Rimac explains why Bugatti no longer fits within VW

Mate Rimac likes to say that Volkswagen, Porsche and Hyundai have invested hundreds of millions of euros in his education. He plans to use that to create new-generation Bugatti hypercars without spending billions as well as electric powertrains and battery systems that can be sold at high volumes. Rimac, who turned 34 this month, explained why Bugatti, despite being profitable, no longer was the right fit within the VW Group. He also shared the reason for the Rimac Nevara supercar's delay, outlined the high cost of the chip crunch and revealed why his new R&D center near Zagreb, Croatia, will not have fences in an interview with Automotive News Europe Managing Editor Douglas A. Bolduc.

What is the status of your next supercar, the Rimac Nevera?

Production was delayed because it's a super complex project, but the car is in production. The first customer cars are on the line. We will deliver the cars in the next two months.

What caused the delay?

It's mostly the availability of parts. People might ask why there is a problem with a car with such a low volume. The issues is that we are very vertically integrated. We make a lot of the parts ourselves, including all the electronics in the car. It's our own hardware and software. We have to procure thousands and thousands of electronic components for each car. And that is proving to be a challenge because of the chip shortage.

What has been the financial toll of the chip crisis?

For a component that's maybe worth $1, we would pay maybe $10 or $20 or $50 -- and in some cases even $100 -- for a chip just to avoid stopping the production. It has been a huge challenge. We have had to change a few designs and change some components on the cars just because we couldn't get the chips and processors.

Is Bugatti profitable? If not, what's the key to getting there? If it is making money, how will you make it even more successful?  

Bugatti actually has been very successful and profitable in the last few years. The previous CEO [Stephan Winkelmann] did a really good job and left me a good company to continue building upon. So, profitability wasn't really the problem for Volkswagen. The problem was, what comes next? Because if you look at Bugatti, it's all based on the W-16 engine, which is almost two decades old. It is an amazing powerplant that created the hypercar business. The easiest thing for us would be to take the Nevera and slam a Bugatti logo on it and call it a day. But I was against it. I'm an electric car guy, but a Bugatti should still have a combustion engine for some time. But it will be developed in a way that is financially viable. We have developed everything in the Nevera from scratch. You will not find one piece in that car that you can find on another car, and we have done that on a shoestring budget compared to what, for example, Volkswagen has invested in the Chiron. We will do the same for future Bugattis, creating really exceptional products that are not comparable with anything else on the market, but without spending billions on them. That's really the key. Also, Bugatti is completely sold out until 2025. This is an incredibly good position to be in.

What kind of powertrain will the Bugatti you develop from scratch have?

It will be heavily electrified, but we'll have a very attractive combustion engine. When people see the next-generation Bugatti, I think they will be surprised that I was pushing for something like that because people associate me with electric cars. But I have always been a performance guy and a car freak. Considering the brand and the customers and the technology available, I think that we are developing the best possible solution for Bugatti, which is not an electric car today. It will be one day, but not today.

Rimac is opening an R&D center near Zagreb that you say will not have fences. What's the underlying message?  

Maybe 15 to 20 years ago, if you asked an engineer: "What's your dream job?" The engineer would have probably said: "Working for BMW or Mercedes." Today, I'm not really sure that's the case. So, the question is: Why do you need fences? Can't you, when you build a facility from scratch, make it nice and still protect the things you need to protect without excluding people? It's about how you involve the community and the surroundings. We have kids driving around here with their little bicycles, looking at how we do things. I would feel terrible if we had to exclude them. We want to be part of the community and also make this the best possible place for employees. They shouldn't have to announce if a friend or their kid is coming over. We are very open as a company, so the things that you need to protect, such as a design for a car that will come out in five years, we protect.

How many supercars has Rimac made since being founded and how will that change with the opening of the new facility, the addition of the Nevera and the addition of Bugatti to Rimac Group?

When we showed our first car, the Concept One, at the 2011 Frankfurt auto motor show, we were eight to 10 people. We were super small and had very limited funding. We built eight of these cars. Now we have moved into the second stage with the Nevera. We just started producing the customer cars. There will be 150 of those, or 50 per year. We are also building 80 Bugattis a year. The combined volumes of Rimac and Bugatti make it by far the biggest player in the hypercar market. We are talking about hundreds of millions in revenues there.

Along with making hypercars, Rimac Group has created Rimac Technology for your components business. What is the plan there?

When I started the company, I wanted to build supercars, but I figured out investors don't really want to invest in that and the revenue will come years and years down the road, because it takes a lot of time to develop the car. How do you survive until then? We started working for other car companies. In those early days, we were doing something like 200 batteries for Koenigsegg, 150 for the Aston Martin Valkyrie. Those kind of things. Today, we are working on projects where we are producing batteries in the tens of thousands and increasing that to hundreds of thousands units per year for big car companies. It's not just batteries, but also powertrains, e-axles and infotainment systems.

Rimac has gone from a handful of people to more than 1,000. What's next?

We realize now that even before the first person moves into our new campus [near Zagreb] we will have outgrown it. We are already thinking about campus No. 2 and No. 3 or creating a megacampus because we are growing so fast. We have a small factory here [near Zagreb] and another five minutes away. We have two other locations for production. We have multiple locations for offices. That's one of the growing pains, being scattered around. You can't imagine how much effort the team and I put in playing a form of [video game] Tetris with all of these locations. It's so inefficient.

What's the solution, preparing to grow to 10,000?

One thing also that I have learned is to avoid making predictions because if I tell you now that we will have 10,000 employees, that's a huge promise to keep. Circumstances sometimes change. But if you don't do exactly what you said three years ago, people will trample on you and say you are a liar. What I can say is that I had an all-hands company meeting before Christmas and I showed them a new plan. I told them, "I know it looks absolutely insane, but that's the plan." And history has shown us that we achieve our goals.

What have been the most challenging parts about creating an auto industry from scratch in Croatia?

It's just 12 years, but it feels like several lifetimes. Going from a garage to today with 1,500 people in several countries was a wild ride. In Croatia you don't have any industrial buildings. I looked at every building around here -- even ridiculous things like the old airport and some old factories that were doing something completely different. Therefore, you have to do everything yourself. You take an old shopping center and convert it into a factory or build it from ground up. And getting hundreds of chairs or laptops or whatever, that's the challenge here. Not just because of pandemic. We have always had that problem. Finding talent has also been difficult because nobody had any experience in manufacturing, supply chains and so on. It was pretty tough. But I asked myself: Would it have been a lot easier somewhere else? Probably, yes, but maybe we wouldn't have been around. I guess all of the struggles and everything that we went through had to be exactly the way it was for us to still be around.

What about the biggest challenge from a business perspective?

I would say it was keeping the company alive, be it through fund-raising or bank loans or customer projects. That was my focus most of the time. That has not been the biggest problem in the last couple of years since we have big, significant partners. But we are not over the edge or out of the Death Valley of companies yet.