The financials may not look good right now, but the vehicles are extremely good. They’re already way out in front of the EV truck segment, and the big automakers have a huge gap to make up to reach the same level of quality. I wouldn’t be surprised if they manage to turn this around and become profitable.
You hear this all the time. There is no such thing as a huge lead in automaking. It’s an incredibly clonable product, and each company has huge teams taking apart each others products.
It’s also not really the product that matters. It’s service centers, parts, repairs, manufacturing capacity. The traditional companies have entrenched supply chains to get parts, and cars, across the country and into hands. All the new companies have to build that from scratch. Producing a couple of something great is an achievement, it is not a lead.
It is much much easier to catch up on the product side than it is to innovate. And because the actual product is only a portion of total value, the companies that are “way ahead” with the most futuristic cars are really the ones playing catch up.
In isolation, sure, but this space is going to get so fiercely competitive so quickly (on the order of years, but that is fast for the car industry!) and ASPs for electric trucks will come down. Rivian are still generally only selling ~six-figure trucks today (the priciest configs ship sooner of course) and not making money at it.
How good the vehicle is becomes irrelevant if you can't make it at a price people want to pay. I still think Rivian can get there, but there is so far to go. They only delivered ~20k cars in 2022.
If you want a truck for looks, EV is nice enough. If you want a truck to haul stuff, EV is terrible. Put a trailer on your EV and they have basically no range at all.
If you need a truck to haul stuff reasonable distances, EV isn't for you (at least not right now). If you want to save the world, then an electric car gets much better ranges with much smaller batteries and a fraction of the power usage.
This leaves EV trucks in a "why bother?" category.
100% anecdotal: I'm in Georgia. If I had to guesstimate, I see about ~20 Rivians a month now in both urban and suburban settings. They seem to be catching on.
The all electric Lightning outsold the R1T in December. Rivian is only guiding to 50K vehicles this year, many of which are Amazon vans. At the December run rate Ford will sell more than Rician in 2023. You can’t even order a Lightning online anymore-sold out for the year. Rivian doesn’t have the battery supply to grow fast.
"We generated negative gross profit of $(1,000) million for the fourth quarter 2022. For fiscal year 2022, we generated negative gross profit of $(3,123) million. Gross profit for
the fourth quarter 2022 was impacted by a lower of cost or net realizable value (“LCNRV”) of inventory charge and losses on firm purchase commitments of $920 million as of December 31, 2022 compared to $95 million as of December 31, 2021. We expect to continue to incur these charges throughout 2023 but anticipate the total charge will decline as we drive down cost of goods sold per vehicle by lowering material, production, logistics, and other costs. We forecast reaching positive gross profit in 2024 and therefore expect that by the end of 2024, we will no longer have material LCNRV inventory charges and losses on firm purchase commitments associated with our Normal facility."
Building an auto manufacturer from scratch is pretty up there as one of the hardest/most expensive business challenge that exists. The fact that they have survived through the "burning money" stage to get to the other side at all is pretty powerful.
All the examples of car startups that failed only did so because they struggled to drum up sales in their day (DeLorean, Fiskar, Tucker, etc). On the other hand, I am seeing Rivians EVERYWHERE. They are selling them as fast as they can make them. On top of that, they seem to be doing a great job of releasing new models pretty quickly and skipping over the years of QC problems that plagued early Tesla.
If there's actually consumer demand for the car, and the marginal costs to manufacture are favorable - you can probably ignore all of the sunk development costs. SOMEONE would want to carry on the business. But we will probably see all parties involved eating or writing off as much of the debt as possible right now that they are transitioning to cash flow.
It seems, though, like they are not at all through the 'burning money' stage. The marginal costs to manufacture appear to still be in the neighborhood of 3x the price of the vehicle. They seem optimistic they can turn that around this year, but promises are easy.
In the land of cheap debt and endless promises, you can continue running a completely irrational business for a very long time. Just look at Uber, who has never turned a profit.
It gets especially bad when you are a new electric car company presenting yourself as a tech company so that you can get tech-company like speculators throwing money at things that make no logical sense whatsoever.
The gross loss is driven by $920M in losses on firm purchase commitments. As I understand it, Rivian has entered into contracts with suppliers to buy some components needed to manufacture its vehicles at fixed prices over some future period of time, likely several years. If the market prices of those components decrease, the value of those contracts also decreases. In some sense this isn't a "real" loss - Rivian will still be buying the same components, at the same prices, on the same dates that it expected to at the start of the quarter. But the market prices of the components went down, which creates a paper loss, which they have to mark to market.
That also creates a timing mismatch - Rivian's revenue in Q4 was $663M and its cost of revenue was $1663M, but most of the $1663M is associated with vehicles that they haven't delivered or even manufactured yet, so they'll recognize that revenue in future quarters. I don't know what it actually costs them to manufacture one vehicle, but I bet it's a lot less than 2.5x the revenue they get from that vehicle.
Leaving aside the accounting and addressing your real question: From a quick search it looks like Rivian has raised a total of $23B of capital between VC rounds and its IPO, and it has $13B of current assets (mostly cash + inventory) as of 12/31, so that gives it a fairly long runway even at its current burn rate. But its burn rate - loosely, revenue minus expenses - is expected to slow over time, assuming that (1) its revenue grows faster than expenses (it's expecting deliveries to ~double this year, which should increase revenue at a similar rate) and (2) its unit economics work out, i.e., its "true" cost of revenue is less than its revenue.
“We make the Amazon delivery vehicles that Amazon gets at cost so we are a cost center that manages to offset our expenses by $600M further optimizing the weighted cost per delivery vehicle for Amazon.”
I think these look great, but I can't see them replacing combustion engines for all the things people who drive trucks in the country need.
Like... I'm not going to load this up with fence posts and go out for a 12 hour day... plugging in the fence post digger to the battery... I'd be afraid that since I can't just toss in an extra gas tank that I'd be walking home.
And I can't see this pulling a horse trailer across the Great Plains stopping every 300 miles to recharge for several hours. (But I know North Dakota did finally get a Tesla charging stating!) Just feels like it's not quite setup for "real" use.
I can totally see some suburban guy using this to go camping. But... even that, like I don't want to leave this parked at the trail head for a week, when I'm hiking. I bet the battery would hold a week, but like what if it didn't? I couldn't just bum a jump from another camper.
One of the joys to being out in nature, is being away from "it all" -- including being away from the population density required to make charging stations viable. I think that's always going to be a fundamental flaw with electric "adventure" vehicles.
Cool to look at. Promising tech. But EVs are still "toys" in my mind.
People still livin in a fantasy world where most trucks are used by farmers to put up fence posts. Its hilarious.
Every single stastic and analysis shows that the waste majority of truck drivers barley ever use trailer and haul stuff in the extreme minority of case. And even then they mostly haul locally.
> But EVs are still "toys" in my mind.
By that definition, most F-150 are toys.
The reality is there is a 2 million a year truck market and EV trucks are totally reasonably for 70% of that market and that is growing fast.
> R&D: 402
> Selling, general, administrative: 393
Loss from Operations: (1,795)
Interest income: 99
Interest expense: 33
Other net income: 6
Loss before taxes: (1,723)
Remember, all of these are in millions. So Rivian managed to lose 1.7 billion dollars in 3 months. That comes out to nearly 19 million dollars lost every single day.
Financial experts: Do they break it down in a way that shows the COGS for each vehicle produced? Has that dropped a significant amount from a year ago?
To answer my own question, the numbers suggest COGS-per-vehicle has increased since last quarter, not dropped. Rivian is burning a lot of money every time they product another vehicle.
It isn't an either or scenario, and you're providing an unrealistic expectation.
Rivian is making "lifestyle vehicles", pick-ups and SUVs that are off-road capable, but are not not work trucks. There is no public transit out in much of these areas.
They also make Amazon delivery vehicles, so you can't expect Amazon deliveries to be made via public transport.
The entire vehicle fleet needs to be electrified, period. There are areas of the United States where a private 4WD vehicle are a necessity to get to and from home. The only way to eventually retire the vast infrastructure required to deliver fossil fuels to rural areas, and everywhere else, is to electrify the entire fleet.
Climate change is a chemistry and engineering problem. You can solve some of the chemistry and engineering problem upstream, through social and cultural changes, but insisting that those changes are the only way to solve the problem is flat-out false, and absolutely repellent to many people that, ultimately, will need to be brought along in the transition away from fossil fuels.
Nothing is stopping you from working on the myriad issues that prevent greater adoption of public transportation, and you and the world would be better served by getting to work building the future you want instead of trashing the efforts of people working the problem from a different angle.
I agree with you that investment in public transit is preferable to private vehicles in many cases, but the primary purpose of a pickup truck is not personal transportation, it's hauling a bunch of bulky, heavy stuff that isn't feasible to bring on public transit.
Regardless, public transit cannot go everywhere. Rural and light-density suburban areas can never be adequately and cost-effectively served by public transit. Sure, you can run trains or buses into areas like those, but either you'll have excessively low per-route ridership and unsustainably-high operational costs, or you'll have routes that require people to travel several miles in order to get to a station/stop, which means people need private vehicles anyway.
In these cases, you often end up with an overall trip that takes several multiples of the time it would take to drive your own private car. I get that many people might find it acceptable to impose that kind of situation on people (in the name of the environment or whatever reason), but I wouldn't want to live in that world. I use public transit whenever feasible, and only drive when I have to, but there are limits to what I will accept.
In the US, total cost per passenger mile for public transportation is higher than private vehicles. All that extra cost has environmental impact in the form of extra steel, concrete, and salaries.
For buying something from Amazon, the largest part of the carbon footprint is the cardboard boxes and overall, its still more efficient than traditional shopping.
you clearly don't live in suburban or rural areas. I've tried to take public transportation in Phoenix. They put stops every 1/4 mi. it takes longer to ride a bus than ride a bike. public transit is just not remotely reasonable.
One of their biggest plays are EV delivery trucks (and I see them on my streets). I'm sure someone will chime in about the environmental concerns of Amazon - but Rivan's strategy seems like a decent environmental message to me.
It'd be far worse to have scheduled bus routes and train tracks cutting across the vast wilderness than the occasional electric vehicle cruising through.
mbgerring|3 years ago
basch|3 years ago
It’s also not really the product that matters. It’s service centers, parts, repairs, manufacturing capacity. The traditional companies have entrenched supply chains to get parts, and cars, across the country and into hands. All the new companies have to build that from scratch. Producing a couple of something great is an achievement, it is not a lead.
It is much much easier to catch up on the product side than it is to innovate. And because the actual product is only a portion of total value, the companies that are “way ahead” with the most futuristic cars are really the ones playing catch up.
hedora|3 years ago
Anyway, they’re competing more with range rover and jeep than trucks, which is fine (and also a mostly-unaddressed segment).
giobox|3 years ago
How good the vehicle is becomes irrelevant if you can't make it at a price people want to pay. I still think Rivian can get there, but there is so far to go. They only delivered ~20k cars in 2022.
hajile|3 years ago
If you need a truck to haul stuff reasonable distances, EV isn't for you (at least not right now). If you want to save the world, then an electric car gets much better ranges with much smaller batteries and a fraction of the power usage.
This leaves EV trucks in a "why bother?" category.
echelon|3 years ago
guiltygods|3 years ago
7e|3 years ago
7e|3 years ago
mushufasa|3 years ago
mattlondon|3 years ago
I guess don't say "The L-word" is some attempt to paint a rosy picture? "This is not use losing money! We're making a negativeprofit by investing!"
uptownfunk|3 years ago
legitster|3 years ago
Building an auto manufacturer from scratch is pretty up there as one of the hardest/most expensive business challenge that exists. The fact that they have survived through the "burning money" stage to get to the other side at all is pretty powerful.
All the examples of car startups that failed only did so because they struggled to drum up sales in their day (DeLorean, Fiskar, Tucker, etc). On the other hand, I am seeing Rivians EVERYWHERE. They are selling them as fast as they can make them. On top of that, they seem to be doing a great job of releasing new models pretty quickly and skipping over the years of QC problems that plagued early Tesla.
If there's actually consumer demand for the car, and the marginal costs to manufacture are favorable - you can probably ignore all of the sunk development costs. SOMEONE would want to carry on the business. But we will probably see all parties involved eating or writing off as much of the debt as possible right now that they are transitioning to cash flow.
rootusrootus|3 years ago
itsmemattchung|3 years ago
alexb_|3 years ago
It gets especially bad when you are a new electric car company presenting yourself as a tech company so that you can get tech-company like speculators throwing money at things that make no logical sense whatsoever.
tfehring|3 years ago
That also creates a timing mismatch - Rivian's revenue in Q4 was $663M and its cost of revenue was $1663M, but most of the $1663M is associated with vehicles that they haven't delivered or even manufactured yet, so they'll recognize that revenue in future quarters. I don't know what it actually costs them to manufacture one vehicle, but I bet it's a lot less than 2.5x the revenue they get from that vehicle.
Leaving aside the accounting and addressing your real question: From a quick search it looks like Rivian has raised a total of $23B of capital between VC rounds and its IPO, and it has $13B of current assets (mostly cash + inventory) as of 12/31, so that gives it a fairly long runway even at its current burn rate. But its burn rate - loosely, revenue minus expenses - is expected to slow over time, assuming that (1) its revenue grows faster than expenses (it's expecting deliveries to ~double this year, which should increase revenue at a similar rate) and (2) its unit economics work out, i.e., its "true" cost of revenue is less than its revenue.
bdcravens|3 years ago
Tesla didn't turn a profit for 8 years, until 2020, and from 2016-2018, regularly had 12 trailing months of $1B losses or more.
martythemaniak|3 years ago
gwbas1c|3 years ago
(It's pretty much impossible to start a car company without outside investment. Just look at its factory.)
They will probably run at a loss until they can figure out how to lower their costs, and then make more volume. Pretty typical stuff, really.
I also suspect they will need outside investment. Given their relationship with Amazon, I could see Amazon supporting them until they're profitable.
serial_dev|3 years ago
echelon|3 years ago
Sometimes this succeeds wildly: Amazon.
Sometimes the vision fails to materialize: Uber.
Sometimes the vision was fatally flawed from the start: Carvana, MoviePass, ...
panick21_|3 years ago
But they have the advantage that the IPO at the exact right moment and have absurd amounts of cash to burn.
tpmx|3 years ago
fnordpiglet|3 years ago
tomcam|3 years ago
dbg31415|3 years ago
Like... I'm not going to load this up with fence posts and go out for a 12 hour day... plugging in the fence post digger to the battery... I'd be afraid that since I can't just toss in an extra gas tank that I'd be walking home.
And I can't see this pulling a horse trailer across the Great Plains stopping every 300 miles to recharge for several hours. (But I know North Dakota did finally get a Tesla charging stating!) Just feels like it's not quite setup for "real" use.
I can totally see some suburban guy using this to go camping. But... even that, like I don't want to leave this parked at the trail head for a week, when I'm hiking. I bet the battery would hold a week, but like what if it didn't? I couldn't just bum a jump from another camper.
One of the joys to being out in nature, is being away from "it all" -- including being away from the population density required to make charging stations viable. I think that's always going to be a fundamental flaw with electric "adventure" vehicles.
Cool to look at. Promising tech. But EVs are still "toys" in my mind.
panick21_|3 years ago
Every single stastic and analysis shows that the waste majority of truck drivers barley ever use trailer and haul stuff in the extreme minority of case. And even then they mostly haul locally.
> But EVs are still "toys" in my mind.
By that definition, most F-150 are toys.
The reality is there is a 2 million a year truck market and EV trucks are totally reasonably for 70% of that market and that is growing fast.
alexb_|3 years ago
> Revenue: 663 > Cost of Revenues: 1,663 > Gross Profit: (1,000)
Operating Expenses (Totals 795):
> R&D: 402 > Selling, general, administrative: 393
Loss from Operations: (1,795)
Interest income: 99
Interest expense: 33
Other net income: 6
Loss before taxes: (1,723)
Remember, all of these are in millions. So Rivian managed to lose 1.7 billion dollars in 3 months. That comes out to nearly 19 million dollars lost every single day.
rootusrootus|3 years ago
rootusrootus|3 years ago
greenthrow|3 years ago
DoesntMatter22|3 years ago
realworldperson|3 years ago
[deleted]
sinistersnare|3 years ago
[deleted]
pedalpete|3 years ago
Rivian is making "lifestyle vehicles", pick-ups and SUVs that are off-road capable, but are not not work trucks. There is no public transit out in much of these areas.
They also make Amazon delivery vehicles, so you can't expect Amazon deliveries to be made via public transport.
mbgerring|3 years ago
Climate change is a chemistry and engineering problem. You can solve some of the chemistry and engineering problem upstream, through social and cultural changes, but insisting that those changes are the only way to solve the problem is flat-out false, and absolutely repellent to many people that, ultimately, will need to be brought along in the transition away from fossil fuels.
Nothing is stopping you from working on the myriad issues that prevent greater adoption of public transportation, and you and the world would be better served by getting to work building the future you want instead of trashing the efforts of people working the problem from a different angle.
gwbas1c|3 years ago
It's very practical for many, and very impractical for many too.
kelnos|3 years ago
Regardless, public transit cannot go everywhere. Rural and light-density suburban areas can never be adequately and cost-effectively served by public transit. Sure, you can run trains or buses into areas like those, but either you'll have excessively low per-route ridership and unsustainably-high operational costs, or you'll have routes that require people to travel several miles in order to get to a station/stop, which means people need private vehicles anyway.
In these cases, you often end up with an overall trip that takes several multiples of the time it would take to drive your own private car. I get that many people might find it acceptable to impose that kind of situation on people (in the name of the environment or whatever reason), but I wouldn't want to live in that world. I use public transit whenever feasible, and only drive when I have to, but there are limits to what I will accept.
xnx|3 years ago
Swenrekcah|3 years ago
Car companies are obviously going to produce cars, and the cleaner they can do it the better.
shagie|3 years ago
The carbon footprint for delivery is less than going to the store. https://sustainability.uw.edu/news/grocery-delivery-service-... and https://www.washington.edu/news/2013/04/29/grocery-delivery-...
https://ctl.mit.edu/sites/ctl.mit.edu/files/library/public/D... looks at the total carbon footprint which takes into account packaging too.
For buying something from Amazon, the largest part of the carbon footprint is the cardboard boxes and overall, its still more efficient than traditional shopping.
abfan1127|3 years ago
seedless-sensat|3 years ago
unknown|3 years ago
[deleted]
explaininjs|3 years ago
cypress66|3 years ago
It's the only environmentally friendly option.
kerpotgh|3 years ago