent, and more.
The show is live every Friday at 4 p.m. ET on Electrek’s YouTube channel.
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The Chinese EV leader is launching a new flagship electric sedan. BYD’s new Han L EV leaked in China on Friday, revealing a potential Tesla Model S Plaid challenger.
What we know about the BYD Han L EV so far
We knew it was coming soon after BYD teased the Han L on social media a few days ago. Now, we are learning more about what to expect.
BYD’s new electric sedan appeared in China’s latest Ministry of Industry and Information Tech (MIIT) filing, a catalog of new vehicles that will soon be sold.
The filing revealed four versions, including two EV and two PHEV models. The Han L EV will be available in single- and dual-motor configurations. With a peak power of 580 kW (777 hp), the single-motor model packs more power than expected.
BYD’s dual-motor Han L gains an additional 230 kW (308 hp) front-mounted motor. As CnEVPost pointed out, the vehicle’s back has a “2.7S” badge, which suggests a 0 to 100 km/h (0 to 62 mph) sprint time of just 2.7 seconds.
To put that into perspective, the Tesla Model S Plaid can accelerate from 0 to 100 km in 2.1 seconds. In China, the Model S Plaid starts at RBM 814,900, or over $110,000. Speaking of Tesla, the EV leader just unveiled its highly anticipated Model Y “Juniper” refresh in China on Thursday. It starts at RMB 263,500 ($36,000).
BYD already sells the Han EV in China, starting at around RMB 200,000. However, the single front motor, with a peak power of 180 kW, is much less potent than the “L” model. The Han EV can accelerate from 0 to 100 km/h in 7.9 seconds.
At 5,050 mm long, 1,960 mm wide, and 1,505 mm tall with a wheelbase of 2,970 mm, BYD’s new Han L is roughly the size of the Model Y (4,970 mm long, 1,964 mm wide, 1,445 mm tall, wheelbase of 2,960 mm).
Other than that it will use a lithium iron phosphate (LFP) pack from BYD’s FinDreams unit, no other battery specs were revealed. Check back soon for the full rundown.
Source: CnEVPost, China MIIT
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