Electric vehicle startup Rivian Automotive was once hailed as an upcoming Tesla competitor. With a multi-million-dollar deal with Amazon, Wall Street expected Rivian to cruise through to profitability in a short time. But the recent fourth quarter earnings report of 2022 reveals that the road is long and hard.
Founded in 2009, Rivian launched its first electric truck towards the end of 2021. But since then, the company has struggled with a less-than-optimistic production outlook, worrying Wall Street.
On Tuesday, the automaker admitted that it had lost $1.7 billion in the last quarter of 2022. Production difficulties made up a majority of its struggles and it expects the trend to continue this year.
Rivian’s Fourth Quarter Earnings Evoke Mixed Feelings
Rivian’s IPO in November 2021 was one of the biggest in history. However, an unstable economy and supply chain issues created roadblocks in its path to success.
The recent earnings report reveals that the company’s total loss for 2022 amounts to $6.8 billion. It also revealed that the company expects supply chain issues to continue although it has become easier to anticipate and tackle them. The company needs to invest in building supply chain resilience to mitigate future problems.
The company announced that its production forecast for 2023 will be 50,000 units against analyst estimates of 63,000. In 2022, Rivian produced 24,337 vehicles against the forecast of 25,000.
As per data compiled by Refinitiv, Rivian EV’s adjusted loss per share stood at $1.73 versus the expected $1.94. Also, stood the company missed revenue estimates as it posted a total of $663 million against the analyst expectations of $742.4 million.
The announcements triggered a fall in Rivian share prices during extended trading. Stocks fell by around 8%, although on February 28 it was up almost 4.6%, closing at $19.30 per share.
Since its debut in 2021, Rivian shares have lost almost 90% of their value.
In its letter to shareholders, the company highlighted that supply chain issues continue to be a point of concern. “Supply chain continues to be the main limiting factor of our production; during the quarter we encountered multiple days of lost production due to supplier shortages. We expect supply chain challenges to persist into 2023 but with better predictability relative to what was experienced in 2022.”
Rivian’s CEO RJ Scaringe also said that the company is working to cut costs as competition heats up. Tesla recently slashed prices of all its top-selling models, forcing rivals to reevaluate their pricing strategies.
Rivian Earns Top Spot in Customer Satisfaction
Consumer insights and analytics specialist JD Power found that the Rivian R1T scored the top satisfaction rating amongst premium EVs, replacing last year’s winner the Tesla Model 3.
JD Power’s US Electric Vehicle Experience (EVX) Ownership Study assesses customer satisfaction across a range of attributes. The 2023 study reveals that the Rivian R1T and Mini Cooper electric have the highest levels of owner satisfaction for premium and mass-market EVs, respectively. In the report, the company noted that discerning customers are prioritizing quality, driving experience, safety, and reliability when it comes to EVs.
The results are sure to give Rivian’s image a boost as the company aims for positive gross profit by 2024. The quarterly revenue for the company has improved to $663 million as against the $54 million for the same period the previous year.
This year, Rivian EV will focus on ramping up production of its R1 trucks and SUV, while fulfilling its deal of providing delivery vans to Amazon.
On an analyst call, CEO RJ Scaringe revealed that the upcoming R2 model will be made using simplified processes to keep costs lower. Meanwhile, the company is actively working to reduce costs and ramp up production as it races against well-established rivals. Early this month, the electric automaker admitted that it is laying off about 6% of its workforce to keep costs under control.
Rivian EV will prioritize supply chains issues and technological advancements in the current year to give customers affordable and efficient options.
