Rivian’s Loss Narrows as Production Speeds Up
EV truck and sport-utility maker raises production guidance for the year Rivian’s vehicles start at $73,000 for a base-model R1T pickup truck. Photo: David Zalubowski/Associated Press By Sean McLain Updated Aug. 8, 2023 6:41 pm ET Rivian Automotive delivered a stronger-than-expected second quarter and raised its production guidance slightly, as the electric truck and sport-utility vehicle maker showed progress in speeding up output at its Normal, Ill., factory. The Irvine, Calif.-based startup said Tuesday it was moving toward its goal of slowing its cash burn by renegotiating supplier contracts and increasing factory output. The company said its gross losses per vehicle shrank by about $35,000 as the cost of producing its R1T truck and R1S SUV fell. The stock was
Rivian’s vehicles start at $73,000 for a base-model R1T pickup truck.
Photo: David Zalubowski/Associated Press
Rivian Automotive delivered a stronger-than-expected second quarter and raised its production guidance slightly, as the electric truck and sport-utility vehicle maker showed progress in speeding up output at its Normal, Ill., factory.
The Irvine, Calif.-based startup said Tuesday it was moving toward its goal of slowing its cash burn by renegotiating supplier contracts and increasing factory output. The company said its gross losses per vehicle shrank by about $35,000 as the cost of producing its R1T truck and R1S SUV fell.
The stock was up about 1.4% in after-hours trading.
How was Rivian’s second quarter?
- The company’s net loss shrunk to $1.2 billion from $1.7 billion a year prior; the result beat analysts’ expectations of a $1.5 billion loss, according to FactSet.
- Adjusted net loss per share was $1.08, lower than analysts’ average forecast of $1.41, according to FactSet.
- Revenue rose to $1.1 billion from $364 million in the year-ago quarter. Analysts on average expected the company to report revenue of $1 billion.
- Cash on hand was $9.26 billion, down from $11.24 billion in the previous quarter.
- Outlook: Rivian adjusted its production forecast for the year to 52,000 vehicles, up from its previous guidance of 50,000; Rivian also lowered its guidance on capital expenditures to $1.7 billion in 2023 from $2 billion previously after it pushed back some expenses until next year.
What is behind the results?
- Production at Rivian’s factory in Normal, Ill., is finally picking up after the company struggled last year with manufacturing issues and parts shortages. The company said it increased customer vehicle deliveries 60% quarter-over-quarter to 12,640 vehicles, beating analysts’ estimate of 11,000 units, according to FactSet.
- Rivian has made 23,387 vehicles in the first half of the year, and executives have said increasing production volume is key to stemming losses.
- The second quarter marks a bit of good news for a company that has laid off workers and slashed spending amid spiraling losses and missed production targets. The market has rewarded the company for beating delivery expectations, and as of Tuesday’s close, Rivian’s share price was up around 48% since the end of June.
Rivian is under pressure to prove it can build its electric trucks at scale without having ramped up production before, as competition heats up from legacy auto makers. WSJ toured Rivian’s and Ford’s EV factories to see how they are pushing to meet demand. Illustration: Adam Falk
What did Rivian executives have to say about the quarter?
- Rivian Chief Executive RJ Scaringe said that the company produced more SUVs than pickup trucks in the second quarter, a first for the young company, and that the company thinks this will continue in the future. The SUV has a higher selling price, which helped trim Rivian’s losses.
- Rivian executives also said the cost of producing a delivery van for Amazon fell 35% during the quarter, in part due to it using a new in-house battery pack and motor. The company expects a similar impact on the costs for the R1 vehicles next year.
- Scaringe said that a $35,000 improvement in the gross profitability of Rivian’s vehicles was just the start and that further savings on parts were expected.
- “When we talk about the confidence we have around further reductions in costs, this is not confidence out of thin air,” Scaringe said. The projections were based on parts deals that had been signed with suppliers.
How did rival EV startups Lucid and Fisker fare in the second-quarter?
- Luxury EV maker Lucid Group reported results on Monday, falling short of analysts’ expectations on both revenue and profit. The Newark, Calif.-based company over the weekend disclosed that it was cutting prices on its Air sedan between $5,000 to $13,000 depending on the version. Some analysts said the price cuts were a potential sign of weakening demand for the luxury vehicle.
- Lucid executives said there were early signs that the price reductions would increase customer demand, noting a sharp increase in orders on the first day of the cuts. The company’s shares rose around 12% on Tuesday from Monday’s close.
- Fisker started U.S. deliveries of its Ocean SUV in July, as the company seeks to prove it isn’t too late to the EV race. The Manhattan Beach, Calif.-based startup isn’t as well funded as Lucid and Rivian, leaving it less breathing room than rivals. Fisker faces a particular challenge getting its vehicles to customers, because its sole factory is in Austria. Fisker produced 1,022 vehicles in the second quarter, but only managed to deliver 11 of them to customers.
- Last week, Fisker slashed its production outlook to between 20,000 to 23,000 vehicles, from an earlier forecast of 32,000 to 36,000 units. Company executives blamed supplier struggles for the reduction.
Write to Sean McLain at [email protected]
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