By Abhirup Roy
NORMAL, Ill. (Reuters) – Electric car maker Rivian’s drive to cut costs and earn its first profit has pushed the battery-making process to more than 100 steps, 52 pieces of equipment from the body shop and more than 500 parts from the design of his car have been removed. flagship SUVs and pickups.
The result of Rivian’s production process adjustment is a 35% reduction in material costs for vans and savings of “a similar magnitude” for the other lines, CEO RJ Scaringe told Reuters.
Rivian’s overall costs for building its electric vehicles have “improved dramatically,” he told Reuters on Friday during a factory tour in Normal, Illinois, 129 miles (209 km) south of Chicago. “The design of the parts and the design of the factory make it easier to build the vehicle.”
Reuters got an exclusive look inside Rivian’s four-million-square-foot factory, with investors eager to learn more about the scale and pace of cuts following a three-week shutdown in April.
Lowering costs is critical for Rivian and other EV startups because high interest rates have deterred some potential customers from purchasing electric vehicles, which are typically more expensive to purchase than their gasoline counterparts. Rivian has never posted a quarterly net profit since its founding in 2009, losing $1.5 billion in the first quarter.
“We did a similar process where we really went through some of the components and redesigned them against cost, so we took over 35% of the material cost out of the vans,” Scaringe said, referring to the closure of the van line in January.
Rivian’s vans are mainly built for major shareholder Amazon and account for about a fifth of turnover.
Market leader Tesla has cut prices, but some smaller EV manufacturers, including Fisker, have filed for bankruptcy.
Rivian is on firmer financial footing, but is losing nearly $39,000 on each vehicle and is counting on cost cuts to turn a gross profit this year.
WORK SMARTER
In addition to simplified assembly and less equipment at the factory, changes are also flowing into Rivian’s second generation of R1 vehicles with company-built drive units, improved software and new battery packs.
Making those battery packs is now easier. The modules have been redesigned and come in one piece instead of walls and floors that are built separately.
The vehicles also come with a new architecture intended to reduce weight and improve production efficiency, including eliminating 1.6 miles of wiring from each vehicle.
These changes have reduced labor time and increased assembly speed on the production line by approximately 30%.
“All of this together puts us on a path to profitability and a positive gross margin,” said Tim Fallon, vice president of manufacturing at the plant.
But investors are concerned. With the plant closure, Rivian is targeting production of 57,000 vehicles – almost the same as last year – and shares in the company have halved this year.
Cash and short-term investments fell by about $1.5 billion to just under $8 billion in the first quarter. Rivian had said it had enough capital to launch the cheaper and smaller R2 SUVs in early 2026.
Sam Fiorani, vice president at research firm AutoForecast Solutions, who had expected the company to need a cash injection before summer 2025, said lowering per-vehicle costs gives Rivian breathing room.
“Focusing on where the cost savings lie is extremely important for the longevity of the business and to allay investor fears,” he said.
To speed R2 deliveries, Rivian said in March it would produce its $45,000 five-seat SUV at its Illinois factory, which will be expanded, instead of at a planned $5 billion plant in Georgia. The move will save $2 billion.
R2 will account for 155,000 vehicles per year of the increased capacity of 215,000 in Normal, Fallon said. The factory currently has a capacity of 150,000 vehicles.
“We’ve been able to really understand what we need to do to continue to move forward and really be smarter about what we do,” Fallon said.
(Reporting by Abhirup Roy in Normal, Ill.; Editing by Ben Klayman and Rod Nickel)
