Thursday Nov 9 2023 06:39
4 min
Shares of electric vehicle manufacturer Rivian saw a boost after the company posted a narrower quarterly loss and surprised Wall Street by raising its production forecast for the year and ending its exclusive delivery van deal with Amazon.com.
In a call with analysts following the announcement of quarterly results, Rivian executives pushed back against fears of slower demand for EVs. In recent weeks, carmakers such as Michigan-based Ford Motor Company and General Motors announced pauses or slowdowns in their electric vehicle investments.
The firm is “deeply” convinced “that the entire automotive industry will be transitioning to electric over the next one to two decades,” Rivian CEO RJ Scaringe said. “We’ve built and designed our business around this transition”.
In the short term, however, there are macroeconomic and geopolitical pressures impacting consumers and businesses, “most notably the increase in interest rates”, Scaringe said. The U.S. Federal Reserve (Fed) has raised interest rates to a range of 5.25% to 5.50%, with markets seeing the central bank maintain them for an extended period of time as it aims to bring inflation back to its 2% target. The Fed recently left interest rates unchanged at a meeting last Thursday.
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Rivian also said it would end its exclusivity deal with Amazon.com to provide electric last-mile delivery vans, which opens up the scope for deals with other companies.
The vans, as well as software and services, can provide “value” for fleet customers, and Rivian is in “active discussions with a number of large potential fleet customers to launch pilot programs,” Scaringe said.
Despite the end of the deal, the firm reiterated its commitment to fulfil an order of 100,000 vans to Amazon by 2030.
Rivian lost $1.37 billion ($1.44 a share), in Q3 2023, compared with a loss of $1.72 billion ($1.88 a share) in Q3 2022. The firm’s adjusted EPS loss came in at $1.19 vs. $1.32 expected.
The company’s revenue in Q3 rose to $1.34 billion from $536 million a year ago, mostly thanks to the delivery of 15,564 vehicles, Rivian said. Revenues from the sale of regulatory credits were minimal this quarter, according to an announcement by the firm. On an adjusted EBITDA basis, Rivian reported a loss of $942 million vs $1.04 billion expected — which is also narrower than the $1.307 billion loss reported a year ago.
Rivian shares rose more than 2% immediately after the announcement of its Q3 results, with gains adding further as the call proceeded.
The company raised its production guidance for the year by 2,000 vehicles to a total of 54,000 units, on the back of sustained demand for its trucks and SUVs.
Rivian is about to face more competition: Elon Musk-led Tesla announced in October that it has penciled in November 30 as the date it will start selling the Cybertruck — its much-awaited futuristic electric pickup.
The unconventional Tesla truck might not be in direct competition with Rivian’s vehicles, which are marketed for the outdoors and rugged terrain, but it may reduce the number of buyers that want, and can afford, a Rivian EV.
Rivian’s cheapest vehicles start at around $73,000, although the EV maker is developing a second-generation vehicle that will likely be cheaper. The price point for a base model Rivian is similar to Tesla's Model S luxury sedan, but much higher than the cheapest Tesla model, which is priced at around $38,000.
At the time of writing on Wednesday, Rivian stock hovered around the $18 mark, up close to 3% in early trading. Despite the recent gains, shares of Rivian have lost about 3% so far this year, compared to growth of around 14% for the S&P 500 index in 2023.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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