Peloton can’t build products fast enough. In September, we detailed long delays and delivery issues. Peloton spent part of their most recent earnings call specifically addressing steps they would take to address order backlogs.
Today, thanks to a report from MoneyDJ.com, we now know a few more steps Peloton will take with Rexon, one of their manufacturing partners (which is referred to as “Lishan” in the translated article).
As a reminder: Peloton has two main suppliers: Rexon, and Tonic. Peloton ended up acquiring Tonic in October of 2019 in order to streamline and have more control over production. Tonic has a brand new factory coming online at the end of December. MoneyDJ previously reported that Rexon/Lishan had moved their factory to 24/7 production this summer. This week’s report notes the following:
Looking forward to Q4, Lishan has begun to implement a two-shift system in its assembly line when all Peloton product lines are in short supply, and continue to invest in capital expenditures to expand production. It is expected that the tight production capacity will continue until June next year, while the new plant is expected It will be completed in Q4 next year.
There are two key point in here:
- The factory will operate with two shifts until the middle of next year
- They are building a brand new factory to further increase production
This is the first indication we’ve seen of how long Rexon might continue their increased production level. The news about the new factory means that by the end of next year, both of Peloton’s manufacturing partners will have built new factories to further increase production.
It’s worth noting that Peloton is not their only customer, and all fitness equipment companies are likely seeing huge surges in demand – so some of the increased production capability Rexon will have will be for other customers as well.
John Mills of Run, Lift & Live was the first to report this news.