Rivian’s Big Supply Chain Issues Continue, Despite Rivian’s quick development as an electric-vehicle startup,
supply-chain issues have remained a source of contention for the firm.
Topics
Exploring Solutions to Supplier Constraints
Challenges of Rivian’s
Market Dynamics of Rivian
Exploring Solutions to Supplier Constraints
The ramp-up of production has been routinely hampered over the previous few months owing to supplier constraints,
as recently reported in a shareholder letter on February 28th.
As a result, when the second shift was introduced in the fourth quarter of 2022,
in-transit durations for train cargo grew even longer.
These current issues are projected to endure throughout 2023 and beyond,
but with greater certainty than in the previous year.
Rivian indicated in its shareholder letter that “we expect supply-chain issues to endure through 2023,
but with greater predictability than what was seen in 2022.”
As a result, the firm is looking at methods to solve these difficulties in the future
to guarantee that production objectives are reached
and consumers receive the quality automobiles they demand.
Challenges of Rivian’s
Rivian’s objective of producing 25,000 automobiles in 2022 was reduced to 24,337 in the end.
Going ahead until 2023, the company has vowed to produce 50,000 vehicles;
but, given their existing supply-chain challenges, they may not meet this target as well.
This new objective is lower than what experts had projected, which was 60,000.
Another challenge that Rivian, like other fledgling EV manufacturers such as Lucid,
is dealing with an increasing supply shortage.
This is partly due to Tesla’s move to lower pricing on some models earlier this year,
which was followed by Ford and other automakers going on board.
As a result, consumers have taken advantage of the chance to discover discounts
or simply to wait out the uncertain economic situation.
On an earnings call, R.J. Scaringe, CEO of Rivian, stated how these conditions
have resulted in an overall drop in demand for the sector.
“What we’re seeing in the macro and what we’re seeing in terms of interest rates is…
throughout the sector, having an impact reducing overall demand,” says the economist.
Challenges of Rivian’s
In recent quarters, Rivian has not issued a regular update on its 114,000 pre-orders.
Nonetheless, the business has said that the current pre-order
backlog will most certainly continue through 2024.
When comparing the prices for Rivian’s R1S SUV at over $78,000
to the Tesla Model Y SUV at $54,990 following a recent price reduction
and Lucid’s Air Pure cars at around $87,400, a clear image of the market emerges.
Cash reserves at the corporation have also been continuously declining,
falling from $15.5 billion on June 30 to $12.1 billion at the end of December.
If the present pace of cash burn continues, Rivian may need to obtain additional money shortly
to sustain its operations and development for the remainder of the year.
Given the present market circumstances, the manufacturer may have to wait until 2024 to turn a profit.