Electric vehicle startup Rivian reported a smaller loss and growth in revenue in the first quarter compared to a year earlier and said an intentional slowdown in production during the first three months of this year will help lay the groundwork for eventual profitability.
The California-based automaker reported $661 million in revenue in the first quarter compared to $95 million during the same period a year ago when the company first started delivering EVs. Rivian’s net loss for the quarter was $1.35 billion, down from $1.59 billion a year ago.
The company produced 9,395 vehicles at its Illinois factory from January to March, a 6% decrease from last year’s fourth quarter, as Rivian said it made technology improvements.
Claire McDonough, the company’s chief financial officer, said on a Tuesday call with investors that production lines were halted during the first quarter to incorporate new technology, which will help bolster production and insulate Rivian from supply chain issues.
“The team’s achievements during Q1 establish an important base of new technologies that will benefit Rivian for quarters to come through greater material cost reduction, enhanced range efficiency and access to additional market segments,” she said.
During the quarter, Rivian completed a bond sale that netted $1.5 billion to help finance the company’s future $5 billion EV factory an hour east of Atlanta. The startup ended March with about $11.8 billion in cash reserves.
The company aims to build 50,000 vehicles this year, matching its initial 2022 production goal before it was cut in half because of supply-chain issues. Rivian ultimately fell just short of that revised goal.
CEO RJ Scaringe affirmed the company is on track to meet its 2023 goal.
Rivian is not the only EV company feeling additional financial pressure. Tesla, the largest EV producer in America, has been cutting prices as Rivian and its competitors fight to become profitable and ramp up mass production. Lucid, another California-based startup that makes electric sedans, posted a wider loss than experts expected during the first quarter, citing a decline in production, deliveries and demand.
Both companies stock prices have experienced stark declines.
Rivian had one of the biggest initial public offerings in U.S. history in 2021, with share prices peaking near $130 and the company’s evaluation surpassing $100 billion. Rivian’s stock plummeted last year as the company grappled with a semiconductor shortage, layoffs, recalls and lower-than-expected manufacturing numbers.
Share prices ended Tuesday slightly down at $13.86. Cox Enterprises, owner of The Atlanta Journal-Constitution, owns about a 4% stake in Rivian.
The new drive unit technologies deployed at its Illinois plant means each Rivian vehicle needs half as many semiconductors. Sourcing chips had been a headache for production.
McDonough said the change cut material costs by a quarter for the company’s electric delivery vans, which Rivian produces for its largest investor, Amazon. She said the lower production costs will help bolster Rivian’s expansion plans into Georgia, where the company expects to manufacture a new SUV called the R2.
She predicted on a March call with Bank of America Securities that Rivian will build 85,000 R1T pickups next year in Illinois, which is more than triple the total number of vehicles the company built in 2022. McDonough said that jump in production coupled with lowered manufacturing and supplier costs will help the company turn a profit by the fourth quarter of 2024.
Rivian officials also said they expect to have more pricing leverage with suppliers going forward, reducing materials costs compared to contracts established before the EV maker started mass production.
“As we wind the clock forward through today, the level of excitement and engagement that we have from suppliers today is absolutely night and day,” Scaringe said.
The Georgia factory, which has been the center of multiple legal battles, is expected to open in 2025.
Local property tax breaks have been the subject of a legal fight between the state and an opposition group of residents who live near the future factory along I-20. An appeals court panel recently sided with the state, though an appeal to the Georgia Supreme Court is expected.
“The court ruled in favor of Georgia and therefore Rivian benefits as part of that ruling overall, so (there is) great momentum as we sit here today on progress in Georgia,” McDonough said.
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