- Rivian and Lucid report delivering far fewer cars than they built this year.
- Electric vehicle start-ups attribute this to increased production and logistics.
- But it’s important for companies to start closing the gap.
Automakers across the auto industry are plagued with issues related to supply chains and logistics, hampering their ability to get cars into the hands of paying customers. Incumbents like Ford.
Lucid reported that it built 2,282 vehicles in the third quarter of this year, but delivered only 1,393 of them to customers. From January he delivered only 66% of his 3,687 cars produced by September.
Rivian is also not as extreme, but feels the gap. The Amazon-backed startup said he built 7,363 vehicles and delivered 6,584 in the third quarter. In his first nine months of 2022, Rivian produced 14,317 of his cars and delivered 12,278. This is his percentage of 86%.
In the “normal” years leading up to the coronavirus pandemic, the auto industry shipped nearly every car it made, according to Eric Anderson, principal research analyst at S&P Global. A global chip shortage and various supply chain disruptions have slowed that pace in 2021. But the industry average is still well above Lucid’s 66%.
This ratio is important because car companies do not record revenue until the vehicle is delivered. But old ratios are becoming harder to apply as startups disrupt dealer-based sales models, Anderson said.
Anderson said, “It’s hard to judge a healthy level of this gap at this point, as it applies to new concepts. At the same time, he said the startup is “gaining momentum in the right direction. said to be important.
Lost or delayed revenue is no fun for anyone, but it’s especially problematic for young players in this capital-intensive business. As of the end of the third quarter, Rivian is on his $13.8 billion, Lucid on his $3.85 billion, and he’s on track to raise another $1.5 billion. A representative for Lucid had no further comment beyond what was stated in the financial results. Rivian declined to comment.
“It’s one thing for a start-up to develop thousands of cars,” said Peter Meissel, principal auto industry analyst at Infor. “However, scaling production to a point where it is commercially viable is a challenge.”
The gap between Lucid’s production and delivery was “primarily a function of the vehicle distributed across three areas of the delivery process: vehicles in transit, vehicles awaiting pre-delivery inspection, and vehicles awaiting delivery to customers. It’s a vehicle that’s in place,” Sherry House, CFO of Lucid, told investors. Third Quarter Earnings Announcement.
Some of Lucid’s early delays were related to troubles at the start of production. The vehicle was being built, but former and current employees said that given Lucid’s ultra-high quality standards, the car was either missing a critical part or was in decline awaiting review. said.
Insiders believe the problem with the parts lies with Lucid’s third-party logistics firm, specifically saying supply bottlenecks occurred at Lucid’s warehouse in Tempe, Arizona.
Lucid has since moved logistics operations in-house to rectify these impediments, and so far that seems to be working, given Lucid’s accelerating pace of production.
Still, House said he expects vehicles produced to continue to outpace those delivered in the near future as Lucid accelerates production and begins shipping internationally.
Rivian CFO Claire McDonough blamed the gap on logistics and said it added another manufacturing shift. “Transit times from rail transport, combined with increased volumes from the launch of the second shift, will cause significant discrepancies between production and delivery,” she said in Rivian’s third quarter. told investors in its earnings. phone.
what it means for the future
Companies expect the gap to close.
As deliveries take longer and gaps widen, these companies not only delay revenue, but risk losing customers and market share to existing competitors.
Legacy auto companies such as Ford, GM and Volkswagen have established production, logistics and delivery strategies, according to Edmonds automotive analyst Jessica Caldwell. What’s more, his EV startups such as Rivian and Lucid won’t enjoy the first-mover advantage Tesla had in the early days of scaling up car production, making this moment all the more important for them, Caldwell said. says.
“These companies aren’t a very exciting prospect,” she said. “It’s based on the fact that they’re not the first.