What Is Going On With Rivian? - (2022 Rivian Update)

Rivian Motors is such an interesting company to be following right now. We have an electric vehicle manufacturer that is still very much in its infancy, but has so much potential to become a global leader. Rivian feels like a company that is in the right place, at the right time, with the right product.

Obviously it’s not all been smooth sailing for them as of late - but honestly the same goes for pretty much everyone, right? Rough year all around. And even in the best case scenario, we know that launching a brand new company that exclusively makes electric vehicles is preposterously hard to do. Elon Musk has said it more times than we can count, and there is a massive graveyard of prototypes from companies that tried and failed to even sell one car.

So the fact that Rivian has not only sold a single car, but actually manufactured and sold multiple thousands of cars, essentially means that they have crossed the Great Filter of EV startups - they’re out there in the wider universe alongside Tesla, and I guess Lucid as well to some degree. Clearly Tesla has a 10 light year head start, but that’s not the point.

It’s not about which company is better or worse. If you’re passionate about electric vehicles and not just a brand cultist, then it is an amazing opportunity to watch a new EV maker work through their trials and tribulations, wins and losses. No one really cared about electric cars when Tesla was going through a lot of this stuff because no one had ever done what they were trying to do, it just seemed impossible. So now we get to see the Rivian story unfold from multiple angles as everyone eagerly anticipates a repeat of Tesla’s success.

Anyway, that’s why we’re talking about Rivian on a Tesla channel. Hopefully that’s cleared up. So let’s get going.

The Product

Right off the top, this isn’t going to be another R1T review - I don’t think they’ve even delivered them to Canada yet, I’ve never seen one in real life.

And I’m sure everyone already knows the quirks and features of the product pretty well by now, it’s all been covered very thoroughly on the review racket. In terms of a pickup truck, the R1T is really cool, it fits into a very smart niche. Most pickup trucks these days are trying to position themselves as either a hardcore work tool, or a giant oversized luxury car with a truck bed, or a muscle car in the shape of a truck or a massive offroading monster machine.

The Rivian actually manages to cover most of those bases, but without all of the macho bravado of its competition. The R1T is just a good time, adventure truck that can go anywhere and do anything while still maintaining a very chill, understated modern vibe. This truck would look right at home on the set of a Star Trek series like Strange New Worlds, Captain Pike would totally drive a Rivian. The Tesla Cybertruck also looks like a sci fi prop, but that brings much more of a James Cameron, Aliens, Terminator 2 kind of vibe. The Rivian is the truck for the hopeful future, the Cybertruck is for the brutal garbage future.

Anyway, let’s knock off the prose and get to some nerdy EV technical details, AKA the kind of stuff that your average car reviewer won’t talk about. The battery pack in the current production R1T is a large, 135 kilowatt hour pack to accomplish 314 miles of range. Rivian is using a Samsung produced version of the 2170 lithium ion cell, which is just a different take on the same battery in the Tesla Model 3 and Model Y Long Range and Performance. 

For a sense of scale, the Model Y Long Range uses a 75 kilowatt hour battery for 330 miles of range. The Ford F150 Lightning uses a 131 kilowatt hour pack to reportedly achieve 300 miles of range, I’m not sure exactly what cell Ford is using in that pack but it’s probably the rectangular, prismatic type.

So I think we can say that Rivian makes reasonably efficient use of their battery and drivetrain architecture, but nothing special.

What does make Rivian special is their 4 motor drive system - this is a first for a consumer vehicle - I think there are a few concept cars and super limited hyper cars that used 4 motors, but Rivian is the first one that you’d actually see in the real world. And this is really cool, because, unfortunately, most electric vehicles don’t take full advantage of the platform, they’re just regular cars with the engine pulled out and some batteries and electric motors stuck in. The EV platform allows for things like giving each wheel its own dedicated motor; this is a deeply useful feature and a smart move by Rivian.

This totally eliminates differentials and drive axles from the vehicle system, which is good because these parts always present a compromise. The most common differential type is an open differential, this allows the wheels on both sides of the car to rotate at different speeds, which allows the car to go around corners without sliding. An open diff will always send torque through the path of least resistance, so if one wheel starts to rotate faster, it will receive all of the power from the engine - and if that wheel happens to be off of the ground or stuck in a rut or a snowbank, then your wheel is going to spin and your truck isn’t going to go anywhere. That’s why most cars get stuck.

One the other end of the spectrum, an off roading vehicle like a Hummer will use locking differentials, which force every wheel to rotate at the same speed - so you’ll never end up with a wheel up in the air just spinning and doing nothing, the wheel with the most grip will always be able to push the vehicle on. This system is totally useless for normal driving conditions, so it has to be turned on and turned off as needed.

Somewhere in between is a limited slip differential that can actively distribute torque to the wheel with the most traction while still allowing the vehicle to corner - these are mostly used in high performance cars and they’re very complex, expensive components, especially the modern, electrically controlled ones.

So Rivian just eliminated all of that from their lives by putting one small motor on each wheel - so the vehicle computer can independently apply a precise amount of torque directly to each wheel and rotate each one at a different speed as needed, it can also use the motor’s regenerative braking to slow down the rotation of each wheel individually without the mechanical brakes.

The result is unlimited traction all of the time in every situation without the driver even having to think about it. As someone who has to drive through extreme winter weather for usually 3 or 4 months out of every year, I want this drive system in my life. And honestly this would save countless people’s lives if they did have this in their cars for the winter. Four motors is the future.

The Struggle is Real

So, Rivian has a great product and they have some really smart engineering. But do they have a good business model? This is where things get more complicated.

In a recent interview, Elon Musk was incredibly harsh on both Rivian and Lucid - speaking with Tesla Owners Silicon Valley, Elon said, "Unless something changes significantly with Rivian and Lucid, they will both go bankrupt. They are tracking toward bankruptcy."

And Elon would know, because Tesla was on the exact same path less than 5 years ago. And he did acknowledge that these new companies can pull out of the danger zone, just like Tesla did. Elon continued to say, "I hope they can do something, but unless they can cut their cost dramatically, they are in deep trouble and will end up in the car cemetery like every other with the exception of Tesla and Ford."

Later in the interview, Elon also said that his advice to Rivian specifically would be "to cut costs immediately across the board dramatically or they are doomed."

And Elon is not wrong on that one. Sandy Munro’s company is in the process right now of doing a full tear down of the R1T vehicle - if you're not familiar with Sandy, he’s an old school automotive engineer who takes modern cars apart down to the bare frame until they are just a big pile of parts on the ground. And in the process his team analyzes every aspect of how the vehicle was manufactured and engineered, then he provides a report to identify how it can be improved.

Munro’s findings with the R1T so far is that it is a very well made, quality product, but it is actually over engineered and under valued. Sandy called the R1T “way underpriced” and says the R1T has "buckets of cost reduction opportunity".

Rivian has already solved some of this problem with a recent price increase to start at 79 thousand US dollars. They also created a problem at the same time by trying to apply that price hike retroactively to buyers who had already made their order at the 67 thousand dollar base price. So, that didn’t go over very well and it caused the company to backtrack and beg for forgiveness and it was all a very sad scene.

But interestingly, it still seems like Rivian has not gone far enough. Lucid Motors CEO Peter Rawlinson, told Reuters in March that the R1T probably needs to be priced at $95,000 to be profitable.

The GM Hummer EV with three motors and rear wheel steering is going to cost about $130,000. While a fully loaded F150 Lightning with dual motors and just slightly less range than the R1T, but fairly equivalent features would cost about $100,000. We don’t know how much the eventual, 4 motor Tesla Cybertruck with rear wheel steering is going to sell for, but it is certainly not going to be just $69,000, it will likely be in that $120,000 range occupied by the Model S and Model X.

All that to say that it would be totally justified for Rivian to charge much more for their product because it is at least competitive, if not better than anything else on the market that sells for significantly higher prices.

Production Hell

We know that Elon Musk simply refers to Tesla’s attempted ramp up of the Model 3 to high volume as “Production Hell”. It sucked. Elon was basically forced to live and literally sleep on the factory floor because the project needed so much work and he was afraid that his staff would just give up and quit if they didn’t see him physically working hard and leading from the front. And when the first Model 3 vehicles did come out, they were widely panned as being a roughly cobbled together pile of electric junk. And some of them were, most were fine but there was very little consistency and quality control problems all over the place.

So when we hear about Rivian having production problems, we have to remember the context. This is a very hard thing to do. The Great Filter of EV startups.

Rivian do all of their manufacturing at a plant in Normal Illinois - the company headquarters is Irvine California, but they were able to get a good deal on an old Mitsubishi production plant, so that’s where they ended up building the product. Again, much the same way that Tesla started off. Except at least Tesla had an old GM and Toyota plant to build on - Mitsubishi is rough, those things are garbage.

Anyway, Rivian uses this plant to manufacture the R1T, the soon to be released R1S - which is just an SUV version of the same platform, and the commercial delivery van that is destined for Amazon. R1 production is one one line, while commercial van production is on a second line, though every vehicle is based off of the same skateboard platform.

Rivian builds their own battery modules and packs in house. They also build their own drive units fully in house - this is good, they already have some vertical integration happening, which we know is one of Tesla’s keys to success. Unfortunately Rivian do not build their own seats in-house. There is currently a lawsuit ongoing between Rivian and their seat supplier for the commercial van that could end up being a setback to actually getting these rolled out to Amazon. Rivian has custom designed that seat but outsourced the manufacturing - now the people making the seat want to double the cost and Rivian decided they would rather sue them than pay double.

Actually, if we’re already talking about difficulties, then we should circle back to the whole battery manufacturing thing. Rivian did have a small fire break out on their battery pack production line about a month ago. According to the fire department report, “When firefighters arrived, there was a battery pack in thermal runaway in a battery testing area in the southwest side of the plant where the batteries are built for the Rivian vehicles.” They followed standard procedure with these kinds of fires, which is to extinguish the flames and then continue to flow water over the pack to keep it cool and prevent it from reigniting.

In a statement after the event Rivian basically just said that no one was injured and they provided no explanation as to why the pack malfunctioned. So that’s not great. It’s probably not cause for panic. But we definitely do want to pay attention to any reports of customer delivered vehicles spontaneously combusting, because that would point to a systemic issue such as the Chevy Bolt.

The good news for Rivian in all of this is that they have enough money to weather a few storms in these early days. So Rivian had a very much hyped initial public offering of their stock on Wall Street, they rang the opening bell and everything. And people went nuts buying up shares of the new company, everyone wants to get in on the next Tesla and get that multiple thousand percent return on investment. Rivian managed to raise 12 billion dollars in cash from that listing, more than any other US company of any kind since the year 2014. That sent Rivian stock prices as high as $179 USD

And then it all came crashing down. In March, company executives announced that they would cut production forecasts for 2022 in half, to 25,000 vehicles - citing the global semiconductor shortage and other supply-chain troubles. In Q1 2022 the company delivered 2,500 vehicles, so even hitting 25 thousand this year is going to be very hard. Rivian also reported a 1.6 billion net loss in the first quarter on revenues of 95 million. Which is perfectly fine, new companies always lose money - Tesla didn’t start making a profit consistently until 2019 and 2020.

And that still leaves Rivian with their giant pile of cash - they reportedly have 17 billion dollars in total stashed away - which is said to be enough money to fund the company until 2025. And that includes the company’s expansion into a second manufacturing plant to be built in Georgia for a cost of 5 billion dollars - this will be the future home of the Rivian R2, a smaller and more affordable SUV vehicle set for release in 2025.

Rivian CEO RJ Scaringe has a vision of the company eventually reaching an annual volume of 10 million vehicles, which would put them on par with where an industry leader like Toyota or GM is today.