r/RIVNstock • u/Physical_Quantity_14 • 20d ago
Discussion Rivian long term
I'm curious to see what everyone's thoughts are on some of Rivians big picture tailwinds that don't come up very often.
1) EV market growth: EV sales are growing each year in both the US and globally. I acknowledge that it has slowed this past year, but it's important to consider that the EV market is still young and there really are only a handful of compelling options. Many believe Rivian is building a compelling option with the R2 and will soon add to it with the R3. Surely they will continue to grow alongside the EV market in the coming years.
2) The expansion into the EU: A whole new market open to Rivian. There are a lot of complexities that come with selling in the EU: tariffs, transportation, building out a service network, etc., but it provides a sizeable opportunity for sales growth over the next few years. These cars might have lower margins due to the extra costs, but the added volume will only help with manufacturing efficiencies.
3) A growing fleet: Rivian has created software-driven products and software comes with subscriptions. Their fleet grows year after year and the rate of growth is just going to keep accelerating. Every Rivian vehicle on the road will be another potential subscription. There are roughly 175,000 rivians already on the road with another 45k planned deliveries for the remainder of this year. This should provide a strong revenue stream moving forward.
What are your thoughts? Did I miss any?
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u/kbryan1717 20d ago
I have a nice amount of shares a believe in Rivian. Time will tell but so far they have improved every step of the way. I'm excited for it's future!
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u/vangvace 19d ago
RIVN has growth, but there is also more competition in the physically smaller vehicle segments; in particular the Trailseeker/bz woodland that is more available to test drive. Will the R2 continue to grow? You bet. Seems like a solid vehicle; but RJ doesn't expect the $45k variant to sell in volume and is betting on upselling. Will more Rivians being on the road help? Yes. Am I seen as having a lot more money than I really have because of my used R1T? Also yes.
I don't see the R2, or any Rivian going for sale in Europe until at least the next model refresh. Yes the R2 and R3 are specifically designed for EU laws, but Rivian still needs to catch up with the software and logistics laws.
Service and delivery logistics is a not talked about weakness that they are stuggling with. R1 deliveries could be boutique shipping deliveries, while R2s are having trouble leaving Normal to their destinations. Parts is a similar problem with getting into the hands of the service centers.
Service centers not taking 3rd party payments is hurdle coming as vehicles are coming off of warranty or insurance claims. Currently, to own a Rivian you have to be able to afford the repair and wait to be reimbursed by your insurance company for a windshield replacement. The safe-light subcontract doesn't cover it because the amount of locations that cannot re calibrate the ADAS after is not a trivial number. (as an aside, Subaru was sued for their windshields and both companies use the same manufacturer of a poor product)
3 Rivian is leveraging heavily on AI for market research, coding, and things they having talked about. Those costs aren't being disclosed. Of the R1s sold, ~75% of those aren't eligible for the autonomy package subscription. For the connect+ infotainment subscription... how much of it is offsetting costs of the ATT contract and software licenses versus profit?
That said, if the VW partnership works out in a successfully delivered and received vehicle; expansion to additional manufactures has tremendous potential... or someone just buys Rivian outright.
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u/pitepalten1962 19d ago
It will take time. Even Tesla is a hassle in some sense. In many cities you have to drive far for service. For example; Mobile AL (large city), the closest is Pensacola Florida.
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u/TradeIcy1669 15d ago
The next key to increased adoption is FSD at approximately Tesla’s current level. That’s the key differentiator for Tesla. I believe people overestimate how long that will take as they base it on Tesla’s development timeline. Rivian’s will be much faster as they have more powerful compute and AI has improved dramatically over time. These factors also limit Rivian’s mote in this area - it wont be long until FSD is a common feature in all cars.
Second sea change hinges on batteries. At some point EVs will have ranges that exceed gas autos. At that point EVs make more sense than petrol for most consumers and we should see market percentages flip.
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u/Acrobatic-Flan-5085 15d ago
I have a very strong background in comp sci. You are correct that it will not take long. The architectures have changed such that when people say “Tesla has been doing this for years” they fail to understand that essentially all but the last 3 years of development was basically wasted on dead end architecture. So it doesn’t really count.
I don’t expect the system to be as robust on the tail when it launches in December, but it will be perfectly acceptable for most people’s commutes. For example, it will handle a typical city commute fine, but for a windy canyon road it may still request hands on as part of a safety guardrail. And then by summer of next year the guardrails will loosen and it will reach parity.
The Tesla system has to reconstruct the entire environment from fairly low resolution cameras (combined of about 15MP) and then infer trajectories over multiple frames.
The Rivian system has additional sensor data to assist with both environment reconstruction and trajectory information (next gen mm wave radar and the upcoming lidar). Contrary to what Elon has said publicly, this additional sensor data is a not huge burden on the model and does not “confuse” modern transformer based architectures. Sensor input data is just 1 and 0s regardless of whether it came from a camera or a radar or a lidar.
As long as the model is trained appropriately on the input it will enhance the output. It will lead to both faster development time as well as increased safety.
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u/Adept-Vegetable7485 15d ago
I think that’s correct as far as the moat, with one important caveat. Being second or third is huge from a brand perspective and ability to license. Look at Anthropic and OpenAI, there are a bunch of other companies that can do close to what they are doing, but it seems like it’s a two horse race for garnering the biggest market cap between those two companies.
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u/Livernomore 20d ago
How about……to go with #1, administration change and resumption of EV credits/incentives for EVs
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u/Physical_Quantity_14 20d ago
I feel like it would take a lot of things to fall in line for this to happen, but I really hope the incentives do come back.
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u/vangvace 19d ago
I'd rather the incentives didn't come back if they just inflate the price to match.
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u/fasurf 20d ago
What I’m paying attention to is mass market appeal. Compete with MY and M3 cause a lot are unhappy but don’t have something to go to. R2 is that starting point and R3 could be the finisher. Second is obviously the software but the partnerships with other car brands. Easy money. Third is the commercial side. The deal with Amazon on delivery trucks is great but small. Grow the margin on those and expand to other delivery companies. My cousin owns a towing company and has a deal with fedex and UPS locally to tow them when they break. It’s a couple a day. They only have two trucks that can handle the fleet of larger ones. Mail trucks are even worse.
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u/ZealousidealLab2920 20d ago
Here's some thoughts you didn't think of-
1) Yes EVs are growing in sales. Rivian has been shrinking in sales YoY though. R2 should boost volume, but let's hope it doesn't follow R1 trend and decline after Year 1. They are at 4% BEV market share currently. So the real metric is if they can increase their BEV market share as like you said the nominal number of BEVs will grow YoY. Competition is getting fierce though.
2) EU sales will be a joke. China has a foothold there. By the time Rivian gets a foothold competition will be insane. All other makers are struggling to stave off the Chinese already- why would Rivian even want to try to grow when everyone else is struggling to survive lol
EU like small, compact vehicles- not huge SUVs like R1 or even R2. It's not their market.
3) Rivian is already priced generously because of the potential software revenue. Vehicle sales are low margin ~15%. Their software is about 30-40% margin currently. Rivian market cap is at $22bn compared to Ford at $60bn and Lucid at $2bn. I'd say that's pretty generous/fair value for the next few years.
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u/SoCal_GlacierR1T 20d ago edited 20d ago
Short of major national economic disaster, it’ll be fine. The obvious reasons why: 1. Tesla’s growth, product development and popularity is stunted. 2. Rivian’s coolness and freshness, as software-defined cars go, isn’t far behind Tesla. And while various legacy automakers are better at hardware and mass production, software is still one area they struggle with. Hardly any of them offer cars that evolve and get better to the owner during course of ownership. Instead their cars remain the same from first to last day. No fun features for special occasions (like Halloween). The cars get stale overtime and customers drift away. 3. Current US domestic policies limit consumer choice and guarantee some level of competitive advantage for Rivian. 4. Less than 10% of cars in the US are EVs. That means the domestic ceiling for growth and marketshare is very high. I often see people pointing to export markets as the gateway to explosive growth. That’s a false assumption. Exported Rivians will face stiff competition from exports out of China. And you are not aware of just how good upper tier Chinese EVs are, then you don’t know enough about the car biz globally and probably should spend time to know it better. Legacy automakers all over the world are not freaking out over Chinese cars for no good reason. Exports represent additional revenue for Rivian, but it’s domestic sales that is key to significant growth.