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Rivian May Have Found Solution to Its Biggest Problem

For a year and a half, Rivian has been stingy with good news.

The EV upstart, considered one of Tesla’s most serious competitors, seems to be caught in an infernal challenge that threatened to crush it until very recently.

This challenge is the one that kills a lot of aspiring automakers: the increase in production rates. The production ramp-up is the obstacle that stands between an automotive startup and a mass car producer. It is the way to the survival for all EV upstarts.

Ramping up production, which consumes a lot of cash, almost caused Tesla’s bankruptcy. From 2017 to 2019, the Austin,Texas-based company found itself on the brink of collapse, because of difficulties managing its ramp-up of production capacity for the Model 3 sedan, its entry-level vehicle.

“Closest we got was about a month. The Model 3 ramp was extreme stress & pain for a long time — from mid 2017 to mid 2019. Production & logistics hell,” Elon Musk, chief executive officer, said on Nov. 3, 2020. 

A Long Nightmare

This difficult period in Tesla’s history is symbolized by the Joe Rogan podcast’s interview with Musk in September 2018. During this interview, the whimsical entrepreneur and his host smoked marijuana live.

Today, Tesla  (TSLA) – Get Free Report has become a juggernaut, the world’s ninth most valuable company, with a market cap of $571 billion at last check. 

The jury is still out on Rivian. One of the pitfalls is that not every EV upstart is Tesla, and the circumstances are no longer the same. When Tesla was struggling to mass-produce vehicles, electric vehicles were not the focus of the auto industry. Today, the competition is tougher because the legacy carmakers all now offer an electric vehicle and have more models in the pipeline.

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When Rivian started ramping up production last year, the question was whether the Irvine, Calif.-based group was going to be able to overcome the traditional problems related to mass production.

The company was, like its rivals, facing disruptions to supply chains caused by the coronavirus pandemic. To this was added in February 2022 the Russian war in Ukraine, which caused a surge in the cost of the raw materials necessary for the development of the battery.

Unfortunately, things did not work out as Rivian had hoped. The carmaker, which manufactures the R1S SUV, the R1T pickup truck and the EDV van at its Normal, Ill., plant, had to halve its initial production target last year to 25,000. In the end, the firm did not quite manage to meet this objective, ultimately producing 24,337 vehicles.

Significantly Reduced Delivery Time

At the start of this year, the group wanted to be cautious. While it announced that it was going to deliver 50,000 units in 2023, Rivian said internally that it could exceed this figure — producing 62,000 units — but at the same time refused to make it official.

Instead, it warned, during the publication of its first quarter earnings on May 9, that: “We continue to believe the supply chain will continue to be the main limiting factor of our Normal facility output. Our team continues to work on the introduction of new engineering design changes and key technologies which will take effect during the second half of 2023 to help mitigate anticipated supply chain constraints.”

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It looks like the sky is finally clearing over Rivian’s head, because the carmaker just sent a message that suggests that it is starting to see the end of this ramp-up production problems. Indeed, the carmaker has reduced the delivery time of the R1T. A consumer who orders this pickup truck today, should receive it in 14 days or less, depending on the location.

“Rivian’s production ramp continues to climb, meaning customers can take delivery of an R1T in 14 days or less in some cases,” a spokesperson told TheStreet in an emailed statement. “Those who live within a serviceable area from a Rivian Service Center will get access to R1 Shop, where they will be able to browse ready-to-go configurations. This is all part of our focus on ramping production and improving delivery timing. 

Previously, customers had to wait between one and four months. 

Rivian is however warning that delivery window estimates are not based on location only. Other factors such as the configuration of an original preorder or reservation date, the way the carmaker batches production of vehicles at its plant, supply availability and changes in customer preferences impact the delivery date.

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