Tag: Rivian

OM in the News: Running a Factory on Recycled EV Batteries

Electric-vehicle startup Rivian has found an unusual power source for its Illinois car factory: old batteries from its own cars. Rivian is reusing EV batteries for energy storage—the largest repurposed-battery energy storage system for an automotive manufacturer in the U.S., says The Wall Street Journal (April 14, 2026).

Rivian’s operation will be the largest repurposed-battery energy storage system for an auto manufacturer in the U.S

Once completed later this year, Rivian’s plant in Normal, Ill., will draw electricity from more than 100 Rivian EV batteries in an area the size of a small parking lot. It will reduce Rivian’s dependence on the power grid during peak demand hours. It saves Rivian money on what it takes to run the plant.

“It reduces the demand on the grid, which is great. These batteries are already built,” said Rivian’s CEO. “We need to integrate them and connect them together, but that can happen quite fast. They don’t have to get imported from some other place.”

This is the latest example of the battery-energy storage industry boom in the U.S., where lithium-ion packs—not dissimilar to those in EVs—are increasingly used to power businesses, industrial facilities, residential zones and artificial-intelligence data centers.

The AI boom is part of what’s driving unprecedented energy demand in the U.S. Electricity prices around the country are rising so quickly that they are outpacing inflation, rising 4.5% between 2024 and 2025.

Many automakers, including Ford and GM, are retooling battery factories once meant for EVs to meet that demand, rather than let those facilities sit idle. Meanwhile, energy storage was the fastest-growing business last year for Tesla, which has long supplied batteries for residential and commercial power. The setup is expected to initially provide 10 megawatt-hours of energy, equivalent to about 1,000 home-energy battery storage units linked together.

Classroom discussion questions:

  1. What are the advantages and disadvantages of Rivian’s approach?
  2. How do other firms handle the energy demands from the AI boom?

OM in the News: EV Supply Chain Headaches

Makers and suppliers of electric cars are dealing with diminishing cash and weak sales. Hurdles are ripping through the automotive supply chain, crunching demand for batteries and materials such as lithium that power them, reports The Wall Street Journal (Dec. 1, 2024). “It’s a whole ecosystem that is collapsing. It’s just a disaster out there with consumer demand going down,”  said the CEO of a clean-energy investment bank.

Rivian, which has burned through more than $19 billion since 2021, is facing a shortage of copper wiring for its electric motors, which caused it to slow or shut down assembly lines

Several high-profile companies, including electric SUV maker Fisker, bus manufacturer Arrival, and Swedish-based battery maker Northvolt recently filed for bankruptcy. At least a dozen other startups, specializing in EVs or batteries, are also at risk.

Many of these young companies have been hammered by cooling demand for EVs, rising costs and supply-chain obstacles that have hindered their ability to put out new products quickly. And established Western automakers such as Ford and GM, which have pledged billions of dollars to expand their EV lineups, are now delaying or pulling back some future investment as sales haven’t materialized.

Northvolt was among the industry’s most stunning implosions. The startup, which sought to make batteries with a lower carbon footprint, had raised $15 billion from backers including VW and Goldman Sachs. But the weakening EV market resulted in BMW cancelling a major order.

 Li-Cycle Holdings, a firm that has promised to turn recycled batteries into useful materials, had an approved $475 million government loan to help build out a plant in Rochester, N.Y. But it now only has enough cash on hand to sustain operations through March, 2025 and has paused construction on the factory.

Electric truck maker Canoo is also burning through cash and has laid off a quarter of its workforce in Oklahoma. It had received a $113 million incentive package from the state to create 1,300 jobs at its vehicle and battery plants and had promised to quickly hit $1.4 billion in revenue this year.  “It feels like being punched in the face every morning trying to develop vehicles that have all their components for so long been outsourced to China,” said Canoo’s CEO.

Classroom discussion questions:

  1. What issues are EV component suppliers facing, and how can they deal with them?
  2. What are the implications for operations managers?

OM in the News: The Looming Electric-Vehicle Battery Shortage

 The auto industry could soon face a shortage of battery supplies for electric vehicles—a challenge that he says could surpass the current computer-chip shortage, reports The Wall Street Journal (April 18, 2022). Car companies are trying to lock up limited supplies of raw materials that are key to battery making, and many are constructing their own battery plants to put more battery-powered models in showrooms.

A Rivian truck being assembled at the company’s factory in Normal, Ill.

Rivian’s CEO  states: “All the world’s cell production combined represents well under 10% of what we will need in 10 years. Meaning, 90% to 95% of the supply chain does not exist.” His comments are the latest alarm bell to go off across both the auto and battery sectors as the fast-rising demand for EV parts and a shortfall of critical materials and production could result in an acute supply crunch. (Rivian is sharply curtailing factory output this year, cutting its forecast in half to 25,000 vehicles because of constraints on getting parts and materials).

Building enough batteries will be among the biggest hurdles in trying to boost EV sales from a few million today to tens of millions within the decade. The shortages will occur everywhere from the mining of raw materials, to processing them, to building the battery cells themselves. Already, demand for lithium-ion batteries, which are the core power source for EVs, has surged to 400 gigawatt hours in 2021—up from 59 gigawatt hours in 2015—and it is expected to jump another 50% in 2022.

The semiconductor shortage that is disrupting the auto industry was a relatively small supply-demand imbalance that then led to aggressive overbuying and stockpiling, putting the car sector in the difficult position it is in now. With batteries, the problem is expected to be much, much worse.

The race to secure raw materials is growing increasingly competitive, in part because they are becoming more costly for battery makers. Raw materials account for 80% of the cost of a battery, up from 40% in 2015. Materials for the battery cathode, such as lithium, cobalt and nickel, have gained about 150% in the past year. 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 battery-cell production in-house, aiming to have more control over this core component for EVs.

Classroom discussion  questions:

  1. What can Rivian’s operations managers do to secure more battery cells?
  2. What are the major OM issues facing EV makers?