It is reported that when Jeff wells first booked a rivian r1t pickup truck in 2019, he was one of the first consumers to queue up to buy the truck of the electric vehicle start-up once supported by Amazon, which promised to enter a niche market that other carmakers did not provide services.
But wells, an accountant from Southern California, is getting more and more frustrated with the new car he has been looking forward to, because he sees others placing orders a few years later than him and receiving trucks, while he has been waiting. Speaking of rivian, Wells said: "this situation is really boring. I think they do things completely out of order."
Wells is not the only consumer who has encountered this problem. In recent weeks, there have been many discussion groups and forums online, and dozens of car ordering consumers are complaining about rivian's delivery schedule and disappointing delays.
Rivian said at the end of April that they were changing the production order of vehicles and giving priority to the production and delivery of vehicles with specific internal and external colors and hub options. After that, the company received a large number of complaints.
Rivian told customers in an email: "producing in a few combinations reduces the complexity of our suppliers and factories, enabling us to produce more vehicles." This means that many early subscribers who adhere to their initial color preferences have to postpone their orders.
The company said in a statement to the media that the delivery date is not only based on the time of pre purchase, but they are exploring new ways for customers to speed up delivery.
Rivian's delivery problem did not attract attention. The California company had also cut its production forecast for this year, and its chaotic rise in vehicle prices had also triggered consumer concern. They first fully announced the price increase of vehicles, but then cancelled the price increase for existing order holders under the pressure of customers.
But the dilemma of delivery may bring more serious problems to the start-up.
While all automakers are struggling with global supply chain obstacles, including semiconductor shortages and rising raw material costs, startups like rivian don't have much room to concentrate on getting things done. Some large investors, including Ford Motor Company and tiger global management, sold rivian shares immediately after the lock-in period after listing.
Despite previous chaotic changes in the company's vehicle pricing, rivian supporters remain largely loyal. Even after the price increase, the reservation order has increased to 90000 vehicles. Now the price increase only applies to new reservation orders.
However, as other automakers begin to launch their own electric pickup trucks, including Ford's F-150 lightning, the delivery delay of rivian may cost them a high price, which is to be robbed of consumers by other companies.
Rivian said on May 11 that they are committed to comprehensively reforming their order system and separating the reservation and configuration process, which is obviously to solve customers' criticism of the shortage of supply in their order system. The change makes pricing and delivery time more transparent, the company said in a statement.
The world has changed
Rivian's efforts to reform its ordering system also reflect broader industry challenges. Inflation and supply chain crisis have destroyed the financial forecast of enterprises. When investors are reluctant to invest, electric vehicle start-ups are under greater pressure and have to find various ways to reduce costs.
Daniel ninivaggi, CEO of Lordstown Motors Corp, another electric car startup, said: "the market is closed to every company, good or bad. You have to curl up, set your priorities and get to the other side at all costs." The company sold its factory to Foxconn, a contract manufacturer in Taiwan, China, this month because of a sharp drop in cash reserves.
Rivian said that the company has been paying close attention to the capital market and making plans by "optimizing its product roadmap and operating expenses" to cope with the increasingly difficult market environment.
Rivian has $16 billion in cash, much more than Lordstown and other small electric vehicle startups, such as canoo, which issued a going concern warning this month that they might not be able to continue if they did not get more capital.
But according to Morgan Stanley analyst Adam Jonas, rivian burned about $1.2 million for every car delivered in the first quarter, and it is estimated that the company will spend a total of $7 billion in cash this year.
Vitaly Golomb, a partner at Drake star, an investment bank, said: "I will never put rivian in the same basket as these other companies. I think they have a high burden and they need to prove that they can achieve their goals." He himself is also an investor and subscriber of rivian.
Although rivian has told investors that they have enough cash on hand to open their second plant in the United States for $5 billion in 2025, investors' patience may be worn out.
Jonas interrupted rivian CFO Claire McDonough during a recent earnings conference call with investors. "The world has changed dramatically since you went public. Investors don't want to fund companies with negative EBITDA growth in this environment now," Jonas said
In this regard, RJ scaringe and McDonough, chief executives of rivan, said that the company would control costs by simplifying the model lineup and minimizing expenses.
Scarin also said that rivian, like some other carmakers, believes that the worst period of semiconductor shortage is over. However, other carmakers said the shortage could continue until 2023.
Rivian did not say when they expected to make a profit from their electric truck products. The increase in price increases the price of its current optional pickup truck from US $67500 to US $79500. This should be to improve economic efficiency and offset the high cost of raw materials. The new price applies to orders after March 1. Rivian also said in an email sent to customers on March 3 that they will launch a r1t electric pickup with lower configuration, which costs $67500 and is expected to be delivered in 2024.
But industry competitors say that even if prices are raised, it is still a challenge to make profits. Peter Rawlinson, CEO of luxury electric vehicle manufacturer lucid group and former engineering director of Tesla, estimates that the cost of rivian entry-level battery pack is about $22000, and about $20000 is spent on the transmission system provided by Robert Bosch, which means that their vehicle price needs to be more than $95000 to make a profit. Lawlinson told the media in March: "if every truck they sell loses money, then their business model can only bring losses“
Rivian said they are confident in pricing their products. The company also revealed that they are developing lower cost motor and battery designs in-house.
For wells, rivian's order holder, profit margin is obviously not important. He just wants to get the electric truck he ordered as soon as possible. Although he said he preferred rivian's r1t, he also booked the F-150 lightning produced by Ford last year. "At this time, if Ford delivers first, I will choose them," he said