March 3, 2023
Rivian lost $6.75 billion in 2022 and it expects to burn through more cash this year, but the electric-vehicle maker expects to make a “gross profit” in 2024 as its plant in Normal, IL, finally reaches production capacity.
CEO R.J. Scaringe, during a conference call with analysts after the release of Rivian’s financial reports for 2022, also says the company’s addition of a less-expensive, mass-market “R2” series to its product portfolio is about six months from completion.
Both the R2T pickup and R2S SUV will be smaller than the existing R1T pickup and R1S and will be assembled at a plant Rivian is constructing in Georgia. Scaringe says the new vehicles will qualify for the full incentive of $7,500 available under the Inflation Reduction Act.
Rivian CEO RJScaringe 1024
The R2 vehicles will benefit from efforts to reduce costs by developing new manufacturing technology such as combining key components like seats into once piece to reduce the total parts count. “It also leverages a lot of network architecture” used in existing vehicles, Scaringe (pictured, left) says.Meanwhile, Rivian’s relations with suppliers have broadened and deepened and are helping in the effort to reduce costs. “We are in a different position with the supply base,” Scaringe says. Material costs, particularly for lithium used in batteries, are beginning to show signs of stabilizing.
Shortages of key parts were the key reason Rivian missed its goal of building 25,000 vehicles in 2022. Instead, the company built 24,332 vehicles and delivered 20,332 to customers throughout the U.S., according to Scaringe’s “Letter to Shareholders.”
The start-up automaker also launched the Rivian Adventure Network comprising DC fast chargers designed, engineered and manufactured in-house, while expanding to 28 service centers and 176 mobile service vehicles as of year-end. Its interconnected software applications released 12 major over-the-air software updates.
Rivian’s pace of production increased substantially in the fourth quarter of 2022, producing 10,020 vehicles and delivering 8,054.
The company says its revised production forecast for 2023 will be 50,000 vehicles, below analyst estimates of about 63,000.
However, the assembly line building electric delivery vans under a contract with Amazon has not operated for much of the first quarter. Additionally, the line building the R1T and R1S will be down later this year for expansion and the introduction of the new lithium iron phosphate battery packs and new Enduro motor, Scaringe says.
The R1T is priced at $73,000 and the R1S is priced at $80,000, but Scaringe believes Rivian can make the prices stick even though rivals such as Tesla and Ford are cutting prices. “These are our flagship products,” he says. “We feel very strongly they reflect their real value.”
Rivian’s production problems also mean the company is facing financial challenges. After losing $6.75 billion in 2022, Rivian now expects a 2023 adjusted loss of $4.3 billion, slightly more than estimates of $4.19 billion, but projects a gross profit in 2024 before the R2 plant in Georgia comes online.
Rivian’s revenues grew from $55 million in 2021 to $1.65 billion in 2022.
“The successful introduction of the R1T and R1S has been underpinned by strong demand and near categorically positive industry accolades – the result is a net preorder backlog that extends into 2024,” Scaringe notes in his letter to shareholders.
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