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Rivian narrows loss while rolling out cheaper EV models
The R2 line has an eventual target price of around $45,000
Rivian R2 SUVs at the manufacturer’s assembly plant in Normal, Ill. (Scott Olson/Bloomberg)
Key Takeaways:
- Rivian reported a second-quarter adjusted EBITDA loss of $379 million and revenue of $1.66 billion, both better than analysts expected.
- The results were boosted by regulatory-credit revenue and higher deliveries as Rivian launched its lower-cost R2 SUV amid weak U.S. EV demand.
- Rivian reaffirmed plans to produce 65,000 to 70,000 vehicles this year and expects R2 deliveries to accelerate in the second half.
Rivian Automotive Inc. reported better-than-expected earnings as it began deliveries of a new midsize sport-utility vehicle, a positive sign while the company contends with a weakened market for electric vehicles in the U.S.
The adjusted loss before interest, taxes, depreciation and amortization was $379 million in the second quarter, down from a $667 million loss a year ago, Rivian said July 30 in a statement. The latest figure was smaller than the $548 million deficit anticipated on average in estimates compiled by Bloomberg. Its revenue also topped estimates.
The company increased the midpoint of its Ebitda guidance by $50 million due to better-than-expected revenue from regulatory credits and increasing delivery volumes. But some of this improvement was offset by rising costs of raw material, memory and logistics.
The automaker is working to rein in costs and revamp production while rolling out its newest model, the lower-cost R2 line. Known primarily for its high-end consumer EVs and plug-in delivery vans used by Amazon.com Inc., Rivian is betting the new vehicles can help it capture greater share of the market for EVs.
The company is “being thoughtful around how rapidly we ramp up our supply chain” as Rivian scales up R2 the rest of the year, CEO RJ Scaringe said on a call with analysts. The company aims to add a second production shift later this year. Rivian did not disclose how many R2 vehicles it has delivered to date.
Rivian shares rose 2.6% at 6:25 p.m. in after-hours trading in New York. Through the July 30 close, they’d dropped more than 14% year to date.
The results come after Rivian earlier this month reported second-quarter vehicle sales that surpassed Wall Street’s estimates. At the same time, the company boosted its production outlook to 65,000 and 70,000 EVs this year, guidance that Rivian reaffirmed July 30. Rivian credited its previous guidance update with a 3,000 vehicle delivery increase in early July.
In an interview on Bloomberg TV, Chief Financial Officer Claire McDonough said “R2 will be a key catalyst for the growth that we anticipate seeing,” adding that “we’ll see a significant step-up in the second half for deliveries.”
McDonough also said that the company has been “encouraged by” the conversion rate Rivian has seen for the R2 from customers on the waiting list.
Revenue during the quarter was $1.66 billion, slightly above the preliminary figures Rivian released on July 6. Analysts estimated $1.52 billion on average.
Rivian, one of the few remaining pure-play EV makers in the U.S., has been seeking stability this year following a tumultuous stretch marked by heavy costs, supply chain challenges and lukewarm EV demand in the U.S. The company has had multiple rounds of job cuts — including in June — as part of the effort to get a handle on costs.
More-affordable model
The R2 line, with an eventual target price of around $45,000, is aimed at pulling in more customers amid broad concerns about automotive affordability in the US. Initial variants cost around $58,000, but Rivian plans to bring the price down going forward.
McDonough has warned that the challenge of scaling the new vehicle would weigh on automotive gross profits in the second and third quarters.
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Production will eventually be supported by a massive new facility in Georgia, which Rivian said would have manufacturing capacity for 300,000 vehicles annually. Rivian this month sold shares to fund equity contributions related to a Department of Energy loan that is helping fund the new plant.
The company has also benefited from funding through strategic partners. Volkswagen, now Rivian’s largest shareholder, is expected to invest up to $5.8 billion over several years, and has already invested about $3 billion as part of a joint venture between the companies. Uber Technologies Inc. announced in March that it would invest as much as $1.25 billion through 2031 as the companies partner to deploy robotaxis.
