Rivian’s Post

This is going to be a defining year for Rivian — and like many climate tech companies, its survival is going to be determined in part by what happens to interest rates. As I write for Heatmap News: “Rivian has a stomach-turning number of corporate milestones coming up. Over the next 11 months, it plans to unveil an entirely new line of vehicles, shut down its factory for several weeks for cost-saving upgrades, break ground on a new $5 billion facility in Georgia, and — most importantly — turn a profit for the first time. It also expects to manufacture and deliver roughly another 60,000 vehicles to customers. Any one of these goals would be difficult to achieve in any environment. But Rivian is going to have to execute all of them during a time defined by ‘economic and geopolitical uncertainties’ and especially high interest rates, its CEO R.J. Scaringe told investors on Wednesday. Since 2021, Rivian’s once robust stockpile of cash has been cut in half to about $7 billion; at its current burn rate, the company will run out of money in a little more than two years.”

Another zombie EV company lumbers forward without a clear path to volume or profitability. The management of Rivian undoubtedly assumed that a 10% lay off would be sufficient to signal to investors that they are serious about cutting costs. Too little, too late. By all accounts Rivian have an incredible product that is absolutely loved by customers, but they lose money on every vehicle they sell. That's not necessarily so bad when a company is growing and scaling - it's part and parcel of getting yourself off of the ground. You would expect gross margin to be decent and net margin to be negative as the company continues to make large capital investments. This happens a lot with companies, the difference is that this is usually hidden in the private markets and additional money raised from investors makes up the difference and pushes the company forward. Rivian is not a private company though. They are a publicly traded company that must report every quarter. And therein lies the problem. Their valuation and the way people feel about the brand is out there for everyone to see. And to that end, Rivian's biggest challenge is that this isn't a net margin issue. This is a this is a gross margin issue - where their COGS exceed revenue. At this rate, they will run out of cash within two years. This is all well and good in a ZIRP environment where the cost of capital or borrowing is negligible, but we are now in a (relatively) high interest rate era. There are compelling competing products that put downward pressure on pricing. And as a public company, their options for getting additional capital are limited to taking large loans, issuing new shares to the public or doing a private deal. All will send a signal to the market and depress the stock price even further. Other than an outright acquisition and a fresh injection of capital, I'm not entirely sure how Rivian gets out of this without a fundamental restructuring of the company. https://lnkd.in/dJEvMhKn

Incremental improvements are really starting to show.

Will Rivian go BANKRUPT in 6 quarters? "Current trajectory has them bankrupt in ~6 quarters. Maybe that trajectory will change, but so far it hasn’t." Musk on X Sometimes you have to wonder how good of a memory Mr Musk really has. Recall early 2018, when Musk said Tesla was going through "Production Hell" ramping up Model 3 production and they were fast running out of cash? Musk even approached Apple about investing. So you'd think he'd know better than to judge situations like this. But, of course, we all know that Musk has no filter. Despite this, Musk does have a point. Rivian is about to lay off 10% of its workforce, obviously an attempt to preserve cash, and the new volume R2 isn't due to start production until 2026, which is when real revenue will start. The problem is that if there really is only six quarters of cash left, then they'll run out Q3 2025. So, Rivian will need to do two things urgently: 1) Control costs on R1 series so that Revenue > Cost on a per unit basis. 2) Ensure deadlines are not missed and that no cost overruns occur on R2 series vs budget. It's hard to tell from this graph how much of this cash reduction is the result of Capex spend on R2, and how much is losses incurred from R1 production. We also don't know if the majority of the capital expenses have been paid out on R2 yet or not. Whatever happens, it's likely going to be tight, and they will need some things to go their way, just as Musk had, to pull through. However, I like Rivian and RJ Scaringe a LOT, and really believe that they will pull it off. Do you believe Rivian will pull through and make it happen? What do you think that they need to do? Let me know in the comments below #automotive #batteries #climatechange #electricvehicles #emobility #innovation #sustainability

"Rivian does not seem to be in trouble — not quite yet, at least. But the earnings made clear what electric-vehicle observers have known for a long time: Either the company will emerge from this year poised to be a winner in the EV transition, or it will find itself up against the wall. That’s partially because Rivian has a stomach-turning number of corporate milestones coming up. Over the next 11 months, it plans to unveil an entirely new line of vehicles, shut down its factory for several weeks for cost-saving upgrades, break ground on a new $5 billion facility in Georgia, and — most importantly — turn a profit for the first time. It also expects to manufacture and deliver roughly another 60,000 vehicles to customers. Any one of these goals would be difficult to achieve in any environment. But Rivian is going to have to execute all of them during a time defined by 'economic and geopolitical uncertainties' and especially high interest rates, its CEO R.J. Scaringe told investors on Wednesday. Since 2021, Rivian’s once robust stockpile of cash has been cut in half to about $7 billion; at its current burn rate, the company will run out of money in a little more than two years. Although Rivian’s situation is dire, it’s not experiencing anything out of the ordinary. As I’ve written before, the electric truck maker is crossing what commentators sometimes call 'the EV valley of death.' This is the challenging point in a company’s life cycle where it has developed a product and scaled it up to production — thereby raising its operating expenses to eye-watering levels — but where its revenue has not yet increased too." Read Robinson Meyer's latest on Rivian's recent speed bumps. #rivian #electriccars #electricvehicles #evmarket

Here's what could happen to Rivian shares next.

Rivian (RIVN) talks R2, cost-cutting, and more during 2024 Investor Day: Here’s the latest

Rivian (RIVN) to release critical Q2 earnings: Here's what to expect - https://lnkd.in/g-SDjS9s It’s EV earnings season again, and Rivian (RIVN) is set to release critical Q2 2024 earnings on Tuesday, August 6, 2024, after the bell. Rivian has been aggressively cutting costs in an effort to achieve a gross profit by the end of the year. Here’s what to expect from

https://lnkd.in/eppVhgD7 The Rivian investor letter is quite interesting. They have been punished, rightly, for a disappointing quarterly earnings report . At the beginning of 2023 some believed that they would ramp production, reduce costs and become cash flow neutral by the end of 2023. Comparing Q4 to Q3 makes for grim reading, especially seeing that they burnt another $1.1B. However, there's a silver lining that I think was missed. If my calculations are correct, the delivery van might actually be profitable, or close to it. If they deliver a lot of vans in Q1 and gross margin improves appreciably then the van is the product that might help fund the R2. Rivian remains in the valley of death, but they still have a reasonable chance if they can execute well.

"Rivian lost $1.45 billion in the first quarter, showing that its recent company-wide cost-cutting measures have a ways to go before it can approach profitability. The EV-maker brought in $1.2 billion in revenue in the period, coming in just under its record haul from the prior quarter, according to its first-quarter earnings report that was released Tuesday after markets closed. That’s slightly more than the $1.16 billion expected by Yahoo Finance analysts. Rivian’s revenue grew 82% from the $661 million it generated in the first quarter in 2023. Still, that wasn’t enough to assuage shareholders. Rivian’s shares fell more than 4% in after-hours trading. Some cost-cutting relief is on the horizon. Rivian recently finished up a weeks-long shutdown at the Illinois factory where it retooled and changed parts of its manufacturing process. Those upgrades should lower the cost of production and speed it up, according to the company. Rivian said it integrated 'nearly 600 new or modified robots' that will make the existing production lines 'run more efficiently.'" #rivian #automotive #finance #equipmentfinance #equipmentleasing #financialservices #corporatefinance #manufacturing #evs https://lnkd.in/eTYWkqCz