A little more than a week after a major pricing blunder, Rivian CEO RJ Scaringe confidently assured investors and analysts the company would meet its previously stated production targets, including 25,000 vehicles by the end of 2022, despite ongoing supplier issues.
In fact, the company will produce 55,000 vehicles by the end of 2023, he confirmed. Through March 8, the company’s built 2,425 units of its R1T, R1S and electric delivery vans. Actually, the company’s not built any production versions of its vans, or EDVs, as they’re still in the final pre-production stage. Those are expected to come later this quarter, Scaringe noted.
He did note the company expected to be producing more vehicles than its current run rate, but that it — like many other automakers — is constrained by a lack of certain components, mostly semiconductors, from suppliers.
“Ultimately, our ability ramp up this will continue to be gated by (suppliers),” Scaringe said. “You know, it’s not all the build materials, it’s just a small fraction of materials where we’re having some of these supplier constraints.”
He said the production ramp up of the EDV is going more smoothly for the EDV than the R1T and R1S because of the lessons learned from building those vehicles.
The moves come after the company reported a $2.5 billion loss on revenue of $54 million in the fourth quarter. The company is just beginning to deliver vehicles, thus the revenue number is expectedly small. For the full year, the company lost $4.7 billion on revenue of $55 million.
The company’s adjusted EBITDA for Q4 was $1.1 billion loss and $2.8 billion in the red for all of 2021. Those numbers were markedly larger than the losses of $341 million and $992 million for each year-ago period.
Losses in the future
The company’s planning to spend — it’s cap-ex for the year — $2.6 billion to meet or beat the prediction of 25,000 vehicles for 2022. That will result in its adjusted EBITDA for the full year coming at a loss of $4.8 billion.
“We plan to continue investing in our business throughout 2022 and therefore expect an increase in capital expenditures as compared to 2021. Capital expenditures are expected to be $2,600 million, driven by additional investment in our Normal Factory to expand the total capacity to 200,000 units annually,” Scaringe told investors in a shareholder letter laying out the company’s 2021 financials and future expectations.
“In addition, we expect to realize increased capital spend associated with tooling for current vehicle platforms, future vehicle manufacturing lines, battery technology and supply, our service network, digital offering, and general technology.”
Optimism despite results
D
espite falling short of analysts’ expectations, little has changed in terms of their outlook, largely because the company is building and selling vehicles — and at an increasingly quicker rate.
Bank of America’s John Murphy kept a “buy” rating on Rivian. He noted “that the company is one of the most viable among the startup EV automakers and also a relative competitive threat to incumbent automakers (and possibly to other automotive-related verticals).”
He chalked that up to the company’s “comprehensive and well-defined business model,” which like its biggest EV competitor Tesla, includes a direct-to-customer sales and service strategy. The hope is that once a Rivian customer, always a Rivian customer as it expands its product line-up in the years ahead as well as the capabilities of those vehicles.
“(W)hile the competitive landscape for electric vehicles is fierce, we believe (Rivian) has more pieces in place and in progress than most EV OEM peers,” he wrote in a report after the earnings call.
Recognize and move on
Scaringe was quick to address price hike kerfluffle, as one analyst called it, during his opening remarks of the call.
“On March 1 we announced the dual motor and standard battery pack along with its updated pricing model and applying the updated pricing to existing customers. We failed to appreciate the customers user configuration as price law,” he said.
The company raised the price of its R1T pickup 17% and the price of its R1S SUV 20% March 1, blaming the move on increased component costs and semiconductor shortages — a theme throughout the earnings call. The move caused furious customers to inundate social media with their cancelled reservations.
Scaringe rolled back its price hike March 3 on orders booked on or before March 1. Consumers who canceled their preorder on or after March 1 were able reinstate it with the original configuration, pricing and delivery date, the company said — and a good number did, officials noted.
He explained the company offered new and improved technology — a dual motor configuration with an improved standard battery — giving customers more options, but also resulting in a price increase on the top end of the company’s product range. Prices originally started at $67,500 and ran up to $83,500. Now the top end is $95,000.
“We wrongly assumed customers would be open to reconfiguring to the recently announced dual motor and standard battery pack, if they wanted to maintain a similar price point to the original configuration. We recognize this was a mistake and quickly moved to honor the original configured pricing for our pre-March 1 pre orders. Our relationship with customers is the most important aspect of what we’re building. We believe our early customers are critical for establishing the brand foundation needed to support many millions of sales across our future vehicle portfolio.”
Officials noted later in the call the company saw “massive reinstatement requests.” Ultimately, more than half of those who cancelled, reinstated their orders. They noted the new order rate is basically at the same level as it was prior to the misstep.
