Rivian is about to make a critical decision in order to solve its major issue.
Rivian, a young electric vehicle manufacturer, has struggled to boost manufacturing rates.
Tuesday, March 15, 2022 | Chimniii Desk
To say Rivian is going through a difficult time is an understatement.
By giving a negative outlook for 2022, the upstart electric-vehicle maker has essentially poured cold water on investors' aspirations. Worse, Rivian did not give the impression that it had figured out how to create a large number of automobiles in order to meet the growing demand for electric vehicles.
Rivian, on the other hand, stated that their facility in Normal, Illinois, could create up to 50,000 automobiles, but that it would only make half that number. This setback was blamed to supply-chain disruptions by the firm, which makes three vehicles: the R1T electric pickup truck, the R1S electric SUV, and the RCV electric commercial van.
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"I'd want to talk about the R1 manufacturing ramp for a moment. "We're attaining demonstrated production rates that are in line with our goals across all parts of the R1 production line," Chief Executive Robert Joseph "RJ" said "On March 10, Scaringe told analysts during the company's fourth-quarter earnings call.
"And, despite all of this progress, the main bottlenecks we now have are in the supply chain, and it's only a tiny number of items for which the supplier isn't ramping up at the same rate as our manufacturing lines."
Supply-Chain Issues to be Solved by a New COO
"We believe our typical facility, manufacturing equipment, and procedures have the ability to produce approximately 50,000 vehicles across our R1 and RCV platforms in 2022 if we were not hampered by our supply chain," said Chief Financial Officer Claire McDonough.
McDonough emphasised the financial impact that these challenges would have on the organisation.
"Increased bill of materials and higher logistical expenses associated with expedited shipping of certain items stemmed from higher costs due to inflation and supply-chain difficulties. As a result, we had a negative gross profit of $383 million in the fourth quarter "According to McDonough.
"As we move ahead to 2022, I wanted to underline our excitement for the potential ahead, as well as continuing development in the areas of our business that we can control," she stated.
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"Our main focus will be on ramping up our regular facility and ramping up production of our R1 and RCV platforms. While we are working hard to address any supply-chain issues, we believe that the supply chain will be the primary limiting factor in our total output for the year to 2022."
Investors rolled Rivian shares, which was unsurprising. They're down about 78 percent from their November 15 high. On Friday, they closed at $38.05. More than $118 billion in market capitalization has gone in just four months.
Rivian chose to make a big strategic hire to assuage investor concerns about its future. Frank Klein, the company's new chief operating officer, is likely to be announced this week.
Scaringe informed analysts last week that Rivian would name its new COO this week. Rivian declined to respond when contacted by TheStreet.
"We'll introduce our new COO next week, who will be in charge of helping us scale our manufacturing and supply chain. To stay up with our tremendous growth, we've continued to hire strong leadership across the board "Last week, Scaringe stated.
Klein would take over for Rod Copes, who stepped down at the end of last year after less than two years on the job.
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'A True Car Guy'
Klein is the head of a car-making unit at Magna International (MGA) - Magna International Inc.
Klein noted on his LinkedIn profile, "As President of Magna Steyr, I head a team responsible for establishing Magna as a key enabler to future mobility through our unique design, engineering, and whole vehicle assembly capabilities."
"We're engaging with big automakers, startups, and even cities to reimagine the possibilities in the new mobility landscape, and it's one of the most exciting periods of my career."
He spent 27 years at Daimler AG (DDAIF) before joining Magna in 2019, where he held positions such as head of operations for the Mercedes-Benz Vans business unit and project lead for the Mercedes-Benz plant in Kecskemét, Hungary.
"I am a true 'car guy' both on and off the work," he remarked.
Scaringe told investors that the new COO's main job will be to assist Rivian in resolving its ramp-up challenges, so Klein will have to take that approach.
Rivian has already changed the leadership of its manufacturing operations. Tim Fallon, a former Nissan executive, will report to Klein. In February, Fallon was named vice president of manufacturing. He took over for Erik Fields, a former Nissan executive who resigned after 16 months on the job.
The company will shortly begin construction on its second manufacturing facility, located east of Atlanta.
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