Tina Bellon

(Reuters) – Jeff Wells was among the first to reserve a Rivian R1T pickup truck in the early 2019 and was backed by Amazon.com (NASDAQ).

However, Wells is a Southern California accountant who has grown frustrated by the fact that others placed orders years later than he and now receive trucks.

Rivian’s comments were described as “annoying” and “it feels like there is no order in how they do things.”

Wells is just one of many reservation holders that have been complaining about delays and unreliable delivery times in forums and groups online in the last few weeks.

Rivian Automobil Inc said in April that they were changing their production process and prioritizing vehicles with certain interior or exterior color options and wheel options.

Rivian stated in an email to customers that building in smaller build combinations lowers the level of complexity for our suppliers and permits us to produce a higher number vehicles.

This meant that many reservation holders who had already chosen their color preference were unable to place orders.

Rivian stated in a statement that they are exploring other ways to speed up deliveries and not only on preorder timings.

Rivian’s difficulties with deliveries have not attracted the same attention that the California-based company’s reduced production plans or messy communication regarding vehicle price increases. It first declared them across the board. However, it later pulled the plug for reservations holders who reacted to the backlash.

Delivery woes can be just as destructive.

All automakers face global supply-chain problems, which include a shortage of semiconductors and increasing raw material costs. Rivian, however, has less flexibility to make things work. After the post-IPO lockup expired, large investors such as Ford Motor (NYSE.) Co. and Tiger Global Management have sold Rivian stock. 9b55ce3c-c70c-46c1-8d0c-b135de26562c1

Graphic showing Rivian stock performance

Rivian’s fans have been loyal, despite their company’s unpredictable pricing changes. Even after price increases, preorders rose to 90,000. This is despite the fact that new reservations are not allowed.

Delivery delays can prove expensive as electric pickup trucks are being launched by other automakers, such as Ford. Ford Motor Co ‘s F-150 Lightning.

Rivian, May 11, stated that it is working to overhaul its order system in order to seperate reservations and the configuration process. This apparent effort to address customer complaints about supply problems in its system.

Rivian stated in the statement that the changes allowed pricing transparency and timing transparency.

“THE WORLD IS CHANGING”

Rivian’s struggle to reform its ordering system reflect larger industry problems. Supply-chain snarls and inflation have distorted financial forecasts, and put more pressure on EV startup to lower costs in a time where investors are shutting their accounts.

The markets are closing for every company. It is important to be able to focus and prioritize your goals, as well as do everything necessary to reach the other side,” stated Daniel Ninivaggi. He was chief executive of Lordstown Motors Corp which sold Lordstown’s plant to Foxconn, a Taiwanese contract manufacturer, after cash reserves had plummeted.

Rivian claimed that the company has been monitoring capital markets continuously and planning for difficult environments by optimizing its product roadmaps and operating expenses.

Rivian’s $16 Billion is significantly higher than Lordstown, and smaller EV startups like Canoo Inc. (which this month issued a Going-concern Warning).

Rivian spent $1.2 million on each vehicle it sold in its first quarter, and will spend $7 billion this year in cash. Morgan Stanley Adam Jonas, analyst (NYSE:)

Rivian is not in my top ten list of companies to avoid, but they are a heavy burden and must show that they can handle it,” Vitaly Golomb (partner at Drake Star), said. Vitaly, who heads the bank’s EV/mobility practice, as well as being a Rivian investor/reservation holder.

Rivian told investors that it has enough money to open its second U.S. facility for $5 billion by 2025. However, Rivian’s patience is wearing thin.

Jonas, Rivian’s Chief Financial Officer Claire McDonough, stated, “Since your IPO. The world has changed significantly, investors just don’t want to finance negative EBITDA Growth companies in this climate.”

McDonough and RJ Scaringe, chief executive officer of the company, stated that they would reduce costs by simplifying their vehicle line-up and minimising expenses.

PRICING JOURNEY

Scaringe stated that Rivian also believed that the worst part of the semiconductor shortage was behind them. Others, however have suggested that the semiconductor shortage could continue until 2023.

Rivian is yet to say when it plans on manufacturing vehicles at a profit. Price increases that increase the price of the currently available pickup by $67,500 and $79,500 are meant to boost economics as well as offset rising raw-materials prices. The price hikes are only applicable for orders made after March 1. Rivian sent customers an email March 3. It also stated that it would offer a simpler R1T model starting at $67,000. This will be available in 2024.

Industry competitors warn that making profits at this price is difficult.

Peter Rawlinson (CEO of Lucid Group Inc) is a luxury EV manufacturer and an ex-engineer at Tesla (NASDAQ.) Inc. Rivian spent around $22,000 on the entry-level battery packs and $20,000 on Robert Bosch GmbH’s drive trains. To make a profit, Rivian needed a vehicle cost of $95,000.

According to him, “The only way that they can ever make their business model work would be if it loses money on each truck they sell.” He spoke out for Reuters in March.

Rivian stated that it is confident in its “pricing journey.” Rivian also stated that it was working to develop a new motor design and a cheaper in-house engine.

For Rivian reservation holder Wells, profit margins matter less. He wants to have a truck soon. Although he stated he preferred Rivian’s R1T to him, Wells placed last year a reservation at Ford for the F-150 Lightning.

Wells stated, “At the moment, if Ford comes through, I believe I’ll follow them.”