Rivian CFO shares details about juggling R1, R2 production & challenges the company faces
Rivian CFO Claire McDonough attended the Goldman Sachs Communacopia + Tech Conference recently. She shared some details about Rivian juggling R1 and R2 production and some of the challenges the company continues to face.
Below is a snippet of McDonough's conversation at the Goldman Sach's event.
Rivian Production Plans
Goldman Sachs Interviewer: "On the last earnings call, you commented that R1 potential output with the current two-shift operation is 56,000 units per year. Is this the run rate we should expect in 2025?"
Rivian CFO McDonough: "So as we think about 2025, there's a couple of key items to point out. First of which, we'll have a significant level of downtime in the second half of the year to integrate R2 into our facility.
So, today, we have 150,000 of capacity within our facility. And in Normal, we'll be increasing that capacity to 215,000 overall units."
McDonough predicts that integrating the R2 line into the Normal factory will impact Rivian's overall production output for 2025. Rivian plans to continue running two shifts of operation for the R1 line and a single shift for its commercial van line by 2026.
Goldman Sachs Interviewer: How quickly could Rivian flux up to the 85,000 potential capacity for R1 if there was sufficient demand and what might it take to have that kind of demand environment?
Rivian CFO McDonough: "As we think out the opportunity, its working collectively with the supply chain. So for us, we would need our supplier partners to continue to invest in their own capacity with labor forces to support a third shift of operations within Rivian. It certainly is available, an option to your question if demand is available to meet that increased volume."
Rivian plans to have an installed capacity of 215,000 units across its product offerings from its Normal factory by 2026. It plans to have a maximum capacity of 155,000 for R2 available volume, 85,000 units for R1, and 65,000 units for its electric commercial vans.
"Those figures don't add up to 215K, and so that gives us the opportunity to flex between our shift patterns, between each of the three vehicle lines, to optimize for gross profit, optimize for the demand environment that we're seeing at the time, and gives us a lot of financial flexibility as we think about the composition of our performance and production plan."
Rivian Demand and Challenges
Goldman Sachs Interviewer: "Can you talk a bit more about what the company is seeing in terms of demand and what gives you confidence in low single-digit volume growth for this year?"
Rivian CFO McDonough: "The demand environment has been a challenging one as a whole as evidenced by a lot of the comments made by other—you know—OEMs in the space and the high level of incentives spent that we're seeing across the board. And this is a challenge that also exists—you know—within Rivian."
McDonough talked about the supply challenges Rivian faces. She mentioned difficulty acquiring parts for Rivian's electric commercial vehicle at the speed and scale the company required.
"Our teams working day in and day out, 24 hours, to resolve these challenges and issues."
The Rivian CFO also stated that supply challenges has impacted the company's product offerings from a consumer standpoint.
"So if you go, for example, on our website, and you look for an R1T, there's very limited supply of R1Ts, given the way that we ramped up production over the course of Q2 and into Q3, starting first with our R1S, you know, standard pack product, introducing our Max Pack product, and building from there."
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