Rivian officials said Tuesday there are early signs of success from their plan to more proactively generate demand for their electric vehicles – a critical step as the company looks to turn a modest gross profit by the end of this year.
Rivian acknowledged the broader auto industry is still experiencing challenges, including concerns about softening demand for EVs amid high interest rates. In response, Rivian said it’s launched a “demand generation” plan that includes the launch of leasing options, new marketing campaigns, and encouraging more demo drives. Rivian hosted over 28,000 demo drives in the first three months of 2024 – up 91% from that period a year ago.
“Getting more customers into the driver’s seat has certainly been a compelling tactic for us,” Rivian chief financial officer Claire McDonough said on an earnings call Tuesday.
The result: The R1S SUV was the fourth best-selling electric vehicle in the U.S. during the first quarter of 2024, the best-selling electric vehicle in the U.S. above $70,000, and the best-selling large luxury SUV in California across both electric and combustion engine vehicles.
Rivian makes its electric pickup (R1T), SUV (R1S), and commercial delivery vans at its plant in Normal, which employs over 8,000 people. The company plans to hire even more, as part of a $1.5 billion investment and expansion buoyed by $827 million in state incentives spread over 30 years. Rivian is expecting to get the first $100 million in cash proceeds from the state this year to support that expansion, McDonough said.
That expansion will allow Rivian to begin making its new R2 model in Normal, rather than at a now-delayed new plant in Georgia. Most of the work to integrate R2 in Normal will happen in 2025, including another plant shutdown, McDonough said.
When finished, Rivian’s annual production capacity in Normal will be 215,000 vehicles, with about three-quarters of that (155,000) being R2s. R1 capacity will be around 56,000.
R1 production has now restarted after a weekslong spring shutdown, which Rivian says sped up the line and cut costs. The company says it integrated “nearly 600 new or modified robots” to help with efficiency, and also reduced the number of electronic control units in each vehicle by 60% to lower costs. The result is that the R1 line rate is expected to improve by approximately 30%, officials said Tuesday’s shareholder letter.
“The energy within the plant is palpable. The excitement to deliver on improved quality and improved cycle time is real,” said Rivian founder and CEO RJ Scaringe.
The problem, of course, is Rivian is losing money on every vehicle it sells. But that gross loss is shrinking – down to $38,784 per vehicle in the first quarter of 2024, from $67,329 this time a year ago. McDonough said they feel “confident in our plan and our path to achieve positive gross profit” in the fourth quarter of 2024.
“We continue to move closer to making money on every vehicle we sell,” McDonough said. “We expect to see meaningful improvement in our gross profit during the second half of this year, and believe we’ll reach a positive gross profit for the fourth quarter.”
Starting R2 production in Normal – not Georgia – is expected to save the company $2.25 billion.
