Rivian CEO RJ Scaringe warns that the impending battery shortage will make the current chip shortage look like a “small starter”.
The warning comes nearly a decade after Tesla announced plans for a battery gigafactory, when the automaker sent similar warnings to the auto industry.
To be fair to Scaringe, Rivian wasn’t able to start work on a battery gigafactory 10 years ago, but it shows how many players in the auto industry who didn’t take these warnings seriously are in serious trouble to ensure the battery supply for their EV ambitions.
In an interview reported by The Wall Street Journal, Scaringe noted that a “relatively small imbalance between supply and demand” in semiconductors led to “aggressive over-buying and inventory” and ultimately to this massive shortage that still affects many industries, especially the auto industry .
Scaringe warns the same will happen to batteries but will be “an order of magnitude worse”.
The CEO added:
“Semiconductors are a small taste of what we will feel in battery cells over the next two decades,”
The problem is that the battery imbalance will be much larger as demand for electric vehicles increases faster than most people in the industry saw coming.
In a separate interview with CNBC, Scaringe said:
It’s the beginning of the end for fossil fuel consumer vehicles – as far as Scaringe is concerned. The 39-year-old believes the production and sale of such vehicles will come to an end sooner rather than later in his lifetime. Without giving a specific date, Scaringe said the end of that era is likely in 20 years rather than 50, as companies are being forced to move away from fossil fuels out of necessity, and potential pressure from Wall Street and regulators . “Most countries around the world will stop selling petrol-powered cars. The extent of the postponement is difficult to assess,” he said. “The challenge is whether it is politically driven or not. The companies that will survive are the ones that recognize that the end state of combustion is zero.”
Some, like Tesla, saw it coming early and have invested at all levels to address the problem. The company invested in a close partnership with Panasonic with the flagship project Gigafactory Nevada. We’re about 9 years after Elon Musk announced the Gigafactory in an earnings call.
It has invested heavily in securing raw materials for its battery manufacturing partners and recently even started producing its own battery cells.
Scaringe says Rivian is taking a similar approach, working with many different suppliers and eventually planning to make their own cells too, although it’s not quite there yet.
Rivian plans to have enough batteries and chips this year to produce 25,000 vehicles – half of what was originally planned.
Many automakers, with decades of experience managing large supply chains, face serious difficulties securing supplies for electric vehicle manufacturing.
And as Scaringe warns, this is probably just the beginning, and the next few decades could prove extremely difficult.
Electrek’s take
Not only difficult, but in my opinion existential for some car manufacturers. Some will not survive this transition because they have waited too long to invest in securing large quantities of batteries and battery materials.
It’s hard to say exactly which, as many of these supply contracts are quite opaque.
We’re aware of some of the larger partnerships, like GM with LG and Ford with SK, but supply shortages will reach down to the mines, and Tesla has been talking about it for nearly two decades.
The only thing that has held them back is the finances and credibility to secure those supplies, but that all changed about two or three years ago.
It will certainly be interesting to see the rush. As Scaringe pointed out, it will look like a chip shortage, but on an even greater level.
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