Slower growth in some parts of the economy is easing supply chain pain for electric vehicle maker Rivian Automotive Inc., founder and CEO RJ Scaringe said Nov. 29.
Speaking to an investor conference hosted by research firm Redburn, Scaringe said the work his team has been doing to solidify and grow relationships with suppliers is being helped by demand softening in some sectors, especially for chips.
“The supply chain being less overpressurized is actually helpful, particularly with semiconductors,” Scaringe said. “We’ve seen that space and across the various stages of supply chain start to loosen up in powerful ways that we think are going to alleviate a lot of the challenges that we had throughout this year.”
A reduction in supply chain snags is welcome news for California-based Rivian, which lost five days of production early this quarter because of a shortage of chips and is targeting growth of 45% from Q3 to meet its full-year goal of making 25,000 vehicles at its Normal, Illinois, plant—versus 1,015 in 2021. Scaringe said Rivian’s suppliers have stepped throughout 2022, sometimes with help from the company, to meet that higher output goal and he added that Rivian executives now feel confident about the outlook for 2023 and beyond.
“Each supplier has to go through their own associated challenges with ramping,” he said. “We’ve seen those ramps occur and we’ve seen our confidence grow with those suppliers and vice versa.”
On the Redburn call, Scaringe also discussed:
- Rivian’s medium-term plans to built its own battery cells alongside a growing supplier network—the company has signed some yet-to-be-announced deals—and wider range of batteries. Boosted by passage of the Inflation Reduction Act, he said, Rivian should be making some of its own batteries in the second half of this decade.
- That the company’s second shift in Illinois, which was launched a few months ago, should be running at 100% capacity by the end of the first quarter.
- Rivian’s opportunity to hike prices for its R1S SURV and R1T truck models, which are lower than several similar products on the market. Scaringe admitted that the vehicles were “clearly underpriced” when they were first launched—an attempt last year to hike prices, including for customers who had already placed orders, backfired—and that the company’s dual-motor and quad-motor options will allow it to lift prices and narrow its losses.
Shares of Rivian (Ticker: RIVN) rose nearly 1% Nov. 29 to close at $28.85. Over the past six months, they have fallen about 8%, trimming the company’s market valuation to about $25 billion.