Welcome to Normal: The town that holds the keys to Rivian's future

Welcome to Normal: The town that holds the keys to Rivian's future
May 2023

Spotting an electric truck on the road remains a novelty in most of the US, but not Normal, Illinois.The town in the Midwestern corn belt is home to the manufacturing operations of Rivian, the battery-powered vehicle start-up worth more than Ford or Volkswagen soon after it listed 18 months ago.Rivian's market capitalization has since crumbled from a peak of $162 billion to $12.5 billion in the face of production shortfalls and intensifying competition from carmakers both established and new. It is expected to report a $1.7 billion operating loss on $654 million in revenue in first-quarter results due on Tuesday, according to a compilation of analysts' estimates.Much of Rivian's future is riding on Normal. And the economy of Normal, population 54,000, is now tied to Rivian. The town government bought one of its trucks for its fleet and has ordered a sport utility vehicle."We want it to succeed," said Keith Cornille, president of Heartland Community College in Normal. "If they're suffering, like in any family, we're suffering."Rivian founder and chief executive RJ Scaringe chose Normal for its first factory, buying a former Mitsubishi car plant weeks away from demolition for $16 million in 2017. The purchase price on the old factory was a bargain, and Normal--the site of the Midwest's first Tesla supercharger--had attempted to position itself as an electric vehicle hub. Scaringe told a local radio station that the Normal area, with a diverse economy that includes agriculture, universities, and the headquarters of the State Farm insurance company, was different from other regional towns that had lost manufacturers.[photo1]"If you look at other plants in the Mid

west, and areas affected by their plants shutting down or manufacturing moving out of the area, you don't have this level of energy," he said. "You don't have this level of progressive thinking."The company is now the second-largest employer in the metro area that includes Normal and neighboring Bloomington. About 7,500 people work at the plant, roughly half of its workforce. Signs of enthusiasm for Rivian are visible around town, from the company logo emblazoned on the mayor's Patagonia jacket to the "Rivian Buzz" popcorn sold by a local shop, topped with sprinkles in the carmaker's signature blue.The factory struggled to meet ambitious production goals last year, slashing deliveries to 25,000 vehicles from 50,000 as first planned. The problems recalled challenges that confronted Tesla when it scaled up, a period its founder Elon Musk described as "production hell."[photo2]"What we're witnessing now is the difficulty of scaling up production in the auto industry," said Fitch Ratings analyst Stephen Brown. "It's a very expensive proposition that requires a tremendous amount of cash in the early years, and manufacturers have to get through that before they can get to scale and start generating some profitability . . . It's a race to get to the other side, before the cash runs low."One of Tesla's early, high-profile manufacturing mistakes included making late changes to products that forced suppliers to change their tooling, adding costs to the process and straining all-important supply chain relationships.At Rivian, a late change to the headlights sent ripples down the supplier base and forced expensive tooling changes, according to two people with direct knowledge of the process.