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Startup electric truck company Rivian has pulled off a manufacturing miracle by managing to launch both an all-new brand and vehicle in the face of the semiconductor shortage and supply chain constraints that have hamstrung the entire auto industry for the past year.
RJ Scaringe revealed the first Rivian R1T prototype in November 2018 in Los Angeles. (Patrick T. Fallon/Bloomberg via Getty Images)
Its R1T midsize pickup entered production this month, less than three years after the first prototype was revealed, and will soon be plugged in to its first owners' homes.
"You almost couldn't design a more perfectly challenging situation between the pandemic and the supply chain shortages. We had to sort of unwind how we thought about interacting with a lot of suppliers," Rivian founder and CEO RJ Scaringe told FOX Business in an exclusive interview at the first test drive event for the R1T in Breckenridge, Colorado.
Scaringe pointed out that getting chips for the components it builds in house at its Normal, Illinois, factory was one thing, but that it also had to cope with suppliers of units like headlights that were facing their own issues.
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"It’s very humbling building a car because you can't you can't launch a vehicle with 99.99% of the parts, you need 100% of the parts," Scaringe said.
"It was a challenge and, certainly over the course of sort of spring to summer, it was painful."
Rivian only had to delay production by three months from its original June target, but it did have a rather powerful helping hand in the form of stakeholder Amazon, which has more than a little experience in the electronics industry.
"It’s a great relationship. They are our largest shareholder and invested a very large amount of money. But more than that, they're also a partner to the vehicles we're building with them. They have a deep vested interest in making sure that don't have these supply interruptions," Scaringe said.
Along with the R1T, which is the first mass-market, all-electric consumer pickup, Rivian also has an order for 100,000 battery-powered vans it developed for the Amazon Prime service, so Amazon is very interested in its success.
"They need a lot of good, large vans, so they've been super helpful," Scaringe said.
Amazon Executive Chairman Jeff Bezos has also provided plenty of high-profile exposure for the R1T and the R1S SUV that will follow it later this year by using them to get around the Blue Origin launch site in Texas.
But the synergy goes beyond the production and sales of the vehicles.
Rivian is pursuing an online direct sales model supported by a small number of storefronts but will operate a nationwide mobile service fleet that Scaringe said can handle 75% of expected repairs at owne''s homes and strategically located large service centers for more intensive work.
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"The beauty of our service network is that it supports both our consumer side and that whole infrastructure, the mobile service vans the service structure physical footprint, those also work with the corresponding commercial fleet," Scaringe said.
"Our view is that we just don't see the value in spending the level of capital to build that dense of an infrastructure for the things that can be rethought."
It’s a similar approach to what Tesla has tried and evolved many times over the years, but Scaringe said it was informed more by the success of Amazon and other digital retailers across a variety of industries.
"We've seen this in many spaces, like you don't need a big box store to sell a lot of stuff. Amazon has proven this to an extreme degree. You don't need a record store to buy music. So I think we're going to see pretty big shifts in how people think about consuming vehicles and how we think about buying vehicles, and we're leaning heavily into that," he said.
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