Rivian, the electric-vehicle maker is on a mission of cost cuts and turn towards profitability. It is learning from its past and cost of building its vehicles has “improved dramatically” as Rivian cuts price on its path to profitability. Rivian has removed over 100 steps from the battery-making process, 52 pieces of equipment from the body shop and over 500 parts from the design of its flagship SUVs and pickups.
Rivian’s financial strategy
The result of Rivian retooling its manufacturing process is a 35% reduction in cost of materials for vans and savings of “similar magnitude” for its other lines, as per CEO RJ Scaringe.
Rivian’s overall cost of building its EVs has “improved dramatically,” he added. “The design of the parts and the design of the plant facilitate making the vehicle easier to build.”
Rivian cost cuts
Cost cuts is critical for Rivian and other EV startups as high interest rates have turned some potential customers off EVs that are typically more expensive to buy than their gasoline-powered counterparts. Rivian has never turned a quarterly net profit since it was founded in 2009 and lost $1.5 billion in the first quarter.
“We did a similar process of really going through and redesigning a number of components for cost, so we took over 35% of the material cost out of the vans,” Scaringe said, referring to a January shutdown of the van line.
Built primarily for major shareholder Amazon, Rivian’s vans account for about one-fifth of its revenue.
Market leader Tesla has slashed prices but some smaller EV makers, including Fisker, have filed for bankruptcy.
Rivian is on more solid ground financially, but loses nearly $39,000 on every vehicle and is banking on cost savings to help it turn a gross profit this year.
Rivian’s change in production strategy
In addition to simplified assembly and less equipment at the plant, changes flow into the second generation of Rivian’s R1 vehicles with company-built drive units, upgraded software and new battery packs.
Making those battery packs is now easier. The modules are redesigned and come in one piece instead of walls and floors that were built separately.
Those changes have reduced labor time and pushed the rate of assembly on the manufacturing line up about 30%.
“All of that together leads to us being able to get to our path to profitability and be gross-margin positive,” said Tim Fallon, vice president of manufacturing at the plant.
Rivian’s forecast
Investors are worried as the plant shutdown meant Rivian is targeting production of 57,000 vehicles and shares in the company have halved this year.
Cash and short-term investments fell by about $1.5 billion in the first quarter to just under $8 billion. Rivian had said it has enough capital to launch the less expensive and smaller R2 SUVs in early 2026.
Sam Fiorani, vice president at research firm AutoForecast Solutions, who had expected the company to require a cash infusion before summer 2025, said reducing the cost per vehicle gives Rivian breathing room.
“Focusing on where the cost savings are is extremely important to the longevity of the company and to calming the fears of any investors,” he said.
Rivian aims for profitability
To hasten R2 deliveries, Rivian said in March it would start producing its $45,000 five-seat SUV in its Illinois plant, which will be expanded, instead of at a planned $5-billion plant in Georgia. The move will save $2 billion.
R2 will account for 155,000 vehicles per year of the increased capacity of 215,000 in Normal, Fallon said. The factory currently has capacity of 150,000 vehicles.
“We’ve really been able to understand what we need to do to continue to move forward and really be smarter about what we’re doing,” Fallon said.
The vehicles also come with a new architecture meant to reduce weight and improve manufacturing efficiency, including shedding 1.6 miles of wiring from each vehicle.
Rivian Stock Price Prediction 2025
Rivian price started in 2024 at $23.46. Today, Rivian traded at $11.01, so the price decreased by -53% from the beginning of the year. Rivian’s stock price forecast at the end of 2024 is $12.10 and the year to year change -48%. It is possible that Rivian should be able to survive the EV slump much better than many of its peers some of which might not be around by 2025.
