Rivian Disappointed with its Q4 Results & 2024 Production Guidance

Rivian Q4 2024 Results

The electric vehicle market had a rough couple of years as demand softened due to various factors, like elevated inflation and most importantly high interest rates that make funding of the already pricier EVs more expensive. Tesla CEO Elon Musk had underscored these challenges a few months back, saying that "i'm worried about the high interest rate environment that we're in". [1]

Following a similar narrative in Wednesday's earnings call, CEO of Rivian Automotive RJ Scaringe, took note of the "historically high interest rates", which have "negatively impacted demand". [2] Unprofitable EV startups like Rivian are more vulnerable to this adverse environment and lack the wiggle room to follow Tesla, with its industry-leading margins, in a protracted price war.

Rivian's previous results showed that the firm was turning the corner, but Tuesday's report for Q4 offered reasons for concern. Deliveries dropped 10% from the previous quarter and the delivery-output gap widened, highlighting the dent in demand. Output reached record highs in the last quarter and the firm exceeded its annual target, with the production of 57,232 in 2023. However, the 2024 guidance was disappointing, as executives don't expect to surpass last year's level.

Furthermore, the company announced a 10% reduction in its workforce, while its financials deteriorated quarter-over-quarter. Revenues dropped nearly 2% q/q to $1.315 billion, net losses widened substantially to around $1.5 billion and losses per vehicle increased by more than $10K from the third quarter.

However, the financials largely improved on a year-over-year basis and the CEO was upbeat about the future. Even though he recognized the "challenging macro-economic conditions" in the short-term, he said Rivian is "laser-focused" on the factors within its control, which include "driving cost-efficiency, optimizing our production and deliveries, investing in differentiating technologies, enhancing the Rivian customer experience and maintaining a strong balance sheet".

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Given the price premium of electric vehicles, the unfavorable external environment and the softer demand, the transition towards more affordable EVs has become more relevant than ever. Elon Musk has already confirmed that Tesla aims to launch a 25K car in the second half of 2025.

Although Rivian Automotive is not looking to compete at such low price point, it is about to unveil its next-gen smaller and cheaper R2 SUV in a few weeks, although deliveries are not expected for another two years. In a GQ interview a few months back, Mr Scaringe had pointed to a $40-60K price range for the upcoming vehicle [3]. On Wednesday, he spoke of "limited compelling EV options" in the mid-sized SUV segment and around that price range. The segment is currently dominated by Tesla's Model Y, which was the best-selling car of 2023.

Rivian Automotive has managed to weather the external headwinds and moves forward by expanding its lineup and pledging greater efficiency. On the other hand, the underwhelming financials, the Q4 drop in sales and the 2024 production guidance are concerning and show that the EV startup has more work to do.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 22 Feb 2024 https://www.youtube.com/watch

2

Retrieved 22 Feb 2024 https://rivian.com/investors

3

Retrieved 19 Apr 2024 https://www.gq.com/story/rivian-scaringe-gqclout

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