Rivian Automotive is facing scrutiny over its operating costs, capital expenditures and cash burn as part of second-quarter earnings after the market close Thursday, as the electric vehicle maker boosts production at its Illinois factory and plans for a second plant, in Georgia.
Rivian, based in Irvine, Calif., increased vehicle deliveries in the second quarter to 4,467, from 1,227 in the first quarter, and assembled 4,401 vehicles last quarter compared with 2,553 in the January-March period. The automaker said it has been building mostly R1T pickups but recently announced launches for its R1S SUV and EDV commercial vans for Amazon.
Rivian forecasts production of 25,000 vehicles this year and has been implementing cost-cutting measures to realign its spending priorities. The company's plant in Normal, Ill., has a production capacity of 150,000 vehicles a year.
Last month, Rivan announced a 6 percent reduction in its work force, which was at about 14,000 before the announcement. Rivian said it wants to optimize spending on increasing its output and developing its R2 platform for the Georgia plant.
Market analysts are focused on how much money Rivian is burning through because of its relatively limited deliveries and its rising costs due to current and future expansion.
"Rising sales of battery-powered vehicles amid heightening climate concerns are expected to buoy Rivian's second-quarter 2022 results," Zacks Equity Research said in a note this week. "On the flip side, Rivian — being in the nascent stage of development — has been burning cash."
Rivian's operating expenses in the first quarter totaled about $1.1 billion, up from $410 million in the year-earlier period, Zacks said, putting the automaker's second-quarter numbers under scrutiny.
"Massive operating costs in the second quarter, stemming from advanced product development activities, are likely to have dented margins," Zacks said. "Also, high [capital expenditures] to support additional manufacturing capacity and infrastructure is likely to have clipped cash flows."
Bloomberg Intelligence noted Rivian's rising production on better management of its supply chain constraints. But it also highlighted the automaker's huge cash needs. Rivian faces competition in the EV pickup market from Ford, Tesla and General Motors.
"Though the company has a high cash balance, it may need more liquidity in 2025, earlier than it plans, as competition from Ford, Tesla and GM speeds up," Bloomberg Intelligence said. "Rivian may burn around $19 billion in cash through 2024 as it expands operations, while shareholders Amazon and Ford don't appear to be capital sources."
Both Amazon and Ford Motor Co. have reported billions of dollars in paper losses on their Rivian investments this year.
Ford launched its F-150 Lightning electric pickup in the spring, coming behind Rivian's start of production in fall 2021. Tesla plans to launch its Cybertruck in mid-2023, and Chevrolet has said production of its Silverado EV will start in spring 2023.
According to Refinitiv data reported by Reuters, Rivian is expected to report revenue of $337.5 million, based on the mean estimate from 13 analysts.
Refinitiv's mean analyst estimate for the automaker is a loss of $1.63 per share in the second quarter. Wall Street's median 12-month price target for Rivian's stock is $55, above its Wednesday closing price of $37.40, Reuters said.