Vivek Ramaswamy pans Rivian’s expected $6B federal loan for Georgia factory

[sekker]

Rivian loses nearly $40,000 on the sale of every vehicle in Q3 - not counting R&D. This is cost of goods vs sold price.

The $6B will fund the sale of another 150,000 vehicles.

As I've noted on MRF before, Rivian has less than a 50:50 chance of being in business in 3 years.

I think their trucks look good - and I'm sure they drive great as they as an EV.

And I absolutely think we need real competition in the US market.

But Rivian sure smacks of being a bad business.

https://www.investors.com/news/rivian-st...ast%20year.

[kj]

sekker wrote:
Rivian loses nearly $40,000 on the sale of every vehicle in Q3 - not counting R&D. This is cost of goods vs sold price.

The $6B will fund the sale of another 150,000 vehicles.

As I've noted on MRF before, Rivian has less than a 50:50 chance of being in business in 3 years.

I think their trucks look good - and I'm sure they drive great as they as an EV.

And I absolutely think we need real competition in the US market.

But Rivian sure smacks of being a bad business.

https://www.investors.com/news/rivian-st...ast%20year.

This is what AI says:

Rivian loses a significant amount, around $40,000 per vehicle sold primarily due to high production costs associated with their new manufacturing facilities, complex engineering designs, low production volume, and the need to invest heavily in research and development, all while still ramping up production to reach economies of scale; essentially, they are still in the early stages of building vehicles and haven't yet reached the point where they can produce large quantities at a lower cost per unit.

I believe this. The alternative is that it costs 40k more in materials and labor than the car costs? That can’t possibly be, so really, they need to sell more cars until they can distribute investments over more cars. It costs money to build factories, streamline production, etc. The better they do, the shorter it will take to achieve prosperity. If they do a poor job, it will take too long, but I think eventually if they could keep going, they would be profitable, even if they do an average job. They don’t have that long, so they are going to have to do better than average. I have faith in their product, but if the Chinese begin selling cars here, no current car companies will survive because their government knows they need to back their companies to get into markets. Assuming our government doesn’t understand that, of course.

[vision63]

They're selling cars right now. Everything is going to go out of business one day. Even Amazon.

[Lux Interior]

Business 101 (absurdly over-simplified):

If you expend a billion in capital to start manufacturing cars, then the first car you sell cost a billion to manufacture.

The second adjusts that to $500M per car.

The third to $333M.

Etc.

Rivian is still in its infancy and they are still expending capital to expand.

If you think that $40k means anything other than that, then I don't know what to tell you.

[sekker]

kj wrote:
[quote=sekker]
Rivian loses nearly $40,000 on the sale of every vehicle in Q3 - not counting R&D. This is cost of goods vs sold price.

The $6B will fund the sale of another 150,000 vehicles.

As I've noted on MRF before, Rivian has less than a 50:50 chance of being in business in 3 years.

I think their trucks look good - and I'm sure they drive great as they as an EV.

And I absolutely think we need real competition in the US market.

But Rivian sure smacks of being a bad business.

https://www.investors.com/news/rivian-st...ast%20year.

This is what AI says:

Rivian loses a significant amount, around $40,000 per vehicle sold primarily due to high production costs associated with their new manufacturing facilities, complex engineering designs, low production volume, and the need to invest heavily in research and development, all while still ramping up production to reach economies of scale; essentially, they are still in the early stages of building vehicles and haven't yet reached the point where they can produce large quantities at a lower cost per unit.

I believe this. The alternative is that it costs 40k more in materials and labor than the car costs? That can’t possibly be, so really, they need to sell more cars until they can distribute investments over more cars. It costs money to build factories, streamline production, etc. The better they do, the shorter it will take to achieve prosperity. If they do a poor job, it will take too long, but I think eventually if they could keep going, they would be profitable, even if they do an average job. They don’t have that long, so they are going to have to do better than average. I have faith in their product, but if the Chinese begin selling cars here, no current car companies will survive because their government knows they need to back their companies to get into markets. Assuming our government doesn’t understand that, of course.
There is a big difference between the scaling time-period (ie. Ford in their EV transition) and Rivian.

Ford is literally catching where their first gen EVs have massive room for cost savings. For example, their first gen MachE uses 4x as much copper wiring as they really need due to inefficient wiring patterns; that's over 70 lbs of extra weight in addition to metal and installation cost! The Ford CEO, and the Chevy CEO, claim with design iterations they will get to profitability per car by the end of 2025 or so. Those care companies will be selling EVs for years to come.

Rivian's cost of goods for their first gen vehicles are nowhere near profitable even accounting for no R&D costs. They make very little themselves, and their suppliers are demanding high pricepoints for THEM to invest in making the Rivian parts. EVERYTHING is expensive for Rivian right now.

Tesla was also in this same state with their first gen Roadster. They were losing money off every single car sold. They were able to be profitable per vehicle only after they went to the Model S where they started making a substantial amount of their own parts.

Again, this assessment is not to say Rivian will fail. Or that I want it to fail.

The reality is that Rivian likely should stop selling any current gen vehicle - stop digging themselves a deeper hole - and use the fleet to optimize software. And spend 200% of their current resources on their second (and announced third gen) vehicles, where they might have a chance at being profitable.

The question is how deep a financial hole they will dig before they make the transition.

I note that Tesla did this - twice. Once going from Roadster to Model S. Then again getting the Model 3 built and sold in a net profitable cost of goods.

[Lemon Drop]

I'd buy RIVN now at around $12.
Yeah it bottomed out after the IPO but I think that phase is over. Already up 20% this month; general outlook is to outperform to $15 to $21 this year.

The future is electric cars. As Lux said above, start up investment in this industry is staggering, but the billions are showing up for this company. Look for the new, more affordable models in 2026.

[kj]

sekker wrote:
[quote=kj]
[quote=sekker]
Rivian loses nearly $40,000 on the sale of every vehicle in Q3 - not counting R&D. This is cost of goods vs sold price.

The $6B will fund the sale of another 150,000 vehicles.

As I've noted on MRF before, Rivian has less than a 50:50 chance of being in business in 3 years.

I think their trucks look good - and I'm sure they drive great as they as an EV.

And I absolutely think we need real competition in the US market.

But Rivian sure smacks of being a bad business.

https://www.investors.com/news/rivian-st...ast%20year.

This is what AI says:

Rivian loses a significant amount, around $40,000 per vehicle sold primarily due to high production costs associated with their new manufacturing facilities, complex engineering designs, low production volume, and the need to invest heavily in research and development, all while still ramping up production to reach economies of scale; essentially, they are still in the early stages of building vehicles and haven't yet reached the point where they can produce large quantities at a lower cost per unit.

I believe this. The alternative is that it costs 40k more in materials and labor than the car costs? That can’t possibly be, so really, they need to sell more cars until they can distribute investments over more cars. It costs money to build factories, streamline production, etc. The better they do, the shorter it will take to achieve prosperity. If they do a poor job, it will take too long, but I think eventually if they could keep going, they would be profitable, even if they do an average job. They don’t have that long, so they are going to have to do better than average. I have faith in their product, but if the Chinese begin selling cars here, no current car companies will survive because their government knows they need to back their companies to get into markets. Assuming our government doesn’t understand that, of course.
There is a big difference between the scaling time-period (ie. Ford in their EV transition) and Rivian.

Ford is literally catching where their first gen EVs have massive room for cost savings. For example, their first gen MachE uses 4x as much copper wiring as they really need due to inefficient wiring patterns; that's over 70 lbs of extra weight in addition to metal and installation cost! The Ford CEO, and the Chevy CEO, claim with design iterations they will get to profitability per car by the end of 2025 or so. Those care companies will be selling EVs for years to come.

Rivian's cost of goods for their first gen vehicles are nowhere near profitable even accounting for no R&D costs. They make very little themselves, and their suppliers are demanding high pricepoints for THEM to invest in making the Rivian parts. EVERYTHING is expensive for Rivian right now.

Tesla was also in this same state with their first gen Roadster. They were losing money off every single car sold. They were able to be profitable per vehicle only after they went to the Model S where they started making a substantial amount of their own parts.

Again, this assessment is not to say Rivian will fail. Or that I want it to fail.

The reality is that Rivian likely should stop selling any current gen vehicle - stop digging themselves a deeper hole - and use the fleet to optimize software. And spend 200% of their current resources on their second (and announced third gen) vehicles, where they might have a chance at being profitable.

The question is how deep a financial hole they will dig before they make the transition.

I note that Tesla did this - twice. Once going from Roadster to Model S. Then again getting the Model 3 built and sold in a net profitable cost of goods.
No, the only way they get out of this is streamlining and selling more cars. Lux’s analysis is exactly right. There is no way to extract the cost of building the factories to build the cars from the current assessment of what it has cost to make each car. Each car sold gets them closer to profitability. If they stopped selling cars, they still at some point are going to have to spend a lot of money to build them, which has to be paid for by selling cars. There is no way to eliminate that upfront cost.