It’s tough starting a new electric vehicle company these days, just ask Faraday Future or Lordstown Motors. But Rivian seemed like one of the good ones that might actually make it, as it’s been shipping its electric trucks out to customers for almost two years now. However, the company is still burning through cash at an extraordinary rate, and a new report found that it actually loses more than $30,000 on almost every truck it sells.
According to a new report from The Wall Street Journal, which was brought to our attention by the folks over at CarScoops, Rivian is looking to dramatically cut the manufacturing costs for its R1T and R1S electric vehicles. According to the WSJ, the American automaker hopes to slash production costs by as much as $40,000 to claw back the losses it makes on each vehicle. The site reports:
Rivian vehicles sell for over $80,000 on average. Yet they’re so expensive to build that in the second quarter the company lost $33,000 on every one it sold. That’s roughly the starting price of a base model Ford F-150.
The losses the company makes on each vehicle are piling up, and the WSJ adds that it has “blown through half of its $18 billion cash pile” in just two years. The big cause of this, the site reports, is the reduced capacity its factory in Normal, IL, is currently working at and the cost the company is paying for some parts.
Production at the site is now ramping up, however, and the WSJ reports that “founder and chief executive RJ Scaringe is rushing to slash expenses and slim down operations.” As a result, the company’s losses “have narrowed.” However, the company still burned through more than “$1 billion a quarter at the end of June.” The WSJ adds:
Ultimately, Rivian has tasked its engineers with cutting up to $40,000 per vehicle in parts and production expenses, former employees say. Rivian declined to comment on the cost-cutting target, but Scaringe said the company doesn’t have to hit all of its targets to achieve gross profit by the end of next year.
However, one analyst warned that cost-cutting might not be enough to reach Rivian’s goal of becoming profitable by the end of 2024. Instead, Wells Fargo analyst Colin Langan said the automaker would have to raise prices across the board and suggested an average price of $96,000 per vehicle” would be needed to break even.
As it stands, Rivian’s R1S and R1T EVs start at $78,000 and $73,000 respectively, following a price hike last year.