A gentle innovation by Rivian

And there was yet another area that impressed me as an automobile consultant. It was the company's "friendly management philosophy." Since Rivian is an electric vehicle brand, it is natural for it to focus on being environmentally friendly. in fact, Rivian heavily uses eco-friendly materials such as vegan leather for the interior of its vehicles. However, the meaning of "friendly" here isn't just directed at the environment. The idea of Friendly means being in harmony, so anything else can apply. What else would be Rivian's targets for friendliness?

The first is the market. For helping you understand, compare Rivian with Tesla which is the leader of the electric vehicle market, and you'll notice something quite interesting. Of course, there had been the Tesla Roadster, but it was Model S that truly started the "Tesla legend," but this was achieved after a lot of drastic attempts. What's remembered is its high-performance drive mode, which was "ludicrous," in other words, "absurd." A minimal interior was applied, even though all its functions were showcased in a big way. On the other hand, there were lots of shortcomings in the quality of assembly and internal materials considering the price. This was an unexpected disappointment for consumers who were used to high-priced sedans until 10 years or so ago when the Model S was released.

As a company, Rivian is friendly to the market, actively meeting market trends by using the pick-up truck market and the large SUV market as its starting point. Those segments usually start the major trends in the U.S. automobile market. Their vehicle design sufficiently includes futuristic elements such as a sleek look and a broad interior with an exclusive electric vehicle platform. As for the interior, it includes natural wood and vegan leather with stitches applied to various places, making it almost universally comfortable and customer-friendly. In addition, the development of delivery trucks with focus on the potential of the electric vehicle B2B market as a platform can be regarded as a result of the market-friendly perspective in the same context.

Rivian's market-friendly elements do not just make them an easy option for consumers to choose. It is clearly differentiated from Tesla's strategy of attempting to lead the market and occupy it before anyone else. Rivian isn't interested in copying Tesla's tactic of creating new markets or breaking the conventional rules for some intended effect. If Tesla has selected a market-occupying policy to make a new market based on the strong support of its fans and the preoccupied themes, Rivian has selected a market-accompanying future automobile strategy to lead to future progress with reliability based on the market requirements and the marketability meeting the expectations of customers.

From this perspective, Tesla's success depends on constantly developing new themes and desperately combating brand fatigue, imperatives that the company regularly needs to address. Rivian offers both luxurious aspects from the conventional perspective and just enough useful innovation from the perspective of future cars, thereby positioning itself as a brand that simultaneously provides reliability and a cutting-edge advantage. Even though Rivian doesn't offer the spectacle of Tesla, the company offers many innovations from the viewpoints of technology and performance as you can see in its tank turn mentioned above.

This seems to be a very intentional choice. In fact, the conventional automobile industry has been watching IT enterprises. There have been concerns that legacy automobile brands might go extinct like dinosaurs or be reduced to merely a "contact point" with customers if enterprises armed with new information and communications technology enter the future car market. That is also the reason why the industry has warily watched every move by Tesla. However, Rivian has taken a friendly approach opening the future together, alleviating the conventional automobile industry's fear of becoming obsolete. The company has also managed to secure a stable supply network by actually entering the automobile industry structure.

Ironically, however, the international collaboration system also has brought difficulties to Rivian. Its supply network has been temporarily destroyed by the COVID-19 pandemic, and the prevalent protectionism over the security, as a basis for the manufacturing industry and future initiatives, has presented obstacles to Rivian, which pursues global partnership. In the modern manufacturing industry, parts supply shortages lead to negative impacts such as production delays and higher prices on produced products.

That was not the end of the story. The IRA, which intended to build an electric vehicle supply network within the U.S. while checking China, has almost eliminated the electric vehicle subsidies (technically, the tax credit) which had been given to Rivian's R1T Pick-up and R1S SUV. In fact, the two Rivian models have been excluded from the targets for subsidies of 7,500 dollars last April, but they reclaimed their qualification to receive half of that, which is 3,750 dollars, within a few days. This was because they were confirmed to have satisfied the "key mineral requirements" regulating the ratio of raw material minerals used for batteries supplied by Samsung SDI. It was a good outcome despite this misfortune.

Rivian is also pursuing a higher level of parts internalization ratio for stabilizing the supply network by promoting a battery production plant of its own, as well as other similar efforts. However, this is not so different from the directions of other global automobile legacy brands that do their best to supply batteries and develop their own software. Accordingly, you may believe that Rivian's business management method is still basically the same as that of the conventional automobile industry.

Rivian is a young company founded by Robert "RJ" Scaringe, an MIT graduate, in 2009. The company did not focus on the electric vehicle market at first. In the early stage when it was founded under the Mainstream Motors name, it tried to manufacture hybrid sports vehicles, but in 2011, it changed its name to Rivian Automotive, Inc. and came to focus on electric vehicles and autonomous driving technology for product development in order to enter into a bigger market.

In 2017, Rivian established its basis for production by acquiring the former Mitsubishi automobile plant and manufacturing facilities in Normal, a small city in Illinois, the U.S. At the end of the year, Rivian announced that it would develop electric pick-up trucks and SUVs, and in 2018, the next year, the company released two models, R1T and R1S, at the L.A. Auto Show. The company posted its R1T tank turn video clip, which I linked in the first part of this article, on YouTube at Christmas 2019. Once again, I'd like to say that it was stunning. That video clip's views has reached 2.37 million as of the end of June.

The first R1T was delivered to customers in 2021, and the delivery of the first EDV according to the EDV development and supply contract with Amazon concluded in 2019 was conducted in 2022. Rivian delivered around 20 thousand vehicles to customers in 2022. Its sales have increased by a whopping 113% from the previous year as well. Because of the rising cost price and the delayed release, Rivian is still in a deficit, which means there are still obstacles that the company needs to overcome. Rivian has announced that its sale target would be 50 thousand vehicles for 2023, which is less than the market estimation value of analysts, which is 60 thousand vehicles. It feels like Rivian is carefully and deliberately taking each step without committing to any overly audacious moves.

Before I finish this article, I have to say something that might disappoint you. Rivian's founder and CEO Scaringe has said that the company plans not to apply the tank turn, which has been fascinating to me, of the Rivian R1T quad-motor to the model for commercial sale. As you can see in the video clip, the tank turn causes the wheels to dig too deeply into the soil. The CEO explained that this function needlessly burdens the environment and does not match the philosophy of Rivian as an electric vehicle brand. It is a personal letdown to me, but I have to accept that.