EV startup Rivian (RIVN) is gearing up to accelerate production of its first electric SUV, the Rivian R1S, with robust demand going into next year.
Rivian’s CFO Claire McDonough explained during an interview with Deutsche Bank that the company is seeing strong demand despite the economic environment.
McDonough discussed Rivian’s production ramp and how the startup plans to achieve positive gross margins by the second half of 2024.
Although supply chain issues have been an ongoing issue in the industry, Rivian is seeing some relief. Their biggest problem was access to power semiconductors, which the company is overcoming with new in-house technology like its Enduro drive units.
Rivian’s CFO says the Enduro production ramp is ahead of schedule. As mentioned during its Q1 earnings, Rivian introduced the drive units and LFP battery packs into its electric delivery vans (EDVs) for Amazon insuring the quarter.
A few weeks ago, Rivian built its first saleable R1 series model fitted with the Enduro drive unit. Rivian expected the transition to slow production in the first quarter, with 9,395 units built. However, it anticipates the pace to pick up in the second half of the year as it works to reach its 50,000 target.
Rivian to focus on R1S production as demand climbs
McDonough said Rivian continues to see a “robust backlog of preorders that extends into 2024.” Although it has seen some impact from the broader economic implications regarding daily order rates, it has maintained stable demand.
With the ability to now order a Rivian R1T model and have it delivered in less than two weeks (it’s also offering same-day deliveries on R1T day, June 17), Deutsche Bank‘s Emmanuel Rosner asked if the company had the flexibility to shift production to get R1S models into customers’ hands quicker.
McDonough explained the R1T was Rivian’s first model, so they have had more time to focus on the production ramp. For the first time in Q2, the R1S will take the bulk of the volume.
Rivian is seeing higher demand for the R1S, with about 70% of the company’s preorders, so the company is beginning to prioritize production to resolve the demand imbalance.
More importantly, Rivian’s CFO says no specific bottlenecks limit the transition, and most models being built today are R1S.
The company is still working through pre-March 1, 2022, preorders at the moment, but over the year into 2024, they will begin later orders. McDonough explains rolling out the new Enduro units will help them work through the backlog.
The company expects a few weeks of downtime next year as it introduces new technology to improve efficiency and cut costs, including its next-gen network architecture, LFP battery tech, high nickel batteries, and a simplified manufacturing process.
Rivian’s CFO touched on another few key points during the interview, including its upcoming R2 series, set to be unveiled early next year. The R2 models will offer Rivian’s adventure theme at an affordable ($40,000 to $60,000) price range.
When asked if Rivian would follow Ford and GM in adopting Tesla’s NACS, McDonough said the company is excited for more people to have access to high-quality charging while it remains open to partnerships.
Rivian was one of the few EV startups that maintained its production target this year after the first quarter.
The company continues reducing complexity while introducing new technology to improve efficiency and profitability. Sources recently told Electrek that Rivian was in talks to acquire Swedish-based EV route planning service A Better Route Planner (ABRP), which will likely greatly improve its software and navigation capabilities as well.
Moving to R1S production could be a sign of weakening demand for pickups, or perhaps the SUV is simply attracting more buyers. We’ll find out more over the course of the year as Rivian continues expanding its brand and working towards turning a profit. For those R1S reservation holders, your time is coming soon.
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