The demand for electric vehicles, and the key elements of the profitability path to monitor
Electric adventure vehicle maker Rivian (RIVN) is set to report third-quarter earnings after the bell on Tuesday, after rivals in the sector reported demand issues and pulled back on spending.
For the quarter, Wall Street expects Rivian to report revenue of $1.31 billion, with an adjusted loss per share of $1.32, according to Bloomberg estimates. This revenue number would represent a 17% jump from the $1.12 billion in the second quarter and nearly 150% more than the $536 million reported last year. On an EBITDA basis, Rivian is expected to report a loss of $1.04 billion, smaller than last year’s loss of $1.307 billion.
Last month, Rivian announced the delivery of 15,564 electric trucks, more than the 14,973 estimated according to Bloomberg. Third-quarter production also exceeded estimates at 16,304 vehicles. Rivian also said it is on track to meet its production forecast of 52,000 units for 2023.
In its second-quarter report, Rivian narrowed its full-year adjusted EBITDA loss to $4.2 billion, compared to the $4.3 billion it saw previously. The $4.2 billion EBITDA loss forecast Rivian expects for 2023 is $1 billion less than the EBITDA loss it reported in 2022.
Investors were in for bad news in the third quarter, when Rivian unveiled a $1.5 billion convertible debt offering in early October. Wedbush analyst Dan Ives called it a “morale punch” for investors at the time.
Rivian shares are down nearly 10% since then and 46% year to date, while the S&P 500 is up more than 14% for the year. Shares of electric vehicle makers and legacy automakers such as General Motors and Ford were also hit hard, with companies reporting declining or “evolving” demand for electric vehicles.
Last month, Ford (France) temporarily halted $12 billion in investments in its electric vehicle projects until “capacity” was needed. Ford said in its earnings report that U.S. electric vehicle buyers are “unwilling to pay premiums for electric vehicles or hybrid vehicles, which is putting sharp pressure on electric vehicle prices and profitability.” Big Three automaker GM ( GM ) delayed the expansion of its electric trucks in late October, citing “evolving demand for electric vehicles” as the main reason behind slowing electric truck volumes.
Even Tesla ( TSLA ) is not immune to the electric vehicle demand story, as the automaker has delayed construction of its upcoming Gigafactory in Mexico due to concerns about global economic conditions caused by rising interest rates.
However, Rivian and its lifestyle-oriented trucks may be a stranger to the electric vehicle scene.
Rivian’s aforementioned third-quarter shipments rose 23% sequentially from the second quarter, even as the company raised prices after selling out of its cheaper initial orders. Unlike Ford and General Motors, Rivian targets coastal and upper-income buyers who have greater immunity to rising prices and rising interest rates than the broader population.
Although Rivian is far from profitable, it is cutting costs and forecasts total earnings by 2024. Investors will look forward to hearing more from the company and CEO RJ Scaringe about its future profitability trajectory.
Pras Subramanian is a reporter for Yahoo Finance. You can follow it Twitter and on Instagram.
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