Intro
In this episode of “How I Built This with Guy Raz,” RJ Scaringe, the founder and CEO of Rivian, discusses the challenges and successes of building an electric vehicle company. He shares insights into the company’s supply chain issues, plans for expansion, and the importance of customer experience. Join Guy Raz as he dives into the story of Rivian and its impact on the electric vehicle market.
Main Takeaways
Rivian’s Supply Chain Challenges
- Rivian faced supply chain issues, affecting electric vehicle production.
- Launching three different products within six months posed significant challenges in managing the supply chain.
- The complexity of the vehicle and its supply chain led to a challenging ramp-up, compounded by competition for semiconductors.
- Managing suppliers without existing relationships and dealing with inventory challenges during production shutdowns added to the difficulties.
- The CEO spent extensive time managing supply chain challenges, including speaking with supplier CEOs and dealing with production constraints.
Rivian’s High Demand and Backlog
- Rivian Trucks and SUVs are in high demand, leading to a backlog due to supply not meeting demand.
- Despite frustration and supply chain issues, the company managed to maintain high demand for its product, resulting in a significant backlog of orders.
- The company aims to balance backlog with customer experience, acknowledging the challenge of long wait times for customers.
- The company has exceeded its goal of producing 50,000 vehicles in the current year, indicating a significant improvement from 2022.
Rivian’s Expansion and Plans for the Future
- RJ Scaringe, Founder and CEO of Rivian, plans to expand their line of all-electric vehicles in the next few years, including a mid-priced crossover to be released in 2026.
- Rivian is developing delivery vans for businesses, with over 10,000 already on the road, and Amazon as a flagship customer.
- Rivian vehicles will be able to charge at Tesla charging stations, with no prioritizations, starting early next year, and the company will transition to the North American charging standard over time.
- Rivian is investing in its own charging network, the Rivian Adventure Network, and currently has around 60 live sites with plans to build hundreds more.
- The company aims to open its network to Teslas and other vehicle brands to ensure a profitable network and provide customers with access to reliable charging infrastructure.
Rivian’s Journey and Focus on Cost Structure
- Rivian’s journey involved years of working in stealth, obsessive attention to detail, and high production costs, with the company currently subsidizing every vehicle due to high costs.
- The company plans to achieve healthy margins by ramping up production to improve cost structure and negotiating significant reductions in overall cost structure with suppliers.
- While R1 has unique features that contribute to its inherent costs, R2, as a more mature organization, will incorporate some of these features with improved cost management.
- The R2 is being optimized for cost while maintaining the essence of a Rivian vehicle, but in a smaller size with simplified architecture and a different supply chain relationship.
RJ Scaringe’s Leadership and Mindset
- The CEO’s recent assumption of responsibility for product development is a return to his core area of interest and expertise, and a way to create unique value for the business.
- The CEO’s close involvement with the full product organization allows him to stay closely connected to the product.
- Keeping the internal team motivated and excited despite external challenges is addressed through regular company all-hands meetings.
- The market shifted after the IPO, leading to volatility in share prices.
- RJ Scaringe copes with stress by taking a methodical approach and analyzing data to manage challenges effectively.
Summary
Rivian’s Supply Chain Challenges
Rivian faced significant challenges in managing its supply chain due to the complexity of its vehicles and the competition for semiconductors. Launching three different products within a short time frame compounded these challenges. Managing suppliers without existing relationships and dealing with inventory challenges during production shutdowns added to the difficulties. The CEO took a hands-on approach, spending extensive time managing supply chain challenges and speaking with supplier CEOs. Despite these challenges, Rivian managed to maintain high demand for its products, resulting in a significant backlog of orders.
Rivian’s High Demand and Backlog
Rivian Trucks and SUVs are in high demand, leading to a backlog of orders. However, the company acknowledges the challenge of long wait times for customers and aims to balance the backlog with customer experience. Despite supply chain issues, Rivian has exceeded its production goals for the current year, indicating significant improvement from previous years.
Rivian’s Expansion and Plans for the Future
Rivian has ambitious plans for expansion, including the release of a mid-priced crossover in 2026. The company is also developing delivery vans for businesses, with Amazon as a flagship customer. Rivian vehicles will soon be able to charge at Tesla charging stations, and the company is investing in its own charging network, the Rivian Adventure Network. The goal is to provide customers with access to reliable charging infrastructure and open the network to Teslas and other vehicle brands.
Rivian’s Journey and Focus on Cost Structure
Rivian’s journey involved years of working in stealth and overcoming high production costs. Currently, the company is subsidizing every vehicle due to these costs. However, Rivian plans to improve its cost structure by ramping up production and negotiating reductions in overall costs with suppliers. The company is also developing a smaller, more cost-optimized vehicle (R2) while maintaining the essence of a Rivian vehicle.
RJ Scaringe’s Leadership and Mindset
RJ Scaringe, the founder and CEO of Rivian, is closely involved with the full product organization, including vehicle engineering, propulsion engineering, electronics, software, and autonomy. He takes a methodical approach to manage challenges effectively and copes with stress by analyzing data. The CEO emphasizes the importance of a positive mindset, celebrating wins, and executing the business plan to drive progress in the company.
Conclusion
Rivian, led by RJ Scaringe, has overcome supply chain challenges and maintained high demand for its electric vehicles. The company has ambitious plans for expansion and is investing in its own charging network. With a focus on improving cost structure and a resilient leadership mindset, Rivian is poised for continued success in the electric vehicle market.
