Whenever a start-up car company wants to establish a factory, the least amount of money it needs to spend is $ 1 billion to get started. Rivian invested $750 million in a factory it bought from Mitsubishi for $16 million in Normal, Illinois. Riversimple needs £150 million to build two factories. And it will have Siemens’ help to plan manufacturing in them.
This is what the Welsh company announced on February 11: an MoU (Memorandum of Understanding) with the German company mainly for Siemens’ “depth of expertise in planning and simulation software for manufacturing operations and factory simulation software for the new production facilities.”
Although an MoU is not a legally binding contract, it is considered one of the most formal versions of a gentlemen’s agreement. With Siemens’ help, Riversimple will also explore ways to make “product design, supply chain management, and economic models” with circular economy principles.
For that gentlemen’s agreement to move forward, Riversimple will need the £150 million we mention at the beginning of this text. That’s equivalent to $206.8 million, a bit more than one-seventh of what Tesla spent buying bitcoins.
One of the factories will build the Rasa in 2023. The other one will produce a delivery van by 2024. This vehicle will also be based on the Network Electric principle, just like the two-seater, which uses ultracapacitors and a small fuel cell to propel vehicles. In Rasa’s case, that makes it a 200 MPGe car – double the average energy efficiency of current electric cars, as Jason Fenske mentioned in a recent video.
To help it with the funding round, Riversimple appointed Gambit Corporate Finance LLP. Their goal is to raise the money over the next three years. If Riversimple chose to go public through a SPAC, it would probably raise way more than that pretty quickly, but that is probably not the company’s goal.
Each factory will offer about 220 direct jobs and produce 5,000 vehicles per year. This is part of why the plants cost so much less than a traditional one. The other reason for that is Riversimple’s business model.
As we have already mentioned, it plans to kill programmed obsolescence by offering a car that will never be sold. It will be part of a subscription service that will give its clients an experience close to ownership – you keep the same car for as long as you want – without all the hassle involved with it.
You do not have to worry about maintenance because that’s on Riversimple. This is why the company plans to make its vehicles as robust as possible. You also do not have to worry about the hydrogen it will use because Riversimple also pays for that, as well as for insurance.
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With cars as a service, it will not be necessary to sell them by the millions. Whenever someone does not need it anymore, it can be transferred to another customer with no hassle, which reduces the need for natural resources to build them.
The small plants allow Riversimple to build one anywhere there is demand for its cars. The company also planned to make them open-source vehicles, allowing competitors to follow the same strategy. The best service would win customers, not necessarily a different car.