While detailing its Q2 results, Rivian says it has made significant progress toward greater cost efficiency, product improvement, differentiated technology, and new business opportunities.

“[W]e have reduced complexity and lowered the cost associated with the vehicle body with a heavy emphasis on removing parts, processes, and steps,” said RJ Scaringe, Rivian founder and CEO, during the company’s Q2 earnings webcast. “These changes have reduced nearly 1,500 joints and contributed to an expected 30% improvement in the R1 production line rate. The new R1 vehicles have hundreds of design, engineering, and performance upgrades with the most significant being an entirely new zonal architecture, new compute and autonomy platform, new in-house drive units, and a re-engineered suspension system.

“The introduction of the second-generation R1 platform, combined with commercial cost downs and commodity tailwinds are expected to enable significant material cost reduction… We are focused on reducing R1 costs beyond 2024 through lower material costs and conversion costs… As we continue to source materials for R2, we are seeing opportunities to further reduce the cost of R1 through additional supplier cost reductions.”

According to Electrek, Rivian has introduced “drastic cost savings measures” including manufacturing upgrades and supplier contracts.

“Over 100 steps from the battery-making process, 50 components from the body shop, and 500 parts from design have been eliminated,” the article states. “With its new in-house drive units, Rivian cuts 47% of the costs compared to its Origin Quad motor. Rivian expects the trend to continue as new tech rolls out.”

Rivian didn’t respond to Repairer Driven News by the publication deadline to discuss how collision repair could be affected by the changes.

During Rivian’s Q1 earnings call, Scaringe said the shutdown of its Normal, Illinois plant for retooling would increase its production rate by 30% and allow for vehicle changes focused on costs. The retooling was completed in Q2.

“Those are new suppliers, with updated part designs or designs that have been optimized around cost, areas of the vehicle where we’ve actually consolidated parts or eliminated parts,” he said. “Even on this changeover, there are areas of the body structure, for example, where the cost reduction was well in excess of 50%. And that’s through part consolidation or part elimination or redesigning a part using different materials or different processes.”

Scaringe said during the Q2 webcast that Rivian needs to “aggressively drive towards profitability” to achieve the full potential of its vision.

“The fundamental levers underpinning this goal include the recent transition to our second generation R1 and the subsequent introduction of our midsize platform… I’m encouraged by the progress of ramping up second-generation R1 vehicles as well as developing R2, which we expect to launch in the first half of 2026.”

Rivian generated a negative gross profit of $451 million during Q2 compared to negative $412 million in Q2 2023.

Cost of revenues for the second quarter of 2024 included $59 million, or approximately $4,278 per vehicle delivered in the quarter, of costs we do not anticipate being part of our long-term cost structure, Rivian said.

Claire McDonough, Rivian’s chief financial officer, said the OEM reaffirms its 2024 production guidance of 57,000 units, delivery expectations of low single-digit growth compared to 2023, EBITDA guidance of negative $2.7 billion, and capital expenditures of $1.2 billion.

“During the second quarter, we improved our cash flow from operations to 41% as compared to the first quarter of 2024,” she said. “This improvement is reflective of our continued focus on cost and greater working capital efficiency across the business.”

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Featured image: Workers are pictured at Rivian’s manufacturing plant in Normal, Illinois. (Provided by Rivian)

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