Why Is Rivian Losing Money On EVs?

Developing, designing, and manufacturing electric vehicles is insanely expensive, especially for startups that don’t have the ability to fall back on gas-powered vehicles for extra funds. Rivian, which currently manufactures the R1S SUV, R1T pickup truck, and delivery van for Amazon, is one of the more popular startups that has actually delivered on its promises. Unfortunately, Rivian is losing a lot of money on every EV it builds.

According to an article from The Wall Street Journal, Rivian lost $33,000 on every electric vehicle it built in the second quarter of 2023. The outlet claims that there are a few reasons why Rivian has struggled to make a profit on its vehicles.

The WSJ points toward Rivian’s strong frame and front-end design that “contains far more metal than is needed” to ace crash tests, increase stability, and protect occupants in the case of an accident. The automaker’s electric vehicles have a skateboard design that’s reportedly complicated to assemble, as it requires “multiple layers of metal to slide into one another,” claim analysts, as well as current and former employees. The tubes also have to be welded together twice, which involves one weld that’s conducted by a robot and the other by hand.

Then, you also have to consider Rivian’s unique quad-motor layout, “complicated suspension system,” advanced tech features, and the fact that Rivian uses a lot of components that were designed in-house, and you have a pickup truck with sophisticated engineering that drives up prices. Additionally, the WSJ claims that Rivian “pays too much for parts and produces too few vehicles to cover its costs.”

In essence, in an attempt to stand out, Rivian designed overly engineered EVs with advanced components and can’t build enough to offset the high prices of materials. While Rivian charges more than $73,000 for the R1T and R1S, it’s still losing money on every car it sells.

“The more sophisticated the engineering is from day one, the harder it is to ramp up the manufacturing and get the vehicles out of the shop floor to fuel the cash flow,” said Frank Bunte, CEO of France-based manufacturing consultants A2Mac1.

Obviously, companies that don’t make a profit end up filing for bankruptcy and disappearing. It’s something we’ve seen from quite a few electric startups. Rivian founder and Chief Executive RJ Scaringe plans to reduce expenses and cut down operations by reducing how much the automaker pays its suppliers for parts, boosting production, and simplifying some aspects of its vehicles’ designs, claims the WSJ.

Even traditional automakers like General Motors and Ford have struggled to manufacture electric vehicles, so Rivian’s woes are par for the course. Hopefully, Rivian can boost production and continue producing cutting-edge EVs, because it’s become a thorn in the side of traditional brands.

Pictured: 2023 Rivian R1S (Top), 2023 Rivian R1T (Middle)

Source: MotorTrend

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