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Rivian CEO Warns of Looming Electric-Vehicle Battery S. Mclain, Sear Patterwon. Scott. Wall street Journal (Online); Mew York, M.Y. NORMAL, Iit-Rivian Automotive lnc- Chief Executive R. Scaringe is warning that the aufo industry could aoon face a shoctage of battery supplies for electric whicles-a challenge that he says could surpass the current computerechip shortage Car companies are trying to lock up limited supplies of taw materials such as cobalt, lithium and nickel that are hey to battery making and many are constructing their own bsttery plants to put more battery-powered models in showrooms: "Put very simply, all the worlds cell production combined represents well under 107, of what we will need in 10 years" Ms Scaringe said last week, while giving reporters a tour of the company's plant in Normal. iti. "Meaning, 903 to 95% of the supply chain does not exist? he added The CEO's comments are the latest alarm bell to go off across both the auto and battery sectors with executives warried that the fast. rising demand for electric-eehicle parts and a shortfall of critical materials and production could result in an acume supply crunch. For instance. Tesla lnc. CEO Elon Musk earlier this month tweeted that lithium prices have "gane to insane levels" and that Teska "might actually have to qet into the mining s refining directly at scale: Mr. Scaringe put a sharper point on the problems for the auto industry ahead, saying building enough batteries will be among the biggest hurdles in trying to boost electric-vehicle sales from a few milion today so teas of milions within the decade. The shortages will occur everywhere from the mining of raw materials. to processing them, to building the battery cells themsehves, he said. Alresdy, demand for lithiumion batteries, which are the core power soutce for electric vehicles, has surged to too gigawat hours in 2021 -up from 59 pigawatt hours in 2015 -and it is expected to jump anether 50 s in 2022, according to Benchmark Mineral Intelligence, which tracks the battery supphy chain. The semiconductor shortage that is disruphing the auto industry was a relatively small tupply-demand imbalance that thef led ta aggressive overbuying and stockpiling. putting the car sector in the difficult position it is in now, Mr. Scaringe said. With batteries, the problem is expected to be an order of magnitude worse, he added. "Semiconductors are a small appetizer to what we are about to feel on battery cells over the next two decadea" Mr. Scaringe said Rivian, a Califoria-based startup focused exclusively an selling electric trucks and SUVs, has spent the past several months working to spool up production at its wehicle-making factory in Northal. The compaey began selling its first modeis last fall-the int truck and RIS SUN-and said reservations for the two were around 83,000 in early March. The company sold a total of 1.227 vehicles in the firat quarter of this year. Investors are closely tracking Rivian's ability to execute on its manufacturing plans, following an initial public otfering last year that raised nearly $12 billion in proceeds and briefly pushed the startup's waluation above that of Ford Motor Co. and General Metors Co. Fivian's success is dependent on how quickly it can ratchet up production and boost sales tevenue. a task made mere difficult by its newcomer tatus and lower starting volumes. Parts suppliers tend to give preference to large, more established car companies that place big bulk ordess and have a record of mevetiog their own targets on factory output analysts and indurtry attorneys say The race to secure raw materials is growing increasingly competitive, in part because they are becoming more costy for bartery makers. Raw materials account for B0s of the cost of a lithium-ion bartery. up from 405 in 2015, aceording to Benchmark. Matenals for the battery cathode. such as lithium. cobalt and nichel, have collectively gained about 156 s in the past yeac, incloding 25$5 to 39t in the past month, according to Benchmark. The demand is coming from other sectors, 100 , with clean-energy companies fooking to build moee battenes to stoce power from sources. such as wind and solar, analysts say. The Biden administration is adding te pressure from the clean-energy industry by pushing for less dependence on fossil fuebs, and earlier this year invoked the Delense Production Act to boost U.S. production of materials used in rechargeable batteries to curb American reliance on China for key ingredients. Fivian's share price has slumped in recent montha, due in part to manufacturing netbacke related to the semiconductoe shortage and other problems getting automotive parts. Rarian's stock closed at $38.23 Mondax dewn nearly 51 thom the ino price ef 57 fi In March. Fivian said it was sharply curtailing factory outpoit this year, cutting its forecast to 25,000 vehicles-about half of atat it could have buit if it weren't for constraints on getting ports and materials. The car company's 33 million-gguare-foot factory has the oanacity to build 160000 yechicles a year but currentiy iant nunning a full could have built if it weren't for constraints on getting parts and materials. The car company's 3.3 million-square-foot factory has the capacity to build 150,000 vehicles a year but currently isn't running a full five-day week. In December, Rivian said it would add a second assembly factory in Atlanta, starting construction next year. That plant is expected to begin production in 2024. Mr. Scaringe said the company plans to build a smaller, compact SUV called the R2 at the Atlanta plant that will help broaden Rivian's buyer base. The production line at the Normal plant-a former Mitsubishi Motors Corp. factory that Rivian purchased in 2017-demonstrates the stakes for the upstart car maker. In addition to building trucks and SUVs, Rivian plans to produce an electric van at the factory for Amazon.com Inc. Amazon, an investor in the startup, has a deal to buy 100,000 battery-powered delivery vans. Other auto executives are also growing concerned about constraints in the battery supply chain. Some companies, such as GM, are joining with mining firms to secure access to critical ingredients such as cobalt and lithium. Others are bringing more of their batterycell production in-house, aiming to have more control over this core component for electric vehicles. Still, even with all the planned battery production expected to be added, less than half of the forthcoming factories will produce cells with sufficient quality to supply global car companies such as GM, Toyota Motor Corp. and startups such as Rivian, according to an analysis by Benchmark. "It varies by region, but it's important for people to understand that capacity isn't a quality, reliable battery supply," said Simon Moores, Benchmark's chief executive. Mr. Scaringe said Rivian's strategy for securing battery cells is diversification. It also plans to structure the deals with partners as coinvestments in dedicated capacity and intends to eventually develop and build cells internally, he added. "We are not going to have a single suppliet," he said. "We are going to have multiple suppliers." Write to Sean McLain at sean.mclain@wsj.com and Scott Patterson at scott.patterson@wsj.com Rivian CEO Warns of Looming Electric-Vehicle Battery Shortage Credit: By Sean McLain and Scott Patterson Word count: 1129 Copyright 2022 Dow Jones \& Company, Inc. All Rights Reserved