If – or, more likely, when – all the business books start to fall on Rivian Automotive Inc., at least one should be titled: Do all the difficult things at once. The young company is trying to finish a factory and three different vehicles, while planning a road trip to a Wall Street IPO. Apparently, CEO RJ Scaringe was yet sleeping too much, because Rivian announced two weeks ago a plan to build its own charging network too, a la Tesla.
The decision, which Scaringe has hinted at for years, comprises at least 3,500 fast chargers at 600 sites and at least 10,000 slower charging “benchmarks” at campsites, motels, hiking trails and the like, all installed by 2024. Project for Expensive capital: Hardware just to build a fast-charging site can cost up to $ 320,000, according to one study, not to mention maintenance and other indirect costs. In short, Rivian’s independent strategy is a silent indictment of the US infrastructure: What’s out there right now, apparently, is not enough.
Tesla opted for the same type of proprietary network, but that was nine years ago. The non-Tesla charge map has gotten denser since then, but the pins are still thin beyond urban centers, and the center of the country is covered in electron deserts.
At the moment, Tesla has 9,723 fast-charging cables in the US, according to the latest count from the Department of Energy. The other networks combined have only 7,589 outlets for public charge, and those are much less dispersed. The Tesla club is covered in Millinocket, Me., Athens, Alabama, and Casper, Wyoming, all places where Ford’s new Mustang Mach-E can have a hard time running free. While this is a challenge for Ford, it is a bigger obstacle for Rivian’s “electric adventure vehicles”, seemingly headed for wilder places than the Santa Monica Farmers Market.
There is good reason for the anemic load map. The microeconomics of a public charge network remains brutal. The gains won’t appear without a lot of electric vehicle traffic; Electric vehicles won’t appear without many chargers. But at the micro-micro level, there is another variable in the equation: chargers sell cars. Elon Musk saw it clearly a decade ago. When Rivian plants a charger in an electron desert like North Dakota, the revenue in return flows through a thicker pipeline than for a charging empire that only sells electricity.
In fact, a glance at Rivian’s map nuances its sales ambitions. It has a large number of chargers planned for Alaska, Hawaii, and the Upper Peninsula of Michigan. Even Prince Edward Island and Nova Scotia will see seasons. “We can be really creative in terms of locations,” Scaringe said. TechCrunch in December, “to allow us to reach very specific and unique places in Rivian.”
In addition, Rivian plans to give Amazon.com the keys to 100,000 delivery trucks in the next decade, including 10,000 by the end of next year. Surely the retail giant would like to deploy (and charge for) those teams broadly. Meanwhile, non-Rivian vehicles will be able to use the company’s slower chargers, another potential revenue stream. “Over-demand is a good problem,” says BloombergNEF analyst Ryan Fisher, and it’s valuable to lock down major charging locations before EVs infiltrate the most remote parts of the country, he adds.
The established auto industry hasn’t been that adventurous, but it does have another variable in the equation: revenue from gasoline. These cars can still sell vehicles in places like North Dakota where chargers are in short supply. As such, the industry has largely decided to jury its own cargo networks, essentially piecing together a patchwork of interoperability agreements with third-party networks. Ford Motor Co., for example, connected in 2017 with Electrify America, the charging network that Volkswagen established as part of the settlement of its Dieselgate emissions trap scandal. (Public charging networks became even more important this week for Mach-E owners, as Ford stopped selling its $ 799 home chargers because some were not working properly.)
Finally, Rivian has to think hard about the long term, specifically the big, soft estimate of brand equity. The company has spent 12 years creating the capital behind its name, and almost every step has been deliberate, from producing seven-minute snowboard movies to appearing in an Aspen gondola for an impromptu interview. You are also hiring “guides” who will be personally assigned to liaise with individual buyers.
Now, on the cusp of releasing the product, it would certainly be easier and cheaper to outsource the billing to some third-party outlet in a motel parking lot, but that would be out of step with the company’s approach to date. Cargo will be a big part of Rivian’s UX, arguably as important as the lights, acceleration, and nifty “Camp kitchen” that slides out from under the van. Apparently, for Scaringe and company, the payoff – the potential savings from skipping the proprietary network – is not worth the risk.