Before pausing Georgia factory, Rivian struggled to meet expectations

Rivian emerged as the most likely upstart candidate. Its November 2021 initial public offering was one of the biggest American history. The company’s valuation peaked at more than $100 billion, briefly surpassing juggernauts like Ford, an early Rivian investor, and General Motors.

Other deep-pocketed investors include Amazon and Cox Enterprises, owner of the AJC, which owns about a 4% stake in Rivian.

But Wall Street’s stratospheric expectations soon met their match with a pandemic-influenced squeeze on materials like computer chips and Rivian’s struggles to meet demand for its vehicles. A high interest rate environment and fears of recession strained many tech companies as investors starting valuing immediate profits over long-term promise.

“They’re going into an industry that’s very challenging with a new product for consumers to adopt,” said Kevin Ketels, an assistant professor of global supply chain management at Wayne State University in Detroit. “And it’s a very complex supply chain that’s immature at best that (Rivian is) trying to figure out.”

Rivian has raised additional funds over the past three years, including a $1.3 billion bond issuance that was advertised to help finance the future Georgia plant, but its executives have stressed they need to trim costs and turn a profit soon.

Over the past two years, the company has steadily seen its revenue increase in line with its production ramp-up, but the high cost to build its vehicles has kept the company deep in the red. Rivian has lost at least $1.2 billion each of the past eight financial quarters.

Rivian officials expect to lose money again in 2024, but they aim to turn a profit by this year’s fourth quarter.

They’ve implemented several rounds of layoffs along with technology improvements aimed at cutting production cost. But the Georgia factory is a huge expense for a company that’s suddenly had to become thrifty.

Rivian said it will save the company more than $2.2 billion to shift initial R2 production to Illinois rather than waiting to build-out a second plant.

“The company needs to cut its losses at the moment and start seeing some better finances coming out of these vehicles,” Fiorani said. “Once they can get past that, then they’re going to need a second plant.”

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