Home » Rivian Had To Cut Production Forecast By 18% Because Of One Dumb Mistake

Rivian Had To Cut Production Forecast By 18% Because Of One Dumb Mistake

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Last Friday, October 4th, Rivian announced they would be cutting their production forecast from 57,000 vehicles down to somewhere between 47,000 and 49,000, about an 18% drop. That’s a pretty steep drop, and Rivian’s stock plummeted 9% upon everyone hearing the news. The company blamed softening demand and a “parts shortage” for the reduction, which raised more questions. A parts shortage? What parts? Is this an industry-wide thing, and if so, why hasn’t any other company mentioned this? What’s going on here?

Well, now we know what’s going on, and the parts shortage is not industry-wide, nor is it about some rare, exotic part. In fact, it’s about he most common type of part you’ll find on anything electrical: wires. Specifically, copper wires, the kind used for windings in electric motors. There’s plenty of wire being made, but what looks to be a simple yet devastating “miscommunication” with a parts supplier has doomed Rivian to not being able to get this crucial resource, leading to the company scaling back their production forecast.

Vidframe Min Top
Vidframe Min Bottom

The supplier in question is Essex Furukawa and the product is “magnet wire,” which the company has been cranking out since 1896! Oh, and speaking of Essex history, here’s a fun little aside: in 1965, the company sponsored Ford’s racing team, and campaigned a 427 Cobra nicknamed “Ollie the Dragon!”

That’s pretty cool! But back to uncool things, like supplier chain problems. According to Transport Topics, a source who chose to remain anonymous said that the “carmaker miscalculated when communicating supply and demand needs with Essex,” which just kind of sounds like somebody gave the supplier the wrong numbers. Someone who – and I’m just speculating here – is probably not employed with Rivian anymore.

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The demand for Essex Furukawa’s wire is strong enough that by the time Rivian realized the mistake, Essex’s resources were already devoted to producing the wire for other companies and Rivian was out of luck. Essex Furukawa appears to have been Rivian’s sole supplier for this copper wiring, and, according to Bloomberg, while Rivian did identify other possible suppliers for the wire, the short notice made ordering the wire cost-prohibitive. So, Rivian is stuck and has had to reduce production forecasts.

Wirewindings 1

All of this could have happened from one email or phone call with bad numbers. One point of failure, with colossal cascading consequences, if you don’t mind the alliteration.

It’s kind of amazing that such a crucial part would only have a single supplier, but Rivian still isn’t at production levels, even when everything is going right, which would make that a necessity. Still, I suspect Rivian will be lining up some backup suppliers for crucial things like copper wire to prevent this from happening again.

Oh, one last thing, check out this great unidentifiable car on Essex’s website:

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Essex Car

That’s even better than what the insurance companies make!

 

Relatedbar

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Engineering Firm Munro & Associates Has Begun Tearing Apart A Rivian R1T; Here’s What They’ve Found So Far

Here’s Why That Rivian R1T Repair Cost $42,000 After Just A Minor Fender-Bender

 

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Jeffrey Antman
Jeffrey Antman
27 days ago

American industry is mostly afraid of manufacturing because of shit like this. Manufacturing has lots of little details like the wire I need = the wire used per car times the number of cars. Most American managers hate that kind of detail.

Do You Have a Moment To Talk About Renaults?
Do You Have a Moment To Talk About Renaults?
27 days ago

kind of sounds like somebody gave the supplier the wrong numbers. Someone who – and I’m just speculating here – is probably not employed with Rivian anymore.

Well, if someone miscalculated this, they’re definitely gone. If, say, this was a typo by upper management somewhere along the chain… well, someone who did the correct calculations is probably also gone, yeah (manager EOY bonus will not be impacted by the typo, but will be supplemented by an automatic add-on for cost-free staff cuts).

Freelivin2713
Freelivin2713
27 days ago

Maybe that employee was “wired” drinking coffee…ahhh, I love coffee!

59turner
59turner
27 days ago

Even if the wire costs doubled, the motor costs don’t double and how can there not be enough profit margin in the whole rest of the truck to not get this done? Something isn’t right. If there isn’t profit in the truck then there are bigger problems then miss ordering wire by 20%. And maybe that is the crux. It won’t be profitable for a LONG time and an order miss of 10000 cars isn’t going to make or break the company in the super long term because they are shipping money out the door with each truck as it is.

Torque
Torque
23 days ago
Reply to  59turner

Although Rivian started in 2009, they are Years away from turning a profit, if they ever do.
Last I remember reading they had 6 quarters of funding left before they’d be forced to raise more capital or go under.

Lots of people shit on Tesla and I think many of those shits are justified. Tesla (started in 2003) is still the 1st American automaker to 1) go public* (in 2012) and become profitable, w/1st time they had year over year profit was in 2019. So 16 years in business before seeing their 1st year over year profit!

Tesla and BYD remain the ONLY companies selling their evs at a profit. Obviously this has to change if the auto future is ev.

I would also Love to be wrong about this and have an intelligent person here prove me wrong as well!

*1st American company making cars to go public since Ford did in 1956!

Scruffinater
Scruffinater
28 days ago

I am sooo here for the alliteration!

Peter d
Peter d
28 days ago

There are surprisingly few manufacturers of high quality magnet wire – although the picture seems to show relatively standard wire and not something fancy like magnet wire with a square or rectangular cross section. Copper is usually contracted with a price for the copper at the time of shipment based on an index and then a price for the value-add which is negotiated this usually results in a small price spread between various suppliers, although that does not seem to be the case here. It is surprising that they don’t have a backup supplier since the risk of a disaster at the one factory they have contracted is likely higher than you would like.

Anoos
Anoos
28 days ago
Reply to  Peter d

Unless there’s no other source for the product of similar quality, they should definitely have a second supplier. Even if their price is higher, buy a percentage from the second supplier just to maintain the relationship and have them waiting for a situation like this where they can step up to be the primary supplier.

Double Wide Harvey Park
Double Wide Harvey Park
28 days ago

The vehicle on Essex’s site is the Ssangyong EV69.

Billy Suter
Billy Suter
28 days ago

Nice!

Urban Runabout
Urban Runabout
28 days ago

Ssangyong EV69?
No such animal.

Double Wide Harvey Park
Double Wide Harvey Park
27 days ago
Reply to  Urban Runabout

You’re fun at parties, aren’t you.

Urban Runabout
Urban Runabout
27 days ago

Oh, I thought you were serious.

Double Wide Harvey Park
Double Wide Harvey Park
26 days ago
Reply to  Urban Runabout

I am Shirley, and don’t call me serious.

Do You Have a Moment To Talk About Renaults?
Do You Have a Moment To Talk About Renaults?
27 days ago

Sold in South Korea/EU as the Fuxton

Disphenoidal
Disphenoidal
28 days ago

I’m surprised Rivian—or any other EV manufacturer—makes their own motors. I always assumed they bought them from a supplier.

Gee See
Gee See
28 days ago
Reply to  Disphenoidal

Rivian bought motors from Bosch initially.. then started to make their own, they claim better performance and lower prices.

BolognaBurrito
BolognaBurrito
28 days ago
Reply to  Disphenoidal

Tesla and Rivian are the big two that are trying to vertically integrate, to capture the value added typically generated by each supplier along the step of making a car. It’s also why they want to make their own batteries along with some other components that other vehicle manufacturers typically use suppliers for.

Plus, if you think of electric motors and batteries as the equivalent of engines, most major car manufacturers make their own engines… so it’s not all that surprising.

Torque
Torque
23 days ago
Reply to  BolognaBurrito

That I know of… BYD is supposed to be the most vertically integrated automanufacturer a huge advantage in thet they make their own batteries from scratch themselves, as well as the full batter packs as well as the motors, etc…
Tesla.is the next most vertically integrated.
I don’t know a lot about how integrated Rivian is/is not.
Lucid claims they are, but again I don’t know how true that is/is not…

Urban Runabout
Urban Runabout
28 days ago
Reply to  Disphenoidal

Why would you think that?

Tesla and Lucid are well known for their quality electric motors specific to their brands.
And do you really think the engineers at Mercedes-Benz, BMW and Porsche would be satisfied just plopping in some generic, off-the-shelf motors?

Phuzz
Phuzz
27 days ago
Reply to  Urban Runabout

I’d not thought about it like that, but Bosch (etc.) must be somewhat annoyed. For years they’ve been selling electric motors to manufacturers, for things like wipers etc. And now the manufacturers are cutting them out.
Kind of a shame really, because if OEMs were all using the same basic Bosch motors, repairing and modifying would be much easier for the end user.

Disphenoidal
Disphenoidal
27 days ago
Reply to  Urban Runabout

Plenty of smaller automakers use engines from other manufacturers. Outside the auto industry, virtually every vehicle manufacturer uses an engine supplier. Look at aircraft, semi-trucks, ships, construction equipment. Large automakers are really the exception to this practice. So I don’t think it’s unreasonable for. Small EV manufacturers to outsource motors.

Urban Runabout
Urban Runabout
27 days ago
Reply to  Disphenoidal

Sure – When production is in the dozens to few hundreds a year – outsourcing engines makes perfect sense.

Doesn’t make sense for full production of thousands of units a month.

Cal67
Cal67
28 days ago

We have suppliers from whom we must place an order once a year for whatever forecast we have. If you misjudge, you get to wait until next year. I doubt Rivian has much purchasing clout (relative to larger manufacturers) so they may well be in a similar situation.
The copper situation is going to get worse. The UK is looking at requesting people to turn in their unused cables to help out. https://www.standard.co.uk/business/business-news/recycling-old-cables-could-help-provide-copper-needed-for-green-tech-study-b1186459.html

Totally not a robot
Totally not a robot
28 days ago
Reply to  Cal67

I pulled a few feet of 6 AWG wire out of the trash can at work the other day. But it’s mine and I’m not giving it to anyone. You never know when you need good wires.

Mechjaz
Mechjaz
28 days ago

I wonder if Torch ever got around to changing out those Changli cables…

Phantom Pedal Syndrome
Phantom Pedal Syndrome
28 days ago

Username checks out.

3WiperB
3WiperB
28 days ago

I have a whole drawer I can show you where I keep my various lengths of wire.

Ranwhenparked
Ranwhenparked
28 days ago
Reply to  Cal67

just like in the war, when they had people tearing out ornate iron railings for munitions, then never actually used the stuff

Canopysaurus
Canopysaurus
29 days ago

Should’ve done like Ford: build them without the missing parts and send folks an IOU. If people complain their Rivian won’t go, just tell them they’re obviously charging them wrong. That oughta work for a few months.

Jb996
Jb996
29 days ago
Reply to  Canopysaurus

And instead source and buy a plastic part with the exact same size and shape as the missing motor, and install that in place.

Amberturnsignalsarebetter
Amberturnsignalsarebetter
28 days ago
Reply to  Jb996

Didn’t Tesla do something similar with a piece of 2×4?

Maryland J
Maryland J
29 days ago

AI car. I’m sure there’s an entire industry of AI stock images of realistic yet generic things.

Tim Cougar
Tim Cougar
28 days ago
Reply to  Maryland J

It’s too symmetrical and coherent to be AI. That’s the work of a human artist.

Phantom Pedal Syndrome
Phantom Pedal Syndrome
28 days ago
Reply to  Tim Cougar

Nope, those door handles?
Dead AI giveaway.
They are too obviously wrong.

Tim Cougar
Tim Cougar
28 days ago

You’re gonna make me dig through TurboSquid and prove it…

Phantom Pedal Syndrome
Phantom Pedal Syndrome
28 days ago
Reply to  Maryland J

Could be a fun Autopian feature.

AI (artificial intelligence)
vs
AR (artist rendering)

Double Wide Harvey Park
Double Wide Harvey Park
28 days ago

Vs AC (Adrian Clarke)

Amberturnsignalsarebetter
Amberturnsignalsarebetter
28 days ago

I can picture AC sketching something with tiny, tiny, wheels to try and fool us, only for AI to try and out-un-Adrian Adrian?

Data
Data
29 days ago

Ladies and Gentleman, I present to you the 2024 Wagon Queen Family Truckster. You think you hate it now, but wait until you drive it!

Will Rivian survive? It’s hard to say. Their stock is nearing $10 a share again and EV mania seems to have cooled. I propose a PHEV R3 for the year of the hybrid. Maybe a gas engine from their buddies over in Wolfsburg?

Cerberus
Cerberus
29 days ago

“I must have put the decimal in the wrong place or something. I always do that. I always mess up some mundane detail.”

Jb996
Jb996
29 days ago
Reply to  Cerberus

This is not a mundane detail, Michael!!

RC
RC
28 days ago
Reply to  Cerberus

You jest, but a product manager (who was incompetent in a lot of ways, but notably in this one) at my former employer forgot to convert a percentage to a decimal in a spreadsheet used for forecasting, turning what appeared to have been a 20% net margin on a product into a 200% loss, ultimately resulting in the sale of the company due to the forecasted losses.

She kept her job, incidentally, and that’s how a 200MM company sold for 150MM (before disappearing into the gaping maw of Canada’s largest software company).

Office Space didn’t make sense to me as a teenager in the early 2000’s. Now, alas, it makes too much sense.

Last edited 28 days ago by RC
Cerberus
Cerberus
28 days ago
Reply to  RC

I was working in an office at the time, so the first half felt practically like a documentary to me. Got another office job after that and vowed that I’d become a black market weapons dealer before I worked in one again.

Torque
Torque
23 days ago
Reply to  Cerberus

(Sadly) Office Space Was a documentary, that is why it is so funny. +20 years later it still holds up and if you work in an office it is still too true to real life

Abdominal Snoman
Abdominal Snoman
29 days ago

That last car looks like a TVR designer did some shrooms and decided they need a crossover.

Spikedlemon
Spikedlemon
29 days ago

TVR and Citroen had a baby.

Freelivin2713
Freelivin2713
27 days ago

They were probably “wired” too!

Mechjaz
Mechjaz
29 days ago

Having unwound a few transformers and motors lately, it’s astonishing how much copper goes into those spaces and assemblies. Okay, not really amazing if you can comprehend that very fine wire can be wrapped hundreds and thousands of times in a relatively compact space, but it’s still neat to see it all spun out into one wild tangle. One home theater receiver’s transformer yielded about 560g of copper. I don’t know the gauge – 26, maybe – but it was a delight to ball it all up and melt it.

Totally not a robot
Totally not a robot
28 days ago
Reply to  Mechjaz

“One home theater”

I can’t relate. Damn. I guess I’m officially one of the Poors.

Mechjaz
Mechjaz
28 days ago

If it’s any consolation, these are decade (or more) old, defunct junk. Any sane person would have taken them to the dump.

You might also call it a stereo, but I find that’s less accurate and too generic. It’s a multi-channel amplifier with audio and video processing, probably about $300 when new. At prices like that, it’s often a matter of caring whether or not you care to have one more than not having the wherewithal to have one of you want.

PlatinumZJ
PlatinumZJ
28 days ago
Reply to  Mechjaz

Many years ago, the now-retired customer service manager at my workplace blew up at me when he found out that we sent 16 feet of special wire per transformer to our manufacturer just for the leads. Waste of material, he said! Fortunately, I was able to get my hands on a transformer that had been partially dismantled as part of testing, and show him exactly why that amount of lead wire was needed.

Mr. Fusion
Mr. Fusion
29 days ago

Seriously, thank you for clearing this up. When I read the news last week, I had all the same questions that led the article, and none of the potential answers made any sense.

It goes without saying that Rivian absolutely cannot afford to make such a blunder. What a devastating stroke of bad luck. I feel like it must have come down to a typo or miscalculation (such as a unit conversion) on a requisition form, because I’m sure the actual determination of the company’s wiring needs are arrived at (or seen by) more than one person.

WasGTIthenGTOthenNOVAthenGTIthenA4nowS5
WasGTIthenGTOthenNOVAthenGTIthenA4nowS5
29 days ago

They could just go talk to a local methamphetamine connoisseur. Those folks know where to find wires.

But for real, surely someone will hear this and sell them what they need for a massive upcharge.

Last edited 29 days ago by WasGTIthenGTOthenNOVAthenGTIthenA4nowS5
Fourmotioneer
Fourmotioneer
29 days ago

Today’s quest: gather copper

Ranwhenparked
Ranwhenparked
29 days ago

Yeah, there has to be at least a few buildings in Detroit that aren’t completely mined out yet

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