Rivian's CEO Statement To CNBC Left The Whole World Speechless

Investing G
10 Mar 202417:03

TLDRRivian, an electric vehicle (EV) manufacturer, is facing challenges with its stock prices and workforce reductions following a reported loss in the fourth quarter. CEO RJ Scaringe discusses the company's strategy to address affordability and consumer concerns, emphasizing the importance of building a brand and expanding their product line to include the more affordable R2 model. Rivian is also focusing on building a robust charging network and has seen success with its flagship R1T and R1S models. Despite the current market slowdown, Scaringe remains optimistic about the future of EVs and Rivian's role in the industry.

Takeaways

  • 📉 Rivian, an electric vehicle (EV) maker, is experiencing a significant drop in share prices following the release of fourth-quarter results.
  • 💼 The company is cutting costs and laying off 10% of its salaried workforce.
  • 🚗 Rivian's flagship products, the R1T and R1S, are designed for a higher price point to build the brand, with future products like the R2 aimed at a lower price point.
  • 🔋 Addressing range anxiety and charging infrastructure concerns, Rivian is building a DC fast-charge network and partnering with Tesla for access to their charging network.
  • 🏦 Rivian's R2 program is designed to qualify for the full $7,500 tax credit, making lease terms more attractive.
  • 📈 Despite market slowdowns, Rivian's flagship products are still the bestselling EVs in the premium segment.
  • 🚚 Rivian has a strong relationship with Amazon, who are both a shareholder and a customer, with over 10,000 electric delivery vans on order.
  • 🚀 Rivian is confident in its capital to support operations through the end of 2025 and is focused on driving cost efficiency.
  • 🌟 The company's brand strength is highlighted by its top ranking in Consumer Reports' annual brand survey and high repurchase intent.
  • 🔄 Rivian is working on making its vehicles more accessible across different price points and form factors to provide consumers with more choices.

Q & A

  • What was the main reason for Rivian's shares being in the red?

    -Rivian's shares were in the red due to the company reporting fourth quarter results and announcing a 10% layoff of its salaried workforce as part of cost-cutting measures.

  • How does Rivian address concerns about the affordability of electric vehicles?

    -Rivian plans to introduce a new set of products, the R2 series, which will be smaller and have a much lower price point while still carrying the essence of the brand established with the R1 series.

  • What is Rivian's strategy to alleviate range anxiety and charging station concerns?

    -Rivian is building a DC fast charge network and has partnered with Tesla to give their customers access to Tesla's charging network, ensuring customers have peace of mind for long-distance travel.

  • How does Rivian's CEO, RJ Scaringe, respond to the idea that the electric vehicle market has peaked?

    -RJ Scaringe believes that all vehicles will eventually convert to electric, and it's not a question of if, but when. He also mentions that policies around the world are driving 100% of new vehicle sales to electric by 2035 or earlier in some regions.

  • What is Rivian's production guidance for the current year?

    -Rivian's guidance for building vehicles in the current year is 57,000, which is below the market expectation of 81,000.

  • How much did Rivian reduce its overall cost per vehicle from the fourth quarter of 2022 to the fourth quarter of 2023?

    -Rivian reduced its overall cost per vehicle by about $81,000 from the fourth quarter of 2022 to the fourth quarter of 2023.

  • What is Rivian's confidence level regarding achieving a positive gross margin in the fourth quarter?

    -Rivian is confident that they will achieve a positive gross margin in the fourth quarter of the current year.

  • How does Rivian plan to ensure they have enough capital to reach R2 production?

    -Rivian is confident in the capital they have to support operations through the end of 2025, and they are focusing on driving efficiency in operations and capital deployment.

  • What is the significance of Rivian's relationship with Amazon?

    -Amazon is one of Rivian's largest shareholders and a close partner. Rivian has built over 10,000 fully electric delivery vans for Amazon, and they are now looking to sell to other companies to diversify their fleet.

  • How does Rivian's CEO view the design of their vehicles?

    -RJ Scaringe wanted the design to be clean, strong, and inviting. They went through hundreds of different front ends and designs, ultimately landing on a stadium-shaped headlight with a crossbar that helps the brand stand out and be easily recognizable.

  • What is the unique selling point of the mini Cybertruck model mentioned in the script?

    -The mini Cybertruck model is a fully functional replica that can reach speeds of up to 12 mph, making it more than just a decorative item. It also comes with a mini cyber quad and can be resold at a premium due to its unique authentication numbers.

Outlines

00:00

🚗 Rivian's Financial Results and Future Plans

Rivian, an electric vehicle (EV) manufacturer, reported its fourth-quarter results, which led to a significant drop in share prices. The company's CEO, Phil, discusses the challenges of affordability in the EV market, the impact of high interest rates, and the company's strategy to address these issues. Rivian is focusing on building its brand with flagship products like the R1 and R2, aiming to offer a range of products at different price points. The CEO also addresses concerns about range anxiety and charging infrastructure, highlighting Rivian's efforts to build a charging network and partner with Tesla. The conversation touches on the importance of tax credits for EV purchases and Rivian's plans to achieve a positive gross margin in the future.

05:01

📉 Market Dynamics and Rivian's Production Challenges

The CEO of Rivian, Phil, addresses the market slowdown and the company's decision to lay off 10% of its salaried workforce to cut costs. He explains the impact of high interest rates on the premium EV segment and Rivian's strategy to launch a standard pack to cater to a broader customer base. The CEO discusses the company's production guidance for the year, which is lower than analyst expectations, and the reasons behind it. He also talks about the efforts to reduce costs per vehicle and the company's confidence in achieving a positive gross margin in the fourth quarter. The conversation includes details about Rivian's capital situation and the company's plans for the R2 production.

10:02

🏆 Rivian's Brand Strength and Consumer Response

Rivian's CEO, RJ Scaringe, discusses the company's strong brand position, as evidenced by high repurchase intentions and positive consumer feedback. The company's flagship products, the R1T and R1S, have been well-received, and Rivian is excited about the upcoming R2 model, which is expected to attract a larger market share with a lower price point. The CEO emphasizes the importance of the brand's design and the company's collaboration with Amazon, which has led to the development of electric delivery vans. Rivian's relationship with Amazon is highlighted as a strategic partnership that has benefited both companies.

15:03

🛒 Cybertruck Replica and Market Anticipation

The script mentions the high demand for a small replica of Tesla's Cybertruck, which sold out quickly and resold at a premium. It suggests that a fully functional model, like Rivian's mini Cybertruck, would likely experience even greater demand due to its collectible and functional nature. The script implies that securing such a model would be a wise investment, as it is expected to deplete stock quickly and potentially resell for a significant profit.

Mindmap

Keywords

💡Rivian

Rivian is an electric vehicle (EV) manufacturer mentioned in the script. It is known for its flagship products like the R1T truck and R1S SUV, and its partnership with Amazon for commercial vans. The company is facing challenges with its stock price and workforce reduction, but it is also preparing for the launch of its R2 model, which is expected to have a lower price point to attract a broader market.

💡Electric Vehicles (EVs)

Electric Vehicles, or EVs, are vehicles that run on electricity rather than combustion engines. The script highlights the transition from traditional vehicles to EVs as a significant industry shift, with Rivian being a part of this change. The discussion includes the challenges of affordability, range anxiety, and charging infrastructure.

💡Affordability

Affordability refers to the ability of consumers to purchase goods or services within their financial means. In the context of the script, it relates to the high price point of Rivian's flagship EVs and the company's strategy to introduce lower-priced models to attract a wider customer base.

💡Charging Infrastructure

Charging infrastructure encompasses the network of charging stations and related services required to support the operation of electric vehicles. The script emphasizes the importance of developing this infrastructure to alleviate range anxiety and encourage EV adoption.

💡Range Anxiety

Range anxiety is the concern that an electric vehicle has insufficient range to reach its destination without recharging. It is a common barrier to EV adoption. The script addresses this issue by discussing Rivian's efforts to build a robust charging network and the capabilities of their vehicles.

💡Tax Credits

Tax credits are incentives provided by the government to encourage certain behaviors, such as purchasing electric vehicles. They can reduce the cost of a vehicle, making it more affordable. The script mentions that Rivian's R2 model is designed to qualify for a $7,500 tax credit, which is a significant selling point.

💡Leasing

Leasing is a financial arrangement that allows customers to use a vehicle for a specified period without owning it. In the context of the script, leasing is presented as an attractive option for Rivian customers due to the associated tax credits and the lower upfront cost.

💡Production

Production in the automotive industry refers to the manufacturing process of vehicles. The script mentions Rivian's plans to build 57,000 vehicles in a year, which is lower than analyst expectations, reflecting a more conservative approach to production in response to market conditions.

💡Market Slowdown

A market slowdown refers to a decrease in the rate of growth or activity in a particular market. In the script, it is used to describe the recent trend in the EV market, particularly affecting higher-priced products like Rivian's flagship models.

💡Brand Strength

Brand strength is the perceived value and recognition of a brand in the market. It is a key factor in consumer decision-making and can influence loyalty and repurchase intent. The script highlights Rivian's strong brand recognition and high repurchase rate as a result of its product offerings and customer satisfaction.

💡Capital

Capital refers to the financial resources available to a company for its operations and investments. In the context of the script, it is crucial for Rivian to have sufficient capital to support its operations and future product launches, such as the R2 model.

Highlights

Rivian shares are deep in the red after reporting fourth quarter results.

The company is laying off 10% of its salaried workforce to cut costs.

Rivian's flagship products are designed for a higher price point with the goal of building the brand.

Rivian's next set of products, the R2 series, will be smaller and have a much lower price point while maintaining the brand essence.

Rivian is building a DC fast charge network to address range anxiety and charging station concerns.

Rivian has partnered with Tesla to access their charging network.

The R2 program is designed to achieve the $7,500 tax credit associated with vehicle purchase.

Rivian is experiencing a rough report with the EV market slowing down due to high interest rates and geopolitical uncertainty.

Rivian's R1T and R1S products have been the bestselling electric vehicles over $70,000.

Rivian reduced its overall cost per vehicle by about $81,000 from Q4 2022 to Q4 2023.

Rivian is confident about achieving a positive gross margin in the fourth quarter of the current year.

Rivian is excited about the brand strength and consumer response to their products.

Rivian's R1 platform serves as a flagship for the brand, introducing the world to their products and company.

Amazon is one of Rivian's largest shareholders and a close partner, with over 10,000 Amazon delivery vans built by Rivian being fully electric.

Rivian is working on a fully functional Cybertruck model that can reach speeds of up to 12 mph.

The Cybertruck model is expected to be a collectible and functional item, likely to experience quick depletion of stock.

Rivian is focused on delivering the R2 product and has confidence in the capital needed to reach R2 production.

Rivian's design philosophy aimed for a clean, strong, and friendly look for their vehicles.

Rivian's relationship with Amazon began with broad discussions and led to a collaborative development of electric delivery vans.

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