Dive Brief:
- Rivian is already seeing supply chain tailwinds from its planned $5 billion joint venture with Volkswagen, Rivian CEO RJ Scaringe said during the company’s Q2 earnings call Tuesday.
- Suppliers view the partnership, announced in June, as an opportunity to scale beyond the electric vehicle maker’s product line and into Volkswagen’s portfolio.
- “That's been a really encouraging early readthrough in terms of how it's perceived and overall looked at by the supply chain,” Scaringe said, adding that Rivian expects to achieve more favorable pricing from suppliers thanks to the VW deal.
Dive Insight:
Rivian remains focused on reducing the costs of producing its R1 model as it continues to source materials for the forthcoming R2, which is expected to begin production in 2026.
As a part of that effort, the company retooled its manufacturing plant in Normal, Illinois, in Q2, a move Scaringe called a “pivotal operational event.”
“The upgrade introduced new technologies and cost-focused material changes into the R1 vehicle platform, while also incorporating manufacturing process improvements that are expected to improve cycle time, utilization, and cost,” he said.
Scaringe said the retooling contributed to a 30% improvement on the R1 line rate. Rivian’s gross cost per vehicle was $33,000 during Q2, down from $43,000 per vehicle in 2023.
Through its relationship with VW, the EV maker expects to save additional capital on components, such as chipsets, printed circuit board assemblies and other hardware, Scaringe added.
“In addition to the $5 billion of capital to Rivian, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture,” CFO Claire McDonough said during the earnings call.
Between VW’s initial and planned investments and Rivian’s liquidity, the company expects to have enough runway to ramp up R2 and its mid-sized platform in Georgia, which will enable “a path to positive free cash flow and meaningful scale,” McDonough added.
Despite a 41% improvement in its cash flow from operations from Q1, Rivian projects a net loss of $2.7 billion in 2024, according to a securities filing.
