Rivian shares fall on missed revenue expectations, production forecast

by Ana Lopez

Electric vehicle maker Rivian generated $663 million in revenue in the fourth quarter and $1.66 billion for the full year, a result supported by an increase in production and shipments towards the end of the year, but still not was enough to meet Wall Street expectations.

Surveyed Yahoo analysts expected Rivian to generate $742.4 million in the fourth quarter and $1.73 billion for the full year.

Shares fell nearly 8% on the news, as shareholders focused on missed expectations, a recall and an elevated, but still lower-than-expected, 2023 production forecast.

The company reported a net loss of $1.72 billion in the fourth quarter and $6.8 billion for the full year. On an adjusted basis, it reported losses of $1.5 billion and $5.2 billion for the fourth quarter and full year, respectively.

The company attributed its net loss to high inventory costs, particularly component costs, which exceeded what Rivian could realize per vehicle. Rivian also said it incurred losses on firm purchase commitments worth $920 million.

Rivian said it expects these charges to continue into 2023. However, it is working to lower the cost of goods sold per vehicle.

In terms of cash burn, Rivian’s fourth-quarter and full-year operating expenses were $795 million and $3.7 billion, respectively, meaning the company is still burning more cash than it makes in revenue.

The good news is that Rivian was able to reduce capital expenditures, largely because it has made further progress in building out its manufacturing capabilities at its Normal, Illinois plant. In the fourth quarter, Rivian’s capex was $294 million, down from $455 million in the same quarter last year. For the full year, capex was $1.4 billion compared to $1.8 billion in 2021.

For 2023, Rivian expects to spend $2 billion in capex as it ramps up production of its R1T truck, R1S SUV and two versions of its commercial van, which it supplies to Amazon.

Capex is also likely to increase as Rivian moves forward with its second domestic manufacturing facility in Georgia, where the company will produce its R2 platform, which is designed for smaller, more affordable EVs. Rivian originally planned to introduce the R2 in 2025, but at the end of the third quarter, that was pushed back to 2026. The R2 is central to Rivian’s plan to expand its consumer business alongside its existing commercial business.

Rivian still has negative cash flow of $6.4 billion. The company ended the year with $11.6 billion in cash and cash equivalents.

Production and Max Pack is back

Rivian has been facing supply chain issues since production of its R1T truck began in late 2021. Those problems did not abate in 2022, forcing the company to scale back its production guideline from 50,000 to 25,000 vehicles.

Even with that lower, more conservative guidance, Rivian couldn’t quite figure it out. Rivian produced 24,337 vehicles in 2022 and delivered 20,332 vehicles.

After a slow start, the company ramped up production in the second half of the year. It produced 10,020 EVs in the fourth quarter and delivered 8,504 in the same period.

On Tuesday, the company pushed back its projected production figure to 50,000 vehicles. That’s still well below the overall capacity of the Normal, Illinois plant. Rivian says the Illinois plant will be able to produce 150,000 EVs annually when fully operational, with plans to increase this to 200,000.

Notably, the company has finally given a date for its long-awaited “Max Pack” battery, an upgrade to its existing battery configuration. Delivery of a 400-mile R1S Max Pack variant is scheduled for Fall 2023.

The company pulled the “Max Pack” option from its website late last year. The company said it will make the option available to existing pre-order customers.

Remember misery

Rivian also announced a recall in its full year and fourth quarter earnings report for a sensor in the front passenger seatbelt system in select 2022 R1T and R1S vehicles.

The company, which discovered the issue this month, said that while the number of potentially affected vehicles is 12,716, “we believe the estimated affected population is less than 1 percent — fewer than 100 vehicles — requiring parts replacement.” Inspections are estimated to take less than 10 minutes. For the very small percentage where parts replacement is necessary, the work can be completed in less than 30 minutes during the same visit.”

The issue first surfaced in July 2022 when Rivian and a supplier assessed the performance of a vehicle where the “passenger airbag off” light activated with certain passengers in the front passenger seat, resulting in a service request, the automaker said.

The company said it had begun its investigation to determine whether the signal from the seatbelt sensor that detects whether the auto-locking retractor (aka ALR) was performing properly. As of February 27, 2023, Rivian is not aware of any accidents or injuries related to this issue in any market.

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