Mar 8, 2024 - Economy

Rivian debuts new vehicles but continues to bleed cash

Illustration of a hundred dollar bill stylized as an electric symbol.

Illustration: Aïda Amer/Axios

If the last few years have taught us anything about electric vehicles, it's that they're easy to design but hard to manufacture at scale — and even harder to do so profitably.

Why it matters: Rivian revealed three additional new vehicles on Thursday, but like many other EV makers before it, the company is still burning cash at a breathtaking pace.

  • The R2, a midsize SUV, would be the automaker's most affordable vehicle yet at around $45,000.
  • The surprise unveiling of two additional and even more affordable models to come later — the R3 and R3X crossovers — was reminiscent of a Steve Jobs "one more thing" product introduction at Apple, Axios' Joann Muller reports.

Reality check: The automaker — which currently sells the premium R1T pickup and R1S SUV — lost about $43,000 per vehicle in its most recent period, Reuters reported.

  • "We think there's a real risk that the R2 may never see the light of day," CFRA analyst Garrett Nelson wrote in a research note, adding that "we see [Rivian's] cash burn accelerating in the coming quarters."

Between the lines: Shortly after the glitzy event Thursday arranged to draw attention to its new, more affordable EVs, Rivian dropped an SEC filing saying that it was suspending plans for a $5 billion factory in Georgia.

  • The company said it will instead make the R2 initially more affordably at its current facility in Illinois.

"What we've always said is it's really important for us to make sure we have a strong balance sheet and to make sure that we're not in a position where we're putting the business at risk," Rivian CEO RJ Scaringe told Muller.

  • "We're tracking towards and focused on both rapidly achieving a scale that ... we're accomplishing, but also doing it in a way that gets us to profitability as fast as possible."

The big picture: Rivian's growing pains are reflective of a broader problem for EV companies — that designing and engineering EVs is a lot easier than making them at a profit.

  • At this point, only Tesla can plausibly claim that it's figured out a formula for making EVs profitably — and only after a brutal stretch of red ink that nearly tanked the company.
  • Others — including established automakers like GM and Ford and startup companies like Fisker and Lordstown — have not yet found a path into the black.

Yes, but: You have to spend money to make money.

  • The R2 and R3 could be Rivian's version of Tesla's Model 3 and Model Y — the vehicles that brought Tesla to the masses and turned the company into a profit machine.

What they're saying: The total addressable market, or TAM, for Rivian in the U.S. and Europe goes from 500,000 to 700,000 for Rivian's R1 lineup, to 8 million to 10 million for the R2 and R3, according to Evercore ISI.

  • "Why we think R2/R3 can have a similar effect for RIVN [to Tesla's experience] is because it marks the shift from small volume, premium units to potential SCALE," Evercore ISI analyst Chris McNally wrote in a research note.
  • "We think the R2 will be attractive to a large customer base," Bank of America analyst John Murphy wrote in a research note.

What we're watching: The question now is whether the company will have to raise more capital to fund its operations.

  • "We're not raising capital right now," Scaringe told Muller — but, he added, the company may consider strategic partnerships or debt offerings in the next few years.

The bottom line: Rivian is under immense pressure to become more cost efficient.

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