Rivian hit with big reality check
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Emerging electric ute maker Rivian has found out making cars is hard.
The US-based EV start-up has posted a fourth quarter loss of $3.4 billion due to production issues, triggering a sharp fall in its share price.
Rivian’s start has shades of Tesla’s early struggles to mass produce the Model 3. At the time Tesla posted big losses and struggled to boost its monthly production.
At one stage Tesla built a production line in a giant tent in the factory’s carpark in an attempt to meet its targets.
In November, 2021, Rivian was the darling of Wall Street as its initial public offering raised $11.9 billion, setting the share price at $US78 ($106) in the largest IPO since 2014 when China’s online giant Alibaba went public.
Shares in the company, which is backed by Amazon and Ford, leapt as high as 50 per cent in its first day of trading, taking Rivian’s market capitalisation to more than $US100 billion ($137b) – well above Detroit’s legacy manufacturers and most global players.
Since then the company has built less than 2500 vehicles and has had to cut its planned 2022 production in half to just 25,000.
The company recently announced it was raising the price on its vehicles by $1000 for all standing orders, but back tracked after customers rebelled.
Rivian expects its production issues to continue throughout the year as it struggles with its semiconductor supply problems.
This coupled with the giant quarterly loss has led the share price to drop to $US38.05 ($52.45), which is 78 per cent lower than its peak in November last year.
The company recently announced it planned to take 10 per cent of the EV market in less than 10 years.
It currently has two models entering production: the R1T electric pick-up truck and the R1S electric SUV.
Rivian says it has a substantial order list of more than 80,000 for the two vehicles combined. It’s R1T electric ute makes up the majority of the orders and has beat the rival Ford F-150 Lightning and Tesla CyberTruck to market by a considerable margin.
Rivian claims its R1T will have some pretty impressive performance. The truck will tow up to 4500kg and have a claimed range of up to 640km.
The good news for Kiwi tradies is that it’s expected to be sold in New Zealand.
In 2019, a Rivian spokesman Chris Wollen told News Corp Australia the ute would be developed in right-hand drive for overseas markets.
“We know that there’s markets that will be into these vehicles and the adventure positioning and Australia fits that perfectly. We know we’re nicely suited for Australia so it’s an important market for us,” he said.