Rivian’s head start is shrinking

Rivian’s head start is shrinking

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“Being first to market may be a nice bragging point for Rivian, but quickly it won’t matter,” says David Whiston, U.S. autos equity analyst at Morningstar. “The EV pickup market is about to get very crowded.”

Prospective buyers who put down $1,000 refundable deposits are getting restless and hedging their bets. New Hampshire health care consultant Joe Paduda says he became frustrated after waiting more than two years for his R1T pickup. He bought a 2019 electric BMW sedan and put down a deposit for the Ford Lightning. “I’m going to go with whichever one comes first and in which manufacturer do I have more trust,” he says. “Right now, I have more trust in Ford.”

Electric vehicles are becoming a hot commodity as climate change roils communities around the world. The Biden administration aims to curb tailpipe emissions, the largest source of greenhouse gases, and spur electric vehicle sales. Battery-electric vehicle registrations in the U.S. more than doubled this year through May to 166,255, while total light-vehicle registrations rose almost 40 percent to 7.3 million, according to data from Crain’s sister publication Automotive News.

U.S. market share for EVs through May rose to 2.3 percent from 1.5 percent a year earlier. Most of the action has been in passenger cars, led by Tesla’s Model Y and Model 3. But interest is shifting to the first generation of electric trucks that can be used as workhorses or just expensive toys for wealthy motorists who want to be environmentally responsible but with some bling.

Before the pandemic, Rivian was on track to have the electric truck market to itself for about a year, giving it more time to rack up early sales and establish a reputation for quality and reliability before better-known competitors unveiled their plug-in trucks. That window of opportunity shrinks with the latest missed delivery target.

The company this month announced a third delay, with the first pickups due in September instead of July and the first electric SUVs to come shortly after. Buyers say they understand supply chain snafus caused by the pandemic but that Rivian could be more forthcoming in sharing product details and delivery schedules. Seattle marine biologist Hans Haupt, who uses several trucks for his work in Hawaii, says he’s been waiting for details on user interface, charging speeds and range testing information.

Haupt, who plans to buy the Rivian pickup and SUV as well as the Ford F-150 Lightning, says he expects another delay. There’s been no press event or invitation for test drives, events that are typical when a launch is a month or two away, he says. And he hasn’t seen a mobile app for the truck or SUV, which he concludes is “another red flag.”

Paduda says he’s trying to find out where service centers will be located and how Rivian is prioritizing city-by-city deliveries. Reservations holders are left to draw conclusions based on comments posted on online forums, which may or may not be true. “They had a strong brand and managed to wear it down themselves by not being transparent,” he says.

Rivian representatives didn’t respond to several requests for comment, but CEO R.J. Scaringe has blamed delays on supply chain constraints plaguing many manufacturers: “The cascading impacts of the pandemic have had a compounding effect greater than anyone anticipated. Everything from facility construction, to equipment installation, to vehicle component supply (especially semiconductors) has been impacted.”

“We’ve seen delays in EV production from all the big OEMs,” says Ben Kallo, a managing director at Robert W. Baird.

At least liquidity isn’t an issue for Rivian. A recent $2.5 billion infusion brought Rivian’s total capital raised to $10.5 billion, from such gilt-edged backers as Amazon, Ford and T. Rowe Price. Amazon and Ford were early investors, and the upstart has a contract to supply 100,000 delivery vans to the e-commerce giant. Reuters reports that Rivian is looking to raise $5 billion to finance a second assembly plant and a battery factory.

But with more delays, the odds are greater that there will be more choices in the electric pickup space, and more chances of consumers getting interested in other options, says Tyson Jominy, vice president of data and analytics at J.D. Power. “Today there’s no choice. Eighteen months from now, you may have four or more options in this space.”

New EV announcements are stealing some of Rivian’s limelight. GM said this month that it’s working on another electric pickup, in addition to GMC’s Hummer EV, due out before the end of the year, and the electric Chevrolet Silverado, expected in late 2022. Dodge parent Stellantis said it will begin production of an electric Ram pickup in 2024.

With the exception of the $80,000 Hummer, newer entries are less expensive than the Rivian. Prices for Ford’s F-150 are expected to start at $45,000 to $50,000. “People don’t understand the loyalty of the Ford pickup truck customer,” Whiston says. “The Ford pickup has been the top-selling vehicle in America for 40 years.”

A small-business owner who can afford only a single truck may feel safer with a Ford or GM brand rather than a startup.

“Rivian is new and exciting. but you have to be willing to rely on an unproven startup automaker,” Jominy of J.D. Power says. “Getting the brand out there, with new vehicles, a new supply chain and distribution network—that’s a lot of challenges for a new company.”

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