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Walmart Rivian Commercial Van Spotted, Is a Fleet Deal Coming?

A Walmart+ branded Rivian Commercial Van was spotted on a car hauler. With GM’s BrightDrop discontinued, Walmart may be lining up a new electric van supplier.

riviantrackr.com

 

[Jasco]

This could be great for Rivian. I often wonder about the accepted wisdom that car manufacturers have to start with low volume, high priced vehicles then move down market. Rivian has lost cash hand over foot for quite a while now due to that strategy. Had they focused more evenly on commercial vans at scale maybe they would be in better shape right now. It looks like commercial vans are their current bread and butter. Hopefully R2 will increase Rivian's momentum towards profitability. Sell a car people can afford to buy and sell a lot of them. Seems more obvious to me than sell a car few people can afford and sell very few of them and hang on until you can sell a car people can afford. I'm not an economist though.

People point to slow ramping as a reason to start with higher margin vehicles but I feel ramps are relatively short 6-9 months or so and then you are stuck with low volume products until you can ramp the higher volume products. At this point your funding rounds are exhausted and you have to work over a longer period to fund the more affordable vehicle which delays its launch. It took Rivian almost 6 years from the R1T to being able to deliver something people can afford in volume.

I have the same feeling about leading with halo versions of your product at launch. Promising $60k and delivering $85k+ (even if they are worth every penny) puts you in very low volume territory (maybe less than 10k units in a year.) Maybe that works for for 2-3 months but you better have the value segment primed and ready to go. Beyond enthusiasts, people don't pay a ton of attention come purchase time to vehicles that are out of their price range. Once the launch hype cycle is past the impression of too pricey might stick around. The second hype cycle is never as big as the first one.

I'm hoping Scout launches with something well within 25% of the base price as an option. We have that poll so I won't rehash it here. There is no better marketing than having Travelers and Terras on the streets. Lots of them, and that will not happen at $85k. Just ask Rivian.

 

[Jasco]

Rivian software might be removed from VW vehicles sold in Europe.... Scout and Audi not included in the list thankfully.
https://riviantrackr.com/news/volkswagen-china-software-europe-rivian/

 

[R1TVT]

Some facts surrounding the actual dates of Rivian's timeline (for clarity & context):

2018: Rivian begins accepting reservations
2019: AMZN announced it would purchase 100,000 Rivian delivery van
2020: W.H.O. declares COVID19 Global Pandemic
2021: RIVN went public.
2022: R1 customer deliveries start
2024: R2 reveal (March)
2024: Gen2 R1 introduction (June)
2026: The year we are in now

 

[R1TVT]

Rivian software might be removed from VW vehicles sold in Europe....

They haven't put Rivian SW in any cars in Europe yet, as far as I know.

Even if they did, it certainly wouldn't be "removed" if it wasn't there in the first place. LOL.

Could they elect to use some cheaper SW acquired from China for 2027 that may allow VW to retain more margin? Yes, of course.

 

[Scout_Lookout]

This could be great for Rivian. I often wonder about the accepted wisdom that car manufacturers have to start with low volume, high priced vehicles then move down market. Rivian has lost cash hand over foot for quite a while now due to that strategy. Had they focused more evenly on commercial vans at scale maybe they would be in better shape right now. It looks like commercial vans are their current bread and butter. Hopefully R2 will increase Rivian's momentum towards profitability. Sell a car people can afford to buy and sell a lot of them. Seems more obvious to me than sell a car few people can afford and sell very few of them and hang on until you can sell a car people can afford. I'm not an economist though.

People point to slow ramping as a reason to start with higher margin vehicles but I feel ramps are relatively short 6-9 months or so and then you are stuck with low volume products until you can ramp the higher volume products. At this point your funding rounds are exhausted and you have to work over a longer period to fund the more affordable vehicle which delays its launch. It took Rivian almost 6 years from the R1T to being able to deliver something people can afford in volume.

I have the same feeling about leading with halo versions of your product at launch. Promising $60k and delivering $85k+ (even if they are worth every penny) puts you in very low volume territory (maybe less than 10k units in a year.) Maybe that works for for 2-3 months but you better have the value segment primed and ready to go. Beyond enthusiasts, people don't pay a ton of attention come purchase time to vehicles that are out of their price range. Once the launch hype cycle is past the impression of too pricey might stick around. The second hype cycle is never as big as the first one.

I'm hoping Scout launches with something well within 25% of the base price as an option. We have that poll so I won't rehash it here. There is no better marketing than having Travelers and Terras on the streets. Lots of them, and that will not happen at $85k. Just ask Rivian.

I've long thought the same thing, but was explained to me as why would you try to sell 10 cars when you could make the same money off of one top end version. My argument to that would be the lack of brand expansion could be detrimental to the companies success, just look at Fisker.

 

[Broverlander]

Thanks for this. I doubt we will get anything official on here from Jamie or anyone at SM regarding the lawsuits. So it’s nice to have someone explain what’s actually happening.

I have no doubt that SM's legal counsel have sandpapered every single employee not to touch commenting on these lawsuits with a 10-foot pole!

 

[J Alynn]

I dug into this. BTW, I would not suggest reading the court's order. It's not terribly interesting.

This order is a nothingburger and has no effect on the case going forward other than it'll go forward.

I'm going to try to keep this short and in plain English. Laws typically have several elements a plaintiff needs to prove to win. Like if 1, 2, 3, and 4 happened, you violated the law. When the plaintiff drafts their complaint (the document that starts a civil lawsuit), they have to have enough facts that, if true, prove a violation of the law. That's what Scout's motion to dismiss asked: did the plaintiff's complaint have enough facts that, if true, prove a violation? The court said yes, there's enough facts there but made no determination about whether those facts are actually true.

The case now proceeds to testing whether those facts are actually true. And it's not uncommon for them not to be true. It's not that the plaintiff lied or misled anyone, but sometimes the facts don't work out for the plaintiff.

If I had to guess, the case is going to come down to how much and to what extent VW controls or has say in Scout. We won't know that for months, if not years. Scout will be selling cars before this gets decided (unless it settles).

Appreciate the break down and thanks for doing what your good at

 

[Broverlander]

I'm going to give the benefit of the doubt that both Scout and Volkswagen's legal council and ELT have already analyzed and pressure tested this exact lawsuit well before deciding on a direct model. The dealers probably know they have no case but feel obliged to put up a fight anyway, plus you know their legal council won't mind the billable hours.

I agree. There's no way SM didn't vet this before deciding to go direct to consumers. You don't do that much market research being backed by VW without vetting anything and everything. Shoot, SM is into their factor for what, $3 billion now? If you're spending that sort of capital, you analyzed the potential hurdles in going direct.

 

[Broverlander]

This could be great for Rivian. I often wonder about the accepted wisdom that car manufacturers have to start with low volume, high priced vehicles then move down market. Rivian has lost cash hand over foot for quite a while now due to that strategy. Had they focused more evenly on commercial vans at scale maybe they would be in better shape right now. It looks like commercial vans are their current bread and butter. Hopefully R2 will increase Rivian's momentum towards profitability. Sell a car people can afford to buy and sell a lot of them. Seems more obvious to me than sell a car few people can afford and sell very few of them and hang on until you can sell a car people can afford. I'm not an economist though.

People point to slow ramping as a reason to start with higher margin vehicles but I feel ramps are relatively short 6-9 months or so and then you are stuck with low volume products until you can ramp the higher volume products. At this point your funding rounds are exhausted and you have to work over a longer period to fund the more affordable vehicle which delays its launch. It took Rivian almost 6 years from the R1T to being able to deliver something people can afford in volume.

I have the same feeling about leading with halo versions of your product at launch. Promising $60k and delivering $85k+ (even if they are worth every penny) puts you in very low volume territory (maybe less than 10k units in a year.) Maybe that works for for 2-3 months but you better have the value segment primed and ready to go. Beyond enthusiasts, people don't pay a ton of attention come purchase time to vehicles that are out of their price range. Once the launch hype cycle is past the impression of too pricey might stick around. The second hype cycle is never as big as the first one.

I'm hoping Scout launches with something well within 25% of the base price as an option. We have that poll so I won't rehash it here. There is no better marketing than having Travelers and Terras on the streets. Lots of them, and that will not happen at $85k. Just ask Rivian.

This is an extremely astute observation! There's a much smaller market for the higher end models and the lower end ones. If you're going to start with the higher end ones, you better have the lower end models ready to do when that buyer pool dries up.

 

[J Alynn]

I have no doubt that SM's legal counsel have sandpapered every single employee not to touch commenting on these lawsuits with a 10-foot pole!

Thank goodness they have all of us to do that

 

[J Alynn]

I agree. There's no way SM didn't vet this before deciding to go direct to consumers. You don't do that much market research being backed by VW without vetting anything and everything. Shoot, SM is into their factor for what, $3 billion now? If you're spending that sort of capital, you analyzed the potential hurdles in going direct.

And I’m sure this started well over 5 years ago and well before they even announced it to realize they could be fairly bullet proof

 

[J Alynn]

This is an extremely astute observation! There's a much smaller market for the higher end models and the lower end ones. If you're going to start with the higher end ones, you better have the lower end models ready to do when that buyer pool dries up.

Makes complete sense and hopefully is their process and strategy

 

[Jasco]

Some facts surrounding the actual dates of Rivian's timeline (for clarity & context):

2018: Rivian begins accepting reservations
2019: AMZN announced it would purchase 100,000 Rivian delivery van
2020: W.H.O. declares COVID19 Global Pandemic
2021: RIVN went public.
2022: R1 customer deliveries start
2024: R2 reveal (March)
2024: Gen2 R1 introduction (June)
2026: The year we are in now

Thanks for the clarification. Looks like I was off by a year in my post. My point still stands though. I really like Rivian but they've been on the rough end of a vehicle launch strategy for quite some time. Can't help but think what higher volumes, sooner could have done for their market share and stock price.

 

[Jasco]

They haven't put Rivian SW in any cars in Europe yet, as far as I know.

Even if they did, it certainly wouldn't be "removed" if it wasn't there in the first place. LOL.

Could they elect to use some cheaper SW acquired from China for 2027 that may allow VW to retain more margin? Yes, of course.

Yeah, I wasn't very clear in my post and it did come across a little alarmist. I promise everyone I wasn't trying to go the click bait route. Mostly its interesting from a financial planning perspective. Removing the Rivian joint venture software from the planning phase for 2027/28 European vehicles might hint at some internal cost saving as you alluded to. Or they could be running a long term cost model. I'm curious though on the quality front. I've heard and seen good things about Chinese vehicle software. VW is full of joint ventures and they might have quality options to choose from.