The electric automaker Rivian told investors Tuesday it’s going to be able to build more vehicles this year than initially forecast, and that a broad cost-cutting plan is having a positive impact on profitability.
During its second-quarter earnings call Tuesday, Rivian announced that it’s raised its annual production target, from 50,000 vehicles to 52,000. That’s due to “the progress we have seen to date on our production lines, the ramp of our in-house motor line, and the supply chain outlook,” Rivian said.
“Our focus very much remains on not only continuing to ramp production in our Normal production facility, but importantly, driving costs down across the business on our path to profitability,” said Rivian founder and CEO RJ Scaringe.
Rivian is making its electric trucks, SUVs and delivery vans in Normal. With over 7,800 employees, Rivian is now McLean County’s second-largest employer, behind only State Farm.
Those employees are on the front lines of Rivian’s push to spend less money making each vehicle, on a yearslong path to profitability. Rivian made 13,992 vehicles in the second quarter (April, May and June). That’s up 49% from the first quarter.
“Increasing our production is the primary lever in our path to profitability,” Rivian told shareholders.
Up until early 2023, Rivian’s employees were making mostly R1T pickup trucks – one of the first electric pickups to hit the market. But that’s now flipping. Over the next three to six months, 70% or more of Rivian’s R1 production will be the R1S SUV, Scaringe said. That’s intended to address a “really long backlog” of R1S orders, he said.
“This is far and away one of the biggest customer complaints we have – the amount of wait time associated with getting a Rivian today,” Scaringe said. (The company says that "over the long-term, we believe consumer mix will be more heavily weighted toward the R1S.")
Cost-cutting continues. Rivian says there have been “meaningful reductions in both R1 and (electric delivery van) vehicle unit cost across each major cost category, including material cost, manufacturing labor, overhead and logistics.”
One of the biggest changes is the introduction of Rivian’s in-house motor, called Enduro. It was already being used in the company’s Amazon delivery vans, and it was added to its R1 platform too during the second quarter. It’s cheaper and brings more supply chain flexibility, the company said.
The impact: Rivian says it improved gross profit per vehicle by about $35,000 in the second quarter versus the start of 2023.
Meanwhile, in the middle of 2024, the R1 line will temporarily shut down for retooling – which is expected to lower costs further and increase annual capacity from 65,000 vehicles to 85,000.
Other notes:
- Rivian now has 43 physical service centers opened with an additional 17 scheduled to open by the end of the year.
- On charging, Rivian has 44 Rivian Adventure Network sites and 273 chargers. Through the recently announced collaboration with Tesla, Rivian drivers will have access to more than 12,000 Superchargers as early as spring 2024.
- Rivian recently acquired Iternio, developer of the A Better Routeplanner (ABRP) app. ABRP gives electric vehicle drivers the ability to plan and compare routes and charging stop options.
