Rivian Posted Narrower Losses in Q2 2023 & Raised its Production Target

Key Points

-The Q2 results showed improvement in Rivian's financials, with revenues rising and losses narrowing.

-the EV start-up also raised its 2023 production target to 52,000 units, helped by the significant increase in Q2 output.

-The results are encouraging, after the hardships of 2022, but there are still challenges.

Rivian Turns the Corner

The auto industry faced multiple headwinds last year. High inflation raises production costs and makes cars more expensive. Elevated interest rates make corporate funding more expensive, while consumers face higher loan costs for purchasing cars. More to it, economic uncertainty make prospective buyers hesitant.

Cash-strapped electric vehicle (EV) startups grappled with an even more perilous environment, since they are often unprofitable and thus more vulnerable to these hardships. Furthermore, ramping up production is a costly and hard endeavor, which became more challenging due to the supply chain disruption.

Why Trade Shares with FXCM?

  • $0.00 Commission*
  • Mini Shares - Fractional Share Trading with minimum trade sizes of 1/10 of a share.
  • Low Margin Requirements

US off-road maker Rivian Automotive was no exception and definitely felt the burn from these adversities. However, the external environment has been improving this year, with the Fed having slowed down the pace of tightening, inflation coming down and the economy proving resilient.

Its performance in the second quarter of the current year is encouraging and shows that Rivian is turning the corner.

Uprgraded Production Target

The first positive signs came at the beginning of previous month, when the EV maker announced the delivery of 12,640 vehicles in Q2. This was nearly triple from a year ago and up roughly 60% q/q. Furthermore, output jumped over 200% y/y and nearly 50% on quarterly basis, to 13,992 units.

Adding more color to these metrics on Wednesday, during the earnings call, the firm noted that Q2 was the first time output of the newest R1S SUV "outpaced" that of the R1T pickup. [1]

The company offered more encouraging news on Wednesday, as it raised its production target to 52,000 units, form previous goal of 50K. During the earnings call, CEO DJ Scaringe stressed that "we remain focused" in scaling up output.

Improved Financials

The higher number of deliveries helped the firm to an impressive 70% y/y rise, to a record of $1.21 billion, according to Wednesday's Q2 results. These also reflected progress on the firm's push to become more efficient and cut down costs, in response to the hardships of 2022.

Operating Expenses were trimmed, staying below $900 million, while Net Loss narrowed to $1.195 billion. The gross loss on every vehicle delivered was significantly improved, by roughly $35,000, compared to the previous quarter. Mr Scaringe spoke of "meaningful reductions" in the costs of the R1 retail EVs and the delivery van (EDV) it manufactures for Amazon.com.

In one of the gloomy parts of the report, Rivian ended the second quarter with Cash of just $10.202 billion, which marked another decline.

Conclusion

Rivian was confronted with multiple 2022 adversities in the past year, during which its stock (RIVN.us) had shed more than 80% of its value. The Q2 results however show that the EV startup is turning the corner. RIVN is up on the year, helped by a very strong July as markets reacted positively to the increased output/delivery figures.

It is making progress on scaling up with a higher production target, its financials improved and its already working on the cheaper and smaller R2, although deliveries are not expected before 2026.

However, challenges still lay ahead. Although the external environment is improving, there are still pitfalls. The output/delivery gap and the series of prices cuts by many EV makers, are signs of weak demand. Startups like Rivian Automotive may have a hard time following and competing in a lower price/margin environment.

Furthermore, Rivian beat everyone to the electric pickup truck market, but now competition heats up. The Ford Motor Company has already been selling its F-150 Lightning for more than a year now and more legacy automakers are entering the arena and Tesla Motors Inc is finally getting ready to begin deliveries of it futuristic Cybertruck.

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 21 Feb 2024 https://rivian.com/investors

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure
*

When executing customers' trades, FXCM can be compensated in several ways, which include, but are not limited to: spreads, charging commissions at the open and close of a trade, and adding a mark-up to rollover, etc. Commission-based pricing is applicable to Active Trader account types.

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.