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Rivian shares are down Wednesday morning after the electric truck maker reported a wider loss for its April to June quarter than expected, although the startup says it has a path to reach positive gross profit by the end of 2024.
The Irvine, California-based automaker’s net loss widened to $1.46 billion, a greater loss than the $1.3 billion expected by Wall Street and $1.2 billion a year earlier, during the second quarter. Adjusted earnings came in at a loss of $860 million, almost 8% worse than expected, according to FactSet estimates.
The electric vehicle maker on Tuesday also reaffirmed its full year guidance to produce 57,000 trucks and take a loss of $2.7 billion in adjusted earnings. However, Rivian noted that it is on track to record positive gross profit during the fourth quarter.
That would “be a major proof point for management, especially considering that” it continues to lose money on every vehicle it sells, RBC analyst Tom Narayan said in a note to clients.
Rivian lost $32,700 per vehicle sold during its second quarter, an improvement from the $38,784 it lost per vehicle in the January to March quarter. Rivian said the improvement comes from work done at its factory in Normal, Illinois, which was temporarily shut down in April. The company delivered 13,790 EVs during its second quarter.
“We have demonstrated strong execution during the quarter with the plant retooling upgrade and launch of second generation R1 vehicles,” CEO RJ Scaringe said in a statement Tuesday, calling last quarter “a defining one for Rivian.” He added that changes made to the R1 truck’s platform allowed it to cut material and manufacturing costs.
Rivian, which currently makes the pricier R1S SUV and R1T electric pickups, has pinned its future success on the rollout of more affordable models, including the R2, a $45,000 two-row compact SUV with more than 300 miles of range. The firm said Tuesday that it plans to halt production in Normal for more than a month next year as it prepares to make the R2.
The R2 was initially expected to be made in Georgia, but Rivian delayed its plans for the $5 billion plant to lower its spending. The firm has also laid off hundreds of workers this year.
Rivian is entering a new joint venture with Volkswagen —which recently cleared a regulatory hurdle in Germany — to develop software and lower future production costs. The German automaker will invest up to $5 billion in Rivian, including an initial $1 billion investment that will primarily be used to fund its operations through the production of the R2.
“As Rivian crosses the gross profitability chasm, it will likely cease to be defined by its historical lack of margin but more by its upcoming growth accelerators: the R2/R3 and the game-changing VW partnership,” Canaccord Genuity analyst George Gianarikas wrote in a note Wednesday.
“[W]e believe Rivian has a unique, timely opportunity to push forward, pull ahead of the non-Tesla pack, and establish itself as the next American auto icon,” Gianarikas added.
Rivian shares are down more than 8% in pre-market trading Wednesday after rising 1% before trading closed Tuesday afternoon. The stock is down 30% year-to-date.