Tesla Rival Rivian Delivers Bad News

It’s a tough time for a start-up.

New entrants to the electric vehicle market face a host of challenges, including runaway inflation, supply chain bottlenecks and Russia’s invasion of Ukraine.

Rivian Automotive (SHORE) – Get the report from Rivian Automotive Inc.which went public in November, reportedly delayed delivery of its long-awaited SUV, the R1S, by one to nine months.

Rivian did not immediately respond to a request for comment, but in a letter to customers posted on RivianForums, the company said that “we continued to navigate a tight supply chain, we had to reduce complexity in the possible, including prioritizing certain build combinations over others.”

Additionally, the company said, “We continue to prioritize deliveries to locations where the service infrastructure is in place so that we can deliver the full ownership experience to Rivian owners from day one.” Rivian said.

“My R1S Launch Edition has moved from April-May 2022 to August-September 2022,” one customer wrote. “Not as bad as I expected.”

“It was July-September now October-December – Groundhog Day in those delayed emails but falling for the trap of thinking OK…It’s a legit final delay,” another poster said, referencing the movie. 1993 starring Bill Murray.

Last month, Ford (F) – Get Ford Motor Company report revealed in a Securities and Exchange Commission filing that it had sold Rivian stock, a move that was seen as a blow to the upstart electric vehicle maker.

“Curls on the Road”

Ford, which held 102 million Rivian shares, sold 8 million of those Rivian shares on May 9, according to the May 10 filing.

Earlier this month, DA Davidson analyst Michael Shlisky launched Rivian coverage with an underperforming rating and a price target of $24.

While the company’s pickup trucks and SUV electric vehicles are more expensive than typical consumer models, “high-performance, feature-rich vehicles can justify the high price tag,” Shlisky said in a research note.

Shlisky said he “loves” the truck he tested, but the analyst fears negative headlines will outnumber positives in the coming months.

Like most electric vehicle startups, “there have been bumps in the road,” he said.

In a June 6 regulatory filing, the company shared a letter to shareholders from Rivian CEO RJ Scaringe, who said that “since raising $13.7 billion in gross proceeds during our IPO in November capital markets have changed dramatically”.

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“We have focused our roadmap”

“We have focused our roadmap to ensure that the $17 billion of cash we had on our balance sheet as of March 31, 2022 can support the 2025 launch and launch pad of our R2 vehicle platform,” did he declare.

In addition to Ford, Amazon (AMZN) – Get the report from Amazon.com Inc. is also another major Rivian shareholder.

Scaringe said in his letter that “our strong partnership with Amazon and its initial order of 100,000 vehicles allows us to work with one of the most sophisticated fleets in the world to demonstrate how electrification and connectivity fundamentally improves vehicle costs. ‘operation of commercial fleets’.

“On the consumer side,” he said, “the R1T and R1S establish the brand and lay the groundwork for us to grow and expand our portfolio globally across different price points and price factors. form, the first of which will be our R2 platform.”

Scaringe told shareholders that “the journey ahead will not be easy” and that other EV startups likely have similar sentiments.

“Difficult Territory”

Canou (GOV) – Get the report from Canoo Inc.another electric vehicle start-up, recently warned that it could run out of cash in the coming months, saying “there is substantial doubt about the company’s ability to continue in business.”

More recently, Electric Last Mile Solutions (ELM) announced that it would file for bankruptcy, saying “there were too many hurdles for us to overcome”.

So is there any reason to believe that electric vehicle start-ups are on the endangered species list? Peter Wells, professor of business and sustainability at Cardiff University, thinks not.

“The automotive industry has long been difficult territory for new entrants to compete with the established advantages of incumbent majors able to deploy vast economies of scale, strong brand recognition and supply chain structures and mature cast,” he said.

Prior to the emergence of EV technologies, Wells added, “industry had pursued a process of global expansion of markets and, in parallel, consolidation of ownership – albeit mediated by governments.”

The exception that confirms the rule ?

Wells said Tesla (TSLA) – Get the report from Tesla Inc. succeeded in disrupting this pattern, “but risks becoming the exception that proves the rule”.

“Tesla has distinctive characteristics that other new entrants have struggled to achieve,” he said, “including a clear technological lead, the deployment of an infrastructure solution alongside the deployment of cars on the market, substantial initial financial support that enabled a “grow first, profit later” strategy, high levels of investment support from national and state (US) governments, and a charismatic CEO capable of capture the public imagination and legitimize these ‘early adopters’.”

There are plenty of other new entrants looking to replicate that story in one way or another, Wells added, “but now established incumbents have, to varying degrees, devoted their considerable corporate resources to the large-scale commercialization of electric vehicles”.

“Therefore, the window of opportunity for companies to take advantage of the EV moment seems to be closing quite quickly,” he said. “It’s not over, that’s for sure…However, I foresee that new entrants will increasingly need the support of a ‘tech’ company with resources and technology and different ways to reach customers.”

About Aldrich Stanley

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