Rivian Slashes Production Costs To Cut Its $39,000 Loss On Every EV Sold

Good morning! It’s Tuesday, June 25, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

Rivian Unveils Trio of New Electric Vehicles

1st Gear: Rivian Cut Costs As It Continues Chasing Profit

It’s tough to be an electric vehicle maker these days. You’ve got to come up with a clever design, innovative tech to power it and find enough buyers for all the cars you hope to build while competing with legacy automakers in a cut-throat market. It’s because of challenges like this that companies such as Fisker and Lordstown Motors have struggled in recent years.

Now, American automaker Rivian is hoping that it won’t follow in the footsteps of Fisker, which filed for bankruptcy just last week. To do this, it’s working to simplify its lineup and slash production costs in order to cut the losses it makes on every car it sells, reports Reuters. As the site explains:

The result of Rivian retooling its manufacturing process is a 35% reduction in cost of materials for vans and savings of “similar magnitude” for its other lines, CEO RJ Scaringe told Reuters.

Cutting cost is critical for Rivian and other EV startups as high interest rates have turned some potential customers off EVs that are typically more expensive to buy than their gasoline-powered counterparts. Rivian has never turned a quarterly net profit since it was founded in 2009 and lost $1.5 billion in the first quarter.

“We did a similar process of really going through and redesigning a number of components for cost, so we took over 35% of the material cost out of the vans,” Scaringe said, referring to a January shutdown of the van line.

As it stands, Reuters claims that Rivian loses “nearly $39,000 on every vehicle” sold. As such, it’s taken various cost-cutting measures like removing more than 100 steps from its battery-making process, 52 pieces of equipment have been cut from the body shop and more than 500 parts have been removed from the design of its flagship models.

The cuts have also reduced the production time of its cars by about 30 percent, reports Reuters.

2nd Gear: Uber Doesn’t Have A Race Problem, Says California Court

A case accusing Uber and its driver rating systems of racial bias has been thrown out of court in San Francisco this week. The case, which was brought by Uber driver Thomas Liu, claimed that the ride sharing company’s policy of terminating drivers with low passenger ratings is racially discriminatory.

The case was heard by San Francisco-based 9th U.S. Circuit Court of Appeals, which dismissed the case after claiming that the Liu and their lawyers failed to show that Uber dismissed non-white drivers “at a higher rate” than white drivers using the service. As Reuters explained:

Liu’s lawyers had argued that statistical evidence backing up their claims would only be available if the case were allowed to proceed to discovery, when plaintiffs can seek documents and testimony from defendants. But a three-judge 9th Circuit panel said Liu had failed to provide anything beyond speculation to buttress his claim that Uber’s system is discriminatory.

Shannon Liss-Riordan, a lawyer for Liu, said she was “deeply disappointed and concerned” about the ruling and would likely ask the court to reconsider it.

Liu’s case had claimed that passengers using Uber are more likely to rate non-white drivers poorly, and drivers with lower ratings risk being kicked off the service. This, Liu’s lawyers argued, violates Title VII of the Civil Rights Act of 1964 and California anti-discrimination law.

Despite this, the case was initially dismissed by U.S. District Judge Vince Chhabria in San Francisco back in 2022. They argued that there was no “statistical disparity” between drivers with low ratings of different races. This decision was backed up by an appeal court on Monday, which argued that Liu’s case had “numerous flaws” and failed to acknowledge the racial composition of the overall population of Uber drivers.

3rd Gear: South Korean Battery Plant Fire Kills 22

The realities of the dangers of battery production hit home this week after a fire at a battery plant in South Korea killed more than 20 factory workers as it ripped through the facility. The fire caught at the Aricell battery factory in Hwaseong, a city south of Seoul, reports CNBC News.

At least 22 people have been confirmed dead in the fire, which was started at a workbench at the Korean factory. A further seven people were injured in the blaze, with two suffering second-degree burns. As CNBC reports:

The blaze erupted at the Aricell battery factory in Hwaseong, a city south of Seoul, around 10:31 a.m. local time, officials said. The fire was largely under control by 3:10 p.m. local time and has now been put out.

The plant housed an estimated 35,000 batteries, NBC said. The factory was a reinforced concrete three-story building that sprawled over roughly 2,300 square meters and housed an estimated 35,000 batteries, according to South Korean news agency Yonhap.

The fire was started by a stock of lithium batteries that were in production at the site, reports CNBC, they began exploding and the fire then spread further into the facility. At the time of the blaze, more than 100 people were working at the factory.

4th Gear: Canada Prepares To Hop On Chinese Tariffs Train

After the United States imposed a massive tariff on the import of Chinese EVs into the country earlier this year, Europe quickly followed suit with measures that could add 50 percent to the cost of some cheaper Chinese models. Now, Canada looks to be following America’s lead and slapping hefty levies on EVs imported into the country.

Lawmakers in Canada are reportedly considering imposing tariffs on Chinese electric cars imported into the country, with Bloomberg suggesting that the rate could be as high as the 100 percent levy imposed south of the border in the U.S. As Bloomberg reports:

As Canada makes final decisions on its plan, stakeholders are debating whether the country should adopt the more restrictive tariffs of its neighbor to the south or take a softer approach. That discussion is adding a new wrinkle to an effort that’s aimed at preventing cheap Chinese EVs from undercutting the market, while still encouraging consumer adoption of cleaner vehicles.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the industry would like to see Canada materially match the US tariffs.

“Four out of five cars made in Canada are sold in the US, so there’s a reasonable expectation of North American partners that Canada reciprocates,” he said in an interview. Still, any new tariffs should be imposed “carefully, with consideration for what the Chinese response might be.”

Many lawmakers and leaders in the automotive world are calling for increased tariffs on Chinese electric cars so that homegrown automakers can better compete with the budget-friendly prices many EVs from China command. However, some have instead called on European and American automakers to be more competitive, with Stellantis boss Carlos Tavares warning that tariffs on Chinese models will make everyone worse off.

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