Author: Abhirup Roy
NORMAL, Ill. (Reuters) – Electric vehicle maker Rivian (Nasdaq: Rivian) has eliminated more than 100 steps in its battery manufacturing process and 52 in its body shop as it seeks to cut costs and turn a profit. devices and more than 500 devices.
Rivian Chief Executive RJ Scaringe told Reuters that the reorganization of its manufacturing processes resulted in a 35% reduction in material costs for trucks and “similar amounts” of cost savings in other production lines.
Rivian’s overall costs of producing electric vehicles have “improved significantly,” Rivian told Reuters on Friday during a tour of the plant in Normal, Illinois, 130 miles (209 kilometers) south of Chicago. “The design of the parts and the design of the factory help make the vehicle easier to build.”
Reuters has exclusive coverage of Rivian’s 4 million-square-foot factory, with investors eager to learn more about the scale and pace of savings following a three-week shutdown in April.
Cutting costs is critical for Rivian and other electric vehicle startups because high interest rates have turned some potential customers away from electric vehicles, which are often more expensive than gasoline-powered vehicles. Rivian has never posted a quarterly net profit since its founding in 2009, losing $1.5 billion in the first quarter.
“We did go through a similar process and go through and redesign a lot of the components to reduce costs, so we saved over 35% in material costs from the vans,” Scaringe said, referring to the van line’s production in January. of closure.
Rivian’s trucks are built primarily for majority owner Amazon (NASDAQ: ) and account for about a fifth of its revenue.
Market leader Tesla (NASDAQ: ) has slashed prices, but some smaller EV makers, including Fisker (OTC: ), have filed for bankruptcy.
Rivian is in a stronger financial position, but is losing nearly $39,000 per vehicle and is counting on cost savings to help it achieve gross profit this year.
work smarter
In addition to simplified assembly and reduced factory equipment, the second-generation Rivian R1 vehicle also features changes, including company-made drive units, upgraded software and a new battery pack.
It’s now easier to make these battery packs. The modules have been redesigned to become one piece, rather than separate walls and floors built separately.
The vehicles also feature new architecture designed to reduce weight and improve manufacturing efficiency, including reducing wiring by 1.6 miles per vehicle.
These changes reduced labor time and increased assembly rates on the production line by approximately 30%.
“All of this combined allows us to be profitable and achieve positive gross margins,” said Tim Fallon, the plant’s vice president of manufacturing.
But investors are concerned. The plant closures mean Rivian aims to produce 57,000 vehicles – almost the same as last year – and the company’s share price has halved this year.
Cash and short-term investments fell by about $1.5 billion in the first quarter to just under $8 billion. Rivian has said it has enough money to launch a cheaper, smaller R2 SUV in early 2026.
Sam Fiorani, vice president at research firm AutoForecast Solutions, who expects the company to need a cash infusion by summer 2025, said lowering the cost per vehicle gives Rivian breathing room.
“Focusing on areas of cost savings is extremely important for the company’s long-term growth and to calm investor concerns,” he said.
To speed up deliveries of the R2, Rivian said in March it would begin production of the $45,000 five-passenger SUV at its expanded Illinois plant instead of a planned $5 billion plant in Georgia. The move will save $2 billion.
Fallon said of the 215,000 vehicles added to Normal’s capacity, R2 will account for 155,000 vehicles per year. The plant currently has a production capacity of 150,000 vehicles.
“We’ve really been able to understand what we need to do to move forward and really be smarter about what we’re doing,” Fallon said.
