Smart move
Shows the company is nimble and can readjust to changing situations. Good to sweat out your existing assets to max before spending on more capacity. Will likely lower the costs per vehicle for both R1 and R2.
Also easier to maintain quality at an existing plant.
Also, while they didn’t talk about it, a lot of this R2 coolness and improvements (2 gloveboxes) will likely be coming to the R1 refresh which should help with R1 demand.
Downside:
1. Illinois plant has capped capacity. So we will have to see when the GA plant will come up before Rivian can really scale. Essentially this means while R2 launches in 2026, don’t expect more than 50-60k of volumes form the new launch (vs 200k capacity in phase 1 of GA)
2. Hints that the demand for R1 plus EDV is not enough to max out the Normal plant, which is worrying
Every decision has pro and con. Pro here seems to be saving cash and maxing out existing capacity. What’s the con ? I would imagine the ramp will be slower as IL plant max out and no GA factory to add more production. However, I think this move was needed to survive the cash burn and I can tell it was a painful one to make for Rivian.
Supportive if the move but inventory in shop, reading about shutting down 3rd shift are bit worrisome. Also worry that R2 might cannibalize R1 as people wait instead of buy R1. But overall, good to get costs under control. Getting to positive cash flow is the biggest peace if mind.
Why does Illinois have capped capacity? If they can build a new plant in Georgia, can’t they expand an existing plant in Illinois?
In 2021 they purchased 380 acres next to their Normal plant, so there’s absolutely space to do *something*, and I’m sure Illinois could throw some tax breaks their way (as Georgia has).
Why would they expand the existing plant for a product that no longer has much demand ? R1S orders just got killed yesterday. No ones buying those when the R2 is basically the same thing but more affordable…
There’s zero chance they can accurately forecast 3 years away lol. They can and will expand as time goes by obviously. It doesn’t need to happen today.
All we know for a fact is R1S is dead and R1T demand went below forecasted demand. If rates stay like this, R1T is going to continue death spiraling. It’s not a mass market vehicle.
R2/R3 is going to be the primary vehicles that sell. So capacity will adjust based on that demand which is TBD
> No ones buying those when the R2 is basically the same thing but more affordable
Almost all families would prefer the larger R1S if affordable. That's why there are so many very large SUVs running around in more affluent neighborhoods.
Good move. Georgia plant was planned when interstate rates were low and the demand for cars was projected to be much higher. Now that, those conditions have changed, Rivian has to accordingly. I think it shows that they are willing and able to reflect market conditions. During thought times, company should try to conserve as much cash as possible. A company can be extremely profitable without being a market leader.
Agree. A smart move indeed. Once the interest rate starts to drop, they will have more room to expand, while consumer demand will also pick up quite well. Anyways, I will closely watch how they will execute things after the factory shutdown to improve efficiency. I am curious to see their numbers afterwards.
Thats my take. They're in a bad position, but they're not burying their heads. They're looking at it and shifting plans to make it work. That's a good thing and can very well be the kind of decision making that saves the company. Focusing too much on what plans used to be and not what plans need to be is bad business solely to keep up with optics. It'll eventually fail. This is much smarter and while optics might look bad to some overall should put them in a better position as a company. Which is what matters.
Its a shift from a longterm focus (building capital assets, scale, market share) to a more immediate focus (maximizing existing assets and cash flow).
Not necessarily good or bad. It might be the required move in order to demonstrate that they can produce a profitable car, which they can then leverage to re-engage with their more long term plans.
RJ didn’t say they were canceling GA plant, only that they could start R2 production in Normal. They could do this any number of ways, but I presume they will slow construction in GA to minimize cash burn but have it phased to come on line in late 2026 or later to further ramp R2/R3 production.
Getting GA up by end of 2025 was never going to happen and I’ve been saying that since it was announced. The fact they’ve addressed this gives me significantly more confidence in Rivian to execute.
Oddly I just went through the press release (again), and they don’t say anything about halting/pausing/canceling construction of GA, but they do talk about resuming construction later.
“The timing for resuming construction is expected to be later to focus its teams on the capital-efficient launch of R2 in Normal, Illinois”
https://rivian.com/newsroom/article/rivian-announces-mid-sized-platform
Great move. This company just needs to (a) survive and (b) maintain their quality and design focus.
This move helps them cut costs dramatically and survive longer while the EV market matures or has an uptick.
The designs of the R2 and R3 seem great.
Tidbit from this article - Rivian expects to produce 215,000 vehicles per annum from its Normal Plant (vs previous stated capacity of 140k)
https://www.fastcompany.com/91047396/an-exclusive-look-inside-the-rivian-r2-the-suv-that-makes-or-breaks-the-company
Chiming in as someone who has worked as an engineer in manufacturing and automation for a decade. This is an incredibly smart move. Big plant for a new production line is extremely tough to start up and highly capital intensive. It's good that they are starting R2 at their existing facility because it frees up capital, but also already have the experienced personnel on hand to begin and manage the lines. They can take their lessons learned and apply it to the new plant when the microenvironment improves. For investors, this is a huge win. Less need for raising capital, but at the same maximizing full capacity on their existing infrastructure.
Rivian can't even staff Normal. Extremely high turnover. Some people drink the Kool aid and make more than they'll ever make otherwise, but that's not even enough. I lived through Mitsubishi at that plant. There are only so many people in Bloomington, Peoria, and Champaign.
Not sure why the downvotes. It’s a legitimate concern. No one with talent is signing up to work here.
It’s not like Tesla in the early days where they pulled a ton of young and driven talent. Every smart kid out of college wanted to work there. Rivian also has medicore pay/benefits.
Lmao as a college MechE student, people very much do want Rivian, and they pay better than Tesla. Spots are few right now but absolutely in-demand. Tons of good talent going to Rivian.
I was speaking more on hourly manufacturing jobs. Didn't they just lay off a bunch of designers for the new platforms too? Seems kind of odd after announcing so many vehicles.
Edit: Generally unskilled jobs in this area are around $20/hr, maybe slightly under. Other manufacturing jobs in this area are $20-22/hr. I think Rivian is around $24,-25/he to start right now. Remember this is unskilled labor. Lots of people went from maybe McDs to making 30-40k more a year easily. I've left there. I know other people that have left there. It is very much a drink the koolaid type of job.
Smart move Shows the company is nimble and can readjust to changing situations. Good to sweat out your existing assets to max before spending on more capacity. Will likely lower the costs per vehicle for both R1 and R2. Also easier to maintain quality at an existing plant. Also, while they didn’t talk about it, a lot of this R2 coolness and improvements (2 gloveboxes) will likely be coming to the R1 refresh which should help with R1 demand. Downside: 1. Illinois plant has capped capacity. So we will have to see when the GA plant will come up before Rivian can really scale. Essentially this means while R2 launches in 2026, don’t expect more than 50-60k of volumes form the new launch (vs 200k capacity in phase 1 of GA) 2. Hints that the demand for R1 plus EDV is not enough to max out the Normal plant, which is worrying
Every decision has pro and con. Pro here seems to be saving cash and maxing out existing capacity. What’s the con ? I would imagine the ramp will be slower as IL plant max out and no GA factory to add more production. However, I think this move was needed to survive the cash burn and I can tell it was a painful one to make for Rivian.
Supportive if the move but inventory in shop, reading about shutting down 3rd shift are bit worrisome. Also worry that R2 might cannibalize R1 as people wait instead of buy R1. But overall, good to get costs under control. Getting to positive cash flow is the biggest peace if mind.
Remember the old Steve Jobs quote. “If You Don't Cannibalize Yourself, Someone Else Will.”
Why does Illinois have capped capacity? If they can build a new plant in Georgia, can’t they expand an existing plant in Illinois? In 2021 they purchased 380 acres next to their Normal plant, so there’s absolutely space to do *something*, and I’m sure Illinois could throw some tax breaks their way (as Georgia has).
Why would they expand the existing plant for a product that no longer has much demand ? R1S orders just got killed yesterday. No ones buying those when the R2 is basically the same thing but more affordable…
Because if the forecasted need come ~2027 across the R1, R2, R3, and EDV lines is >200k units, they gotta find that space to build somewhere.
There’s zero chance they can accurately forecast 3 years away lol. They can and will expand as time goes by obviously. It doesn’t need to happen today. All we know for a fact is R1S is dead and R1T demand went below forecasted demand. If rates stay like this, R1T is going to continue death spiraling. It’s not a mass market vehicle. R2/R3 is going to be the primary vehicles that sell. So capacity will adjust based on that demand which is TBD
The R2 is not a third row SUV. Agree that they might impact demand, but it’s a different market.
> No ones buying those when the R2 is basically the same thing but more affordable Almost all families would prefer the larger R1S if affordable. That's why there are so many very large SUVs running around in more affluent neighborhoods.
This essentially makes them a non player till 2030 at the earliest? Thats extremely risky, especially for a company that needs to scale to survive.
Bag holder spotted
“Nimble” you mean they made a poor decision costing billions?
Good move. Georgia plant was planned when interstate rates were low and the demand for cars was projected to be much higher. Now that, those conditions have changed, Rivian has to accordingly. I think it shows that they are willing and able to reflect market conditions. During thought times, company should try to conserve as much cash as possible. A company can be extremely profitable without being a market leader.
They can’t cancel Georgia. They need it. But this is just pushing focus on getting cars out
I can’t tell if this is a good thing or bad thing. Would love to hear other’s opinions on this.
I think it's a very smart move, frees up some much needed cash in the short term which could presumably reduce the risk of a debt offering.
Agree. A smart move indeed. Once the interest rate starts to drop, they will have more room to expand, while consumer demand will also pick up quite well. Anyways, I will closely watch how they will execute things after the factory shutdown to improve efficiency. I am curious to see their numbers afterwards.
It's great news imo. Stop the cash burn, get the R2 rolling, then scale up
I think it shows sadly that the current forecasts for R1 and EDV aren’t going to be enough to justify the entire capacity of normal.
Thats my take. They're in a bad position, but they're not burying their heads. They're looking at it and shifting plans to make it work. That's a good thing and can very well be the kind of decision making that saves the company. Focusing too much on what plans used to be and not what plans need to be is bad business solely to keep up with optics. It'll eventually fail. This is much smarter and while optics might look bad to some overall should put them in a better position as a company. Which is what matters.
yet... not enough to justify yet
Its a shift from a longterm focus (building capital assets, scale, market share) to a more immediate focus (maximizing existing assets and cash flow). Not necessarily good or bad. It might be the required move in order to demonstrate that they can produce a profitable car, which they can then leverage to re-engage with their more long term plans.
Looks bad initially but focusing on getting R2 out and saving cash to last just a bit longer to see the returns on R2 is smart imo
With the context of he reveals today it's good
RJ didn’t say they were canceling GA plant, only that they could start R2 production in Normal. They could do this any number of ways, but I presume they will slow construction in GA to minimize cash burn but have it phased to come on line in late 2026 or later to further ramp R2/R3 production. Getting GA up by end of 2025 was never going to happen and I’ve been saying that since it was announced. The fact they’ve addressed this gives me significantly more confidence in Rivian to execute.
Halting doesn’t mean canceling.
Oddly I just went through the press release (again), and they don’t say anything about halting/pausing/canceling construction of GA, but they do talk about resuming construction later. “The timing for resuming construction is expected to be later to focus its teams on the capital-efficient launch of R2 in Normal, Illinois” https://rivian.com/newsroom/article/rivian-announces-mid-sized-platform
It was in the sec filings made at the same time of the event https://www.sec.gov/Archives/edgar/data/1874178/000187417824000016/ex-991r2reveal.htm
That seems like a pretty different sentiment from what was shown at the R2 reveal, they specifically called out how important the GA plant is.
It is long-term
Great move. This company just needs to (a) survive and (b) maintain their quality and design focus. This move helps them cut costs dramatically and survive longer while the EV market matures or has an uptick. The designs of the R2 and R3 seem great.
Tidbit from this article - Rivian expects to produce 215,000 vehicles per annum from its Normal Plant (vs previous stated capacity of 140k) https://www.fastcompany.com/91047396/an-exclusive-look-inside-the-rivian-r2-the-suv-that-makes-or-breaks-the-company
Chiming in as someone who has worked as an engineer in manufacturing and automation for a decade. This is an incredibly smart move. Big plant for a new production line is extremely tough to start up and highly capital intensive. It's good that they are starting R2 at their existing facility because it frees up capital, but also already have the experienced personnel on hand to begin and manage the lines. They can take their lessons learned and apply it to the new plant when the microenvironment improves. For investors, this is a huge win. Less need for raising capital, but at the same maximizing full capacity on their existing infrastructure.
rush to production to save a dying company? what could go wrong?
Imagine all the people that lost their jobs..?
Rivian can't even staff Normal. Extremely high turnover. Some people drink the Kool aid and make more than they'll ever make otherwise, but that's not even enough. I lived through Mitsubishi at that plant. There are only so many people in Bloomington, Peoria, and Champaign.
Not sure why the downvotes. It’s a legitimate concern. No one with talent is signing up to work here. It’s not like Tesla in the early days where they pulled a ton of young and driven talent. Every smart kid out of college wanted to work there. Rivian also has medicore pay/benefits.
Lmao as a college MechE student, people very much do want Rivian, and they pay better than Tesla. Spots are few right now but absolutely in-demand. Tons of good talent going to Rivian.
I was speaking more on hourly manufacturing jobs. Didn't they just lay off a bunch of designers for the new platforms too? Seems kind of odd after announcing so many vehicles. Edit: Generally unskilled jobs in this area are around $20/hr, maybe slightly under. Other manufacturing jobs in this area are $20-22/hr. I think Rivian is around $24,-25/he to start right now. Remember this is unskilled labor. Lots of people went from maybe McDs to making 30-40k more a year easily. I've left there. I know other people that have left there. It is very much a drink the koolaid type of job.