At first glance of its balance sheet, electric vehicle startup Rivian’s second quarter looks pretty ho-hum.
The California-based automaker, which indefinitely paused plans to build a $5 billion factory in Georgia, continued trends from the past few quarters. The company is still modifying its manufacturing capabilities to trim production costs while slowly curbing its quarterly losses, albeit very slowly.
But the company’s second-quarter financials, which were released Tuesday, don’t represent how busy — and potentially pivotal — the three-month stretch was to Rivian.
Between April and June, the automaker announced a partnership with Volkswagen that could ultimately be valued at up to $5 billion and a second generation of its flagship vehicle models. Rivian CEO RJ Scaringe called the second quarter “a defining” period for his company.
Those two announcements, which simultaneously bolster Rivian’s cash reserves and reduce manufacturing costs on its vehicle fleet, could go a long way toward the company’s efforts to stop bleeding cash and turn a profit by the end of 2024. It also potentially rejuvenates the company’s efforts to eventually build cars an hour east of Atlanta — although the factory’s construction timeline remains undisclosed.
Scaringe has emphasized Rivian’s commitment to building the Georgia plant with a promised 7,500 jobs. He said profitability and ramping up vehicle production at the company’s sole factory in Normal, Illinois, will help accomplish the company’s Peach State plans.
“To achieve the full potential of our vision, we need to aggressively drive towards profitability,” Scaringe said.
Rivian reported a little less than $1.2 billion in revenue during the year’s second quarter, a 3% decrease from the first quarter but 4% more than Rivian reported during last year’s second quarter. It came alongside an anticipated dip in vehicle production at the Illinois factory, which is undergoing overhauls to incorporate various cost-cutting measures and technology improvements.
Claire McDonough, Rivian’s chief financial officer, said the company reduced its gross loss per vehicle by about $6,000 compared to the first three months of the year. Gross loss per vehicle delivered was about $33,000 at the end of the second quarter. The second generation of R1 vehicles reduces production costs by about 30%, eliminating 65 parts and removing 1,500 joints.
“We expect to see significant cost reductions in our R1 platform during the second half of 2024 as we ramp up production and deliveries of our second generation R1 vehicles,” McDonough said.
Credit: arvin.temkar@ajc.com
Credit: arvin.temkar@ajc.com
The company’s net loss for the second quarter was nearly $1.4 billion, about 15% more than the same time a year ago. Rivian ended June with nearly $5.8 billion in cash and cash equivalents at the end of June. At the same time last year, it had $10.2 billion in cash reserves.
Rivian produced 9,612 vehicles during the three months ending in June, a 31% decrease from both a year ago and last quarter. Production is expected to increase during the second half of the year in order to meet the company’s goal of building 57,000 vehicles this year. The Illinois factory has an annual production capacity of 150,000 vehicles, nearly triple its current output. It will expand to 215,000 vehicles per year once production of a new crossover called the R2 is incorporated.
While production backslid, the number of customers who picked up a new Rivian vehicle increased. The company delivered 13,790 vehicles during the past three months, a 9% increase from the same time last year and a 1% increase from the prior quarter. It means the second quarter was the first time in two years that Rivian delivered more vehicles than it manufactured during a financial quarter.
Deliveries peaked in the third quarter of 2023, which came just before EV manufacturers — namely Tesla — saw multiple down quarters of slowing demand. While EV sales have continued to increase, they have not met industry expectations, prompting some automakers to slow down their EV transition plans.
In late June, Rivian and German automobile giant Volkswagen Group announced a potential $5 billion partnership, which the companies expect to close during this year’s fourth quarter.
VW plans to invest an initial $1 billion in Rivian, taking an equity position in the startup and becoming one of the company’s largest investors. The planned partnership includes $4 billion in additional investments through 2026, and would result in the developed software technologies being used in both companies’ future EVs.
“(The VW partnership) really eliminates a lot of risk that was seen around our balance sheet and allows us to focus the launch of R2 in Normal,” Scaringe said.
Cox Enterprises, which owns The Atlanta Journal-Constitution, also owns about a 3% stake in Rivian.
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