Rivian, Lucid likely to report disappointing Q1 deliveries, forecast says

Electric vehicle maker Rivian Automotive is trying to scale up its Illinois factory to turn out 50,000 vehicles this year, but Cox Automotive estimates first-quarter deliveries of just 8,145 units, for a 1.1 percent gain over the previous quarter.

Luxury EV maker Lucid Motors is growing at a faster clip, but Cox projects deliveries of 1,344 vehicles in the January to March period. That represents a 27 percent increase vs. fourth-quarter 2022, but it's a slow start for Lucid to meet its 2023 guidance of 14,000 Air sedans.

The two startups are cutting costs and laying off workers a year and a half after their first deliveries in fall 2021. Both have seen their stock prices drop by about 70 percent in the last 12 months.

Rivian says it has enough demand, but has been unable to solve manufacturing issues at its Illinois plant, which has a 150,000-unit annual capacity. Lucid says it needs to raise brand awareness to grow its order backlog.

Meanwhile, EV leader Tesla has been able to cut prices, leverage the new $7,500 EV tax credit and post record numbers. Cox estimates U.S. first-quarter deliveries at 180,993 vehicles for Tesla, a 38 percent increase over the previous quarter and a 40 percent improvement from first-quarter 2022.

"Tesla, which lowered prices in the first quarter to spark demand, is forecast to post solid sales gains and surpass market share of 5 percent for the first time," Cox said in its first-quarter sales forecast. "Tesla will be the top luxury-vehicle seller in the U.S. in Q1, by far, with sales more than double that of BMW or Mercedes."

Rivian's projected market share of 0.2 percent for the first quarter is up from 0.1 percent a year earlier, Cox said. Lucid's share is projected to be under 0.1 percent. Both automakers are expected to report sales in April.

Overall, U.S. automotive sales are expected to rise 6 percent in the first quarter of 2023 to 3.5 million units, which Cox describes as "an upside surprise."

But that's not the case for Rivian and Lucid, which had been expected to steal sales from Tesla and shake up the luxury EV market. Both are in cost-cutting mode, shedding workers and trying to preserve cash. Both have burned through billions of dollars and seen their stock prices plummet since listing publicly in 2021.

Lucid this week said it was laying off 18 percent of its work force, or about 1,300 employees. Rivian had a 6 percent work force reduction in February, following similar cuts in July 2022.

On a February earnings call, Rivian said it has enough pre-orders for the R1T pickup, R1S crossover and EDV commercial vans to keep it busy through 2024. But the company stopped giving out its pre-order numbers publicly this year. In November, Rivian said it had 114,000 pre-orders for its consumer vehicles but did not break them down by model.

Rivian CFO Claire McDonough said the automaker was pausing production on commercial vans for Amazon in the first quarter to introduce an in-house electric motor and a new battery pack using lithium iron phosphate technology for cost savings.

She also said assembly lines building Rivian consumer vehicles, the R1T and R1S, would be taken down for a week to prepare them for greater production in 2024.

Rivian CEO RJ Scaringe said a lack of supplier parts was constraining production of its consumer vehicles. He also said Rivian was not contemplating price reductions because of robust demand. The R1T will start at $74,800 for the base version available in 2024, while the current production model starts at $88,800.

The consulting company Munro & Associates has torn down an R1T for analysis and produced a series of YouTube videos highlighting the pros and cons of the pickup and of Rivian's manufacturing process.

One takeaway is that the R1T is well built but uses a significant amount of overlapping parts that can slow down the manufacturing process and raise costs.

"Hats off to Rivian for getting a vehicle into production — huge feat — but with that, we're seeing some elements that tell us they're struggling with structure and efficiency," said Jordan Arocha, program manager at Munro & Associates, in a September video.

"When I look at this, I think it is a low-volume, high-cost application, given the redundant structures," Arocha said. Rivian is likely to improve its design and manufacturing processes over time to save costs and speed up production, he added.

Munro & Associates compared the Rivian R1T, which was the first electric pickup on the market when it launched in 2021, to the Ford F-150 Lightning, which debuted as the second electric pickup a year ago.

Ford, which used the gas-powered F-150 as the starting point for the Lightning, is far ahead of Rivian in terms of simplifying its vehicles for mass production and cost efficiency, the Munro experts said.

"It's undeniable that the F-150 is clearly significantly simpler overall to produce and manufacture," said Kevin Harty, senior engineer for the group, in a November video focused on frame design. Of the R1T, he said, "there's a substantial amount of material in this vehicle," adding that it needs to slim down for cost and assembly ease.

Scaringe said Rivian will introduce its in-house Enduro electric drive unit to the R1 platform, along with less expensive lithium iron phosphate battery packs to save costs. He also said the upcoming R2 platform for more mainstream vehicles will be designed for mass production with much lower costs.

"The way we've looked at the design of the product is really through the lens of where we can see opportunities to consolidate parts — so larger single-piece stampings [and] use of parts consolidation," Scaringe said.

Lucid Motors, which also struggled with supply chain shortages and factory teething pains last year, is more concerned about stimulating demand for its luxury vehicles than production constraints, said CEO Peter Rawlinson.

"We've solved production," Rawlinson said on a February earnings call. "My focus is on sales. And here's the thing: We've got what I believe to be the very best product in the world and just too few people aware of not just the car but the company."

Lucid recently introduced the lowest-cost version of its Air sedan, the base Pure trim level, starting at $89,050 with shipping. It started Air production with the limited-run Dream Edition, at $170,500 with shipping, and has been moving down the trim ladder over the last 18 months.

The company plans to launch a second vehicle, the Gravity crossover, next year.

In announcing the layoffs this week, Rawlinson said Lucid remains committed to global expansion.

"We are committed to a more innovative and environmentally sustainable future — designing, building and delivering the best EVs on the market as we expand globally and develop more exceptional vehicles," he said.