Electric Truck Maker Rivian Hires Magna International Executive as Chief Operating Officer, Will Help to Fix its Production Problems

author: Eric Walz   

Rivian's fully-electric R1T pickup and R1S SUV are being built at the company's factory in Normal, Illinois, but the production ramp up has been slow.

Electric truck and SUV maker Rivian has hired Frank Klein as its new Chief Executive Officer (COO) to help fix its production problems, which are stalling deliveries of its electric R1T pickup and R1S SUV, Reuters reported on Monday.

Klein succeeds former COO Rodney "Rod" Copes, who retired in December.

Klein is a former executive at contract manufacturer Magna International, which in the past has built vehicles for BMW, Jaguar and Mercedes Benz under its European division Magna Steyr in Austria.  

BMW contracted Magna Steyr to build its popular X3 SUV in Graz, Austria from 2003 to 2007. The company also built the Mercedes Benz 4-Matic all-wheel-drive system for the German automaker. 

During his tenure at Magna Steyr, Klein oversaw the division's shift to become a manufacturer of electric vehicles, which includes building the Jaguar I-PACE electric SUV. 

In Oct 2020, EV startup Fisker Inc. announced that Magna Steyr will build its electric Ocean SUV.

Before joining Magna, Klein worked in various management positions at German carmaker Daimler AG for almost 30 years. He was also responsible for setting up the Mercedes-Benz plant in Kecskemét, Hungary. The automaker's plant in Hungary has built various Mercedes-Benz A-Class models since 2018.

Klein will be based out of Rivian's factory in Normal, Illinois, where the company currently produces all of its vehicles, including electric delivery vans for Amazon. The e-commerce giant ordered 100,000 of the custom-designed vans from Rivian.

Rivian purchased the shuttered Mitsubishi Motors auto plant in Normal in 2017 and converted it into an electric vehicle manufacturing plant. Mitsubishi closed the plant in 2015, putting the facility up for sale after the company stopped manufacturing vehicles in the U.S.

Rivian is also building a second EV factory in Georgia that will eventually help increase its output. However the plant won't be operational until at  least 2024.

Rivian recently warned that it might not hit its production targets in 2022, which has caused some reservations holders to cancel their order for the R1T pickup and R1S SUV. Last week, the company said supply-chain issues could cut its planned production by half in 2022 to 25,000 vehicles.

Rivian's stock has been hammered as its deals with much slower than anticipated production ramp up. Rivian stock price is down nearly 65% to $36.13 since the beginning of the year as investors fear that Rivian won't be able to fulfill some customer preorders until late 2023.

Rivian recently dealt with one of the worst weeks in the company's history. On March 1 without notice, the company hiked prices by up to 20% for its R1T electric pickup and R1S SUV, in a move it said was due to semiconductor shortages and rising costs of parts due to inflation. 

The price increase also applied to Rivian reservation holders, some of which put down deposits for an electric Rivian vehicle back in 2020 and locked in favorable prices. 

Rivian CEO R.J. Scaringe addresses the price increases in an email to reservation holders. He explained that costs have increased since setting up the company's original pricing structure, which led to the decision to raise prices.

The backlash over the sudden hike in prices on social media was rough, causing a flood of cancellations from reservation holders. The company's problems were made worse by not providing an official explanation for two days to those that had already locked in pricing for their Rivian vehicles. 

As a result of the negative backlash, Rivian backtracked on the price hikes. Scaringe sent an email to reservation holders on March 3 saying the company would honor the original prices quoted to reservation holders that put down deposits before March 2. He also explained what led to the price hikes in the first place, which was not communicated to its customers.

Rivian said it would restore original configuration, pricing and delivery times. Customers that canceled their pre orders on or after March 1 will now be able to reinstate them. 

Scaringe said last month that Rivian aims to grab 10% of the EV market by 2030, which will require that its two factories are up and running smoothly.

Rivian's production problems are similar to those faced by Tesla when its launched the Model 3 sedan 2017. Tesla Chief Executive Elon Musk referred to the setbacks as "production hell" and admitted that the production problems related to the Model 3 sedan were worse than he expected.

Rivian has been facing a similar situation as Tesla, but the hiring of Klein may help turn things around for the fledgling EV startup.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.