Inside Rivian's EV facility, as well as CEO RJ Scaringe's expansion strategy, lower-cost EVs, and competing with Tesla
NORMAL, ILLINOIS (AP) - Outside Rivian Automotive's facility in central Illinois, a guy screams, "R.J., R.J." as CEO Robert Scaringe exits one of the automaker's R1T electric trucks.
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| Low cost electric vehicles |
Scaringe, who goes by those initials, turns to the male employee, who expresses gratitude for the position at Rivian's large facility. Before walking into a meeting with suppliers, the company's 39-year-old founder expresses his gratitude with a handshake.
During a recent half-day tour of the plant with reporters and Scaringe, whose daily office is within the former Mitsubishi Motors building, the acknowledgment was one of several from staff, who included fist-bumps, waves, and other pleasantries.
They're niceties, but they're also signals of trust in the CEO in the face of the electric car maker's enormous hurdles.
Scaringe, who started the business in 2009 and brought it public through a successful IPO in November, has also received praise from Wall Street. Rivian was branded "the one" by Morgan Stanley head auto analyst Adam Jonas to be able to fight against EV market leader Tesla.
Rivian, like the rest of the automotive sector, is experiencing huge supply interruptions and has internal production problems that forced it to miss production targets last year.
Investors are looking for a safer footing than an EV start-up amid economic worries, and the company's stock price has dropped by more than 60% this year.
Scaringe is aware of these issues, but, as he has for more than a decade, he remains focused on the goal at hand: proving the company's worth by actually producing vehicles, an ironic industry difference that distinguishes Rivian from a recent rush of new EV start-ups. Rivian now manufactures electric R1T pickup trucks, Amazon delivery vans, and some R1S SUVs.
Here are Scaringe's comments on the company's output, component shortages, and other topics.
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| Low cost electric vehicles 2022 |
Disruptions in production and supply
Rivian is "very confident," according to Scaringe, in its ability to deliver 25,000 cars in 2022, including van and R1 versions. This is down from early estimates of over 50,000 cars, which were reduced due to supply difficulties.
The company's main challenges include a lack of semiconductor chips, which have been plaguing the industry for more than a year, and wire harnesses, which operate as the vehicle's nervous system. Both are essential components in automobiles.
"We don't have supply chain restrictions on the great majority of our vehicles." Scaringe explained, "It's a small fraction." "It just takes one part to put a halt to manufacturing."
Scaringe believes that the semiconductor supply will not return to normal until next year. He, like every other executive in the automobile sector, communicates with suppliers frequently to source, manufacture, and distribute as many components as feasible.
For Rivian, this involves having some of its staff work on-site at its suppliers' facilities to assist with manufacturing.
"We don't have any sort of demand problem." After a tour of the auto production, he told CNBC, "We have a 'can we manufacture enough vehicles' dilemma."We have an issue with our supply chain." It's aggravating, but we'll get through it."
Because the vans have fewer features, Rivian claims they can be built faster than the consumer R1T and R1S cars. At the facility, they also go through fewer procedures. Painting the vans, for example, is a time-consuming and lengthy operation that takes two hours less than painting the other vehicles.
The vans at the body shop require less complexity and time, according to Victor Taylor, the company's senior director of stamping, body, and plastic.
EVs with a lower price tag
Rivian hiked car pricing last month, much to the chagrin of reservation holders, because of increasing commodity expenses. The business promptly reversed the price hikes for its 70,000 or so existing ticket holders, but stated it will stick to the increased cost for any reservations made after March 1.
The R1T now has a beginning price of $67,500, while the R1S now has a starting price of $72,500. Both are considered luxury automobiles rather than mainstream models at those prices.
On its next-generation EV platform, Scaringe said the business hopes to build lower-cost automobiles. Those cars will be produced in a $5 billion factory in Georgia that is set to open in 2024.
According to Scaringe, Rivian intends to maximize revenues and improve the performance of current models, much like other automakers.
Gas-powered automobiles will be phased out
According to Scaringe, this is the beginning of the end for fossil fuel-powered consumer automobiles. The 39-year-old believes that the manufacture and sales of such vehicles will cease sooner rather than later in his lifetime.
Without giving a specific timeframe, Scaringe believes the end of that period will be closer to 20 years than 50, with firms being compelled to migrate away from fossil fuels out of need as well as future Wall Street and regulatory constraints.
"Most countries throughout the world will phase out the sale of gasoline-powered automobiles. "It's difficult to grasp the magnitude of the shift," he remarked. "The question is whether a policy is driving it or not." The firms who grasp that combustion has no end-state are the ones that will endure."
SPACs
Rivian is one of a slew of electric vehicle start-ups that have gone public in recent years, but its rivals have done so through special purpose acquisition companies or SPACs. Rivian went public with a more traditional and direct IPO.
Many SPACs have run into financial difficulties or received questions from the Securities and Exchange Commission (SEC) about their plans to go public or other business troubles.
Scaringe feels that some of those firms won't be Rivian's rivals for much longer.
"I believe a lot of those underfinanced SPACs and firms like that will eventually start dying as the financial market's transition from a growing emphasis to more of a value orientation," he added. "They're going to run out of cash," says the narrator.
Purpose-built autonomous vehicles?
Elon Musk, the CEO of Tesla, reportedly stated that the business will develop a "dedicated robotaxi." He didn't provide a timeline or any other information, other than to say it will "look futuristic" and be completely self-driving, something the business has yet to achieve despite the moniker of its driver-assist function, "Full Self-Driving" (FSD).
Rivian hasn't disclosed any intentions for a competitor, and Scaringe declined to comment on one direction. However, he stated that the firm will "provide a wide range of items in the future."
Scaringe, who relocated from Southern California to be closer to the 3.3 million-square-foot factory, is recognized for being a focused, level-headed planner who believes that his deeds speak louder than his words (or tweets). Though both are regarded as incredibly detail-oriented and ambitious leaders, it's a different approach than Musks.
EV pickup trucks
Rivian was the first carmaker to commence mass production of an all-electric pickup truck last year, beating Tesla, General Motors, and Ford Motor, which owns a roughly 12 percent investment in Rivian, to market.
In December, months after Rivian released the R1T, GM began distributing the GMC Hummer EV truck. Ford is anticipated to begin selling an electric version of its F-150 pickup truck, dubbed the F-150 Lightning, shortly, followed by Tesla's long-awaited Cybertruck, which is set to go into production next year.
While the Rivian R1T has been compared to other electric pickups, Scaringe is unconcerned about the competition. For the time being, he truly enjoys it. He feels that there is now sufficient demand to meet EV pickup manufacturing shortly.