Ramping production of a new vehicle is absurdly expensive, and Rivian is learning that first hand as it pushes to bring it’s R1-T electric pick-up truck to market this year. The beloved electric vehicle startup has raised a fresh $2.65 billion in a new funding round that closed this week.
Not only is Rivian working to deliver its first vehicle, the R1T electric pickup, to customers by early June, but two other capital-intensive programs also are underway. Rivian is building a network of charging stations throughout the country. And CEO RJ Scaringe told Automotive News Publisher Jason Stein in November that the company plans to have 41 brick-and-mortar service centers open before its first vehicles are delivered.Auto News
That sounds like a lot of work. It’s a toss up whether the Rivian R1-T or Tesla Cybertruck will hit volume production first. For Rivian’s sake, they better do everything they can to start delivering the first R1-Ts before Tesla delivers the first Cybertruck. With a higher price point and lower specs than the Cybertruck, the R1-T already faces tough competition in a cut-throat market that will soon include entrants from GM and Ford.
If Rivian is able to sell their electric trucks unopposed during the start of the ramp, during which production costs are highest, the financial math gets a lot easier for Rivian. If they face delays and other electric trucks hit the market first, the game starts to look a lot tougher.
In a statement Tuesday, Rivian said the round was led by T. Rowe Price Associates and included Fidelity Management and Research Co., Amazon’s Climate Pledge Fund, Coatue and D1 Capital Partners, as well as several other existing and new investors.
Since 2019, Rivian has raised $8 billion. Ford Motor Co. and Cox Automotive are two of its earlier investors.Auto News
Producing vehicles is an insanely capital intensive business. You can’t sell a single car without raising untold billions of dollars. Most companies that try this will fail, and Rivian has yet to secure their place in the market for the future. If things don’t work out, I could see them getting acquired by an incumbent though.
Rivian has three vehicles planned: the R1T, with the $75,000 Launch Edition entering the market first and a $67,500 trim coming later; the $77,500 R1S electric SUV; and an electric delivery van for Amazon. The R1S is slated to arrive later this year, with a less expensive model coming, probably in 2022. Rivian has promised to start deliveries of the Amazon van next year. Amazon has ordered 100,000 of the vehicles, making it the industry’s largest order of electric delivery vans to date.Auto News
That’s too many vehicles for a start-up. If you’re going to try something as batshit crazy as building a new car company, focus on making one amazing product before you start planning your second and third. I know that Bezos money is tempting, but you have to stay focused.
I’m excited to see Rivian enter the market and find out if their products live up the hype. If they can produce enough of them, it certainly seems like the the R1-T has the potential to become a very popular EV. However, without a $40,000 variant the R1-T is unlikely to outsell the Cybertruck.
Best of luck to Rivian in ramping up production of these three products.