Rivian Earnings: Focus on ‘cash burn’ in Q2

Rivian Automotive is facing scrutiny from its operating costs, capital expenditures and cash burn as part of its second-quarter earnings release after the market close on Thursday, as the EV maker ramps up production at its Illinois factory and in Georgia. Planning for another plant.

Irvine, Calif.-based Rivian increased vehicle deliveries to 4,467 in the second quarter, up from 1,227 in the first quarter, and assembled 4,401 vehicles in the previous quarter, compared to 2,553 in the January-March period. The automaker said it is manufacturing mostly R1T pickups, but recently announced launches for its R1S SUV and EDV commercial vans for Amazon.

Rivian anticipates production of 25,000 vehicles this year and is implementing cost-cutting measures to meet its spending priorities. Normal, Ill. The company’s plant has a production capacity of 150,000 units annually.

Last month, Rivan announced a 6 percent reduction in its workforce, up from about 14,000 before the announcement. Rivian said it wants to increase its production and optimize spending on developing its R2 platform for the Georgia plant.

Market analysts are focused on how much money Rivian is burning due to its relatively limited distribution and its rising costs due to current and future expansion.

“Rivian’s second-quarter 2022 results are expected to bounce back from rising sales of battery-powered vehicles amid climate concerns,” Jacques Equity Research said in a note this week. “On the other hand, Rivian — being in an early stage of development — is burning cash.”

Rivian’s operating expenses in the first quarter were about $1.1 billion, up from $410 million in the year-ago period, Jacques said, placing the automaker’s second-quarter numbers under scrutiny.

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“Heavy operating costs in the second quarter, stemming from enhanced product development activities, are likely to reduce margins,” Jacques said. “Besides, high [capital expenditures] The cash flow is likely to decrease to support the additional manufacturing capacity and infrastructure.”

Bloomberg Intelligence notes Rivian’s increased production on better management of its supply-chain bottlenecks. But it also highlighted the automaker’s huge cash needs. Rivian faces competition in the EV pickup market from Ford, Tesla and General Motors.

“Although the company has a higher cash balance, it may need more liquidity in 2025, as competition from Ford, Tesla and GM intensifies,” Bloomberg Intelligence said. “Rivian could burn about $19 billion in cash by 2024 as it expands operations, while shareholders Amazon and Ford do not appear to be capital sources.”

Amazon and Ford Motor Co. Both have reported billions of dollars in paper losses on their Rivian investments this year.

Ford launched its F-150 Lightning EV pickup in the spring, coming on the back of the Rivian’s production start in 2021. Tesla plans to launch its Cybertruck in mid-2023, and Chevrolet has said production of the Silverado EV will begin in spring 2023.

According to Refinitiv data reported by Reuters, Rivian is expected to report revenue of $337.5 million, based on an average estimate of 13 analysts.

Refinitiv’s average analyst estimate for the automaker is for a loss of $1.63 per share in the second quarter. Wall Street’s average 12-month price target for Rivian’s share price is $55, up from Wednesday’s closing price of $37.40, Reuters said.

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