Rivian expects to drastically increase production of its flagship electric pickup truck next year, which a top executive said positions the startup to become profitable by the end of 2024.
Claire McDonough, the California-based company’s chief financial officer, gave a positive outlook on Rivian’s financials and production outlook during an interview last week with Bank of America Securities. She also announced lofty production goals for next year and teased to hundreds of thousands of vehicles being built at the company’s planned $5 billion factory in Georgia in 2026.
Rivian has burned through billions in recent years as it began mass production of its R1T pickup, R1S SUV and electric delivery vans for Amazon. The company’s growing pains — exacerbated by supply chain issues — led to its stock tanking last year and prompted renewed efforts to raise capital. McDonough said the groundwork has been laid for Rivian to stop bleeding cash and become profitable by the fourth quarter of 2024.
“We expect to see a true step change, not just to break even, but to (enter) positive territory in that timeframe,” McDonough said on the April 4 call.
If she’s right, it’s a dramatic turnaround for Rivian, which recorded a $6.8 billion loss in 2022.
Rivian, like most traditional startups, relied on cash-flush investors as the company developed products and set up mass production. Amazon, the company’s largest investor, issued a massive contract to buy 100,000 vans from Rivian to electrify its delivery fleet. Cox Enterprises, which owns The Atlanta Journal-Constitution, also owns about a 4% stake in Rivian.
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. Rivian ended 2022 with about $12.1 billion in cash reserves. It announced a plan last month to sell $1.3 billion in bonds to raise additional funds for its future Georgia factory an hour east of Atlanta.
The first quarter of 2023 also saw production at the company’s factory in Illinois decline for the first time, but McDonough said that was expected. She said manufacturing lines were halted to introduce new technologies, specifically a new battery pack and drive unit.
She added that the new drive unit, which shifts vehicles to dual motors from quad motors, means each vehicle needs half as many semiconductors to build, helping alleviate tight supply chains. Rivian is on track to build 50,000 total vehicles this year, McDonough said, and the new technology will allow the company to significantly increase output next year.
She said Rivian expects to 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.
McDonough said “core technologies” Rivian is developing and its expanded production will also give the company pricing leverage with suppliers in future negotiations, reducing materials costs compared to contracts negotiated before the EV maker started mass production.
She said production ramp-up will go toward fulfilling the company’s large backlog of orders, which she said extends “well into 2024.” The company broke from its precedent of releasing its order book figures at the end of 2022, and McDonough affirmed that will continue going forward, given the company’s large backlog.
“The single biggest deterrent to putting in an order is how long the waitlist is,” she said.
The Georgia factory, which has been the center of multiple legal battles, is expected to open in 2025. McDonough said Rivian aims to build 200,000 of its new R2 crossovers in Georgia during 2026, which is roughly half of the future factory’s expected capacity.