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Economy & Business

Rivian doubles pace of production, but 2022 output still held back by supply chain 'ceiling'

 The Amazon-backed Rivian recently began production of its electric vehicles in Normal, with customer deliveries of the R1T truck (above) starting last month.
Emily Bollinger
/
WGLT
The Amazon-backed Rivian recently began production of its electric vehicles in Normal, with customer deliveries of the R1T truck (above) starting last month.

Rivian is making its electric vehicles about twice as fast as it was a few months ago, though supply chain problems will cut significantly into annual production at the plant in Normal, the company said Thursday.

Rivian workers have made 1,410 vehicles so far this year, or about 176 per week on average. That’s more than twice as many as were being produced on a weekly basis at the end of 2021.

Rivian’s plant – with its 4,600+ workers – would be able to make 50,000 vehicles in 2022, but it’s only projected to build 25,000 this year because of supply chain constraints, the company said. Semiconductors, or chips, are among those in shortest supply – a problem facing many global manufacturers.

“I want to be very, very clear: We are pushing very hard on those suppliers,” Rivian founder and CEO RJ Scaringe said during Thursday’s quarterly financial results call. “Those suppliers will continue to hear from us, and we’re going to be continuing to push to get those numbers are high as possible, because they are constraining us. Because it’s painful when we see our production plant really ramping and the lines running as we intend, to have to throttle production because of shortages of those parts.”

Those 25,000 vehicles projected in 2022 will be a combination of R1S pickups, R1S sport utility vehicles, and Amazon delivery vans. Production on the pickups is furthest along, starting last September.

When at full production, the Normal is capable of making 150,000 vehicles per year, with plans to expand that to 200,000 per year. Rivian is also building a $5 billion second plant in Georgia.

Thursday’s earnings call comes just a week after Rivian announced – and then backtracked on – a plan to raise prices for its vehicles. Ultimately, existing customers were allowed to keep their original preorder price (starting at $67,500) and features, although the cost will increase for future customers.

The company said Thursday that it saw an elevated (though unspecified) number of cancellations after the March 1 price change. But it said over half of them have since reinstated their orders.

As for the reversal, Scaringe said:

“This wasn’t driven by some mass cancellation, but rather the recognition that the brand we’re building is the foundation, the platform, upon which ultimately we’re going to be selling millions of vehicles per year. These early customers are such a critical part of what we’re building as an organization,” he said.

Rivian now has 83,000 pre-orders for its R1 vehicles, up 17% from what it was three months ago. (Amazon, which is also a Rivian investor, ordered 100,000 electric delivery vans, which are made on a separate line.)

“Since announcing the new pricing, we’ve also seen really no change in the rate at which preorders are coming in. So customers are really seeing the value proposition,” Scaringe said. That new pricing model includes Dual-Motor (instead of Quad-Motor) and Standard battery pack options.

Rivian said it plans to announce a new chief operating officer next week. Its former COO, Rod Copes, left the company in December.

Rivian has rapidly become McLean County’s third-largest employer. But the launch of production has not been easy. Rivian is up against those supply chain challenges and its own ambition of launching three vehicles simultaneously. It missed its own modest production target in 2021 and shut down the plant for 10 days in early January to adjust its production lines. COVID’s omicron peak also disrupted production.

Copyright 2022 WGLT. To see more, visit WGLT.

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