Tesla CEO Elon Musk gave electric vehicle startup Rivian a bit of invaluable advice regarding manufacturing efforts that could help the company’s longevity.
After reports of Rivian’s second U.S.-based automotive plant potentially landing in Fort Worth, Texas, Musk stated it might be more beneficial to ramp its first plant before committing to a second one, as unit costs can be difficult to keep affordable in the early manufacturing stages.
“I’d recommend they get their first plant working,” Musk said on Twitter. “It’s insanely difficult to reach volume production at affordable unit cost.”
I’d recommend they get their first plant working. It’s insanely difficult to reach volume production at affordable unit cost.
— Elon Musk (@elonmusk) August 11, 2021
Musk may be the best person to ask this question as Tesla found this lesson out the hard way when ramping the Model 3. Tesla was not focused on developing and constructing a second factory at this time, as Giga Shanghai was not approved to begin production until July 2018. In 2017, however, Tesla was ramping its first mass-market vehicle, the Model 3, and financial specifics were dicey. Musk has called this time in Tesla’s history “production hell” and indicates that it was one of the most stressful times of his life. Tesla was nearly bankrupt at this time, as demand was high, but vehicle production costs were also astronomical. These costs wouldn’t begin to reduce or be consistent until Tesla ramped the vehicle significantly to a more sustainable run rate.
While Rivian’s financial situation may be different due to large funding contributors like deep-pocketed Amazon and Ford, the advice is seemingly invaluable. While Rivian has been plagued by the global semiconductor shortage and the COVID-19 pandemic for the past 18 months, the company has been forced to delay the deliveries of its first vehicle, the R1T. While manufacturing is in its early stages at the Normal, Illinois facility where the vehicle is being built, there is no indication that Rivian will not encounter challenges just because of its comfortable financial situation.
It will not be smooth sailing early on. There will still be bottlenecks due to parts shortages. Additionally, it may take some time to have the manufacturing staff trained up on the finer points of the job.
Interestingly, Musk commented with the advice, as Tesla is still currently in an ongoing lawsuit with Rivian that has to do with poaching employees. According to Superior Court of Santa Clara, California documents, the two parties met earlier this month, and the next case discussion meeting will occur in February 2022. Musk could be helping Rivian avoid potential downfall as Tesla’s mission is to accelerate the transition to sustainable energy, including all companies partaking in the clean energy revolution.
Rivian told Teslarati that it is surveying several potential regions across the United States for its second factory.