When are losses a good thing? In Rivian’s case, this could be when the company shows it’s losing less money than before.
Rivian is Tesla’s greatest competition in the EV market. While Tesla builds road-focused electric SUVs and a strange-looking electric pickup truck, Rivian’s products are much more versatile and useful. The R1T looks like a truck and has all the qualities you expect in a pickup truck, including offering real off-road capabilities. The R1S is rugged and ready for the trails while also being comfortable on the road. You might think these vehicles would help the company make money, but that hasn’t happened yet.
Losing cash, but less of it
Rivian just posted their Q2 numbers, and here’s the deal: they’re still losing cash hand over fist, but hey, they cut those losses by about a third compared to last year. The electric truck maker is making some real progress on their cheaper R2 platform that’s supposed to save the company, but Wall Street isn’t exactly throwing a party. The stock keeps getting hammered because investors are getting tired of waiting for this company to actually make money instead of just burning through it. This is a classic startup story; promising tech, big dreams, but the money folks want to see some actual profits soon.
Will the Volkswagen investment help
A large investment from another automaker can be the sot in the arm that Rivian needs. After showing gross profits for two consecutive quarters, the Volkswagen Group provided Rivian with a $1 billion equity investment on June 30. This is part of a long-term investment of up to $5.8 billion to create a joint venture between the two companies.
Trade policy shifts slowed production
Recent trade policy changes have caused production to slow at Rivian. During the second quarter, the company produced 5,979 vehicles at the Normal, Illinois plant, and delivered 10,661 vehicles to customers. This production felt the impact of recently imposed tariffs, which have caused challenges in the supply chain for many automakers.
The R2 Platform is on track
The launch of the R2 platform includes a 1.1 million square foot plant expansion at the factory in Normal, Illinois. In order to expand, any company needs money to get the job done, which means investors need to be patient, but some are running out of patience with Rivian. The plant expansion is substantially complete and installation of the tooling and equipment necessary to bring the R2 platform online is under way.
The R2 line of vehicles should be released during the third quarter of this year, which could allow them to begin to become profitable. The company currently builds design validation models on its pilot production line in California, which helps the company understand the costs associated with this new line.
When the new R2 line is fully operational, the company expects to be able to build up to 215,000 vehicles each year, which would be a major increase in production compared to the current capacity.
“This quarter, we made significant progress in R2 development and testing. We also substantially completed the expansion of our Normal, Illinois, facility and have begun installing manufacturing equipment in preparation for our start of production. Along with R2, our autonomy platform continues to be one of our major focus areas, and we’re excited to share more of our roadmap later this year.”
– RJ Scaringe, Rivian founder and CEO
Improved Quad-Motor systems
Recently, Rivian began delivering its second-generation Quad-Motor R1 models, which are more powerful and have longer driving ranges than the first generation models. This was already proven with the Tri-Motor versions which showed the new models are more powerful than the older systems.
The new Tri-Motor Max R1 models have 850 horsepower and 1103 lb-ft of torque, which is 15 more horsepower and 195 lb-ft of torque more than the first-gen Quad-Motor R1 models. The greatest change is where the motors come from. Rivian has developed its own electric motors for the second-generation R1 vehicles. During the first generation run, these motors were sourced from Bosch. The new motors are more power-dense and impressive, making them much better than before.
Is it too early to throw in the towel?
Rivian is expected to continue to lose money over the next couple of years. Eventually, some investors may stop investing and will demand profits and results. The addition of the new R2 platform means more production and more affordable vehicles.
The initial plan is to do basically the same with the R2 platform as the R1, offering a truck and an SUV using this platform to offer consumers electric adventure capability. This means the R2 platform will have a midsize SUV with two rows of seats and a smaller truck. The maximum driving range for R2 models is expected to be 330 miles with the Tri-Motor setup, but each configuration is expected to offer at least 300 miles.
Rivan has been burning through money, but that is generally part of a large company getting off the ground in any industry, especially a well-established industry like the automotive world. The new R2 platform could be exactly what the company needs to become profitable, but will investors wait for this new platform to prove its worthiness on the market?
