Launching any new vehicle is expensive, and even Rivian is losing tens of thousands on each vehicle it sells.
Following a report this week from The Wall Street Journal, Rivian’s recent financial performance is the topic of conversation. More specifically, folks are looking at the fact that the EV automaker loses nearly $33,000 on every single vehicle it sells, showing it’s still a way off from the R1 series — comprising both the R1T pickup and R1S SUV — being a profitable venture.
As it happens, Rivian reported that $33,000-ish figure as part of its Q2 2023 financial report and letter to shareholders. While the company brought in $1.121 billion in revenue in the second quarter, it still posted a loss of $32,595 on each vehicle it delivered. In total, Rivian managed to get 12,640 vehicles to customers in the three months spanning April to June. Now, the Journal notes that CEO RJ Scaringe asked engineers to scrutinize the manufacturing process to cut roughly $40,000 off per-unit costs to bring Rivian’s quarterly performance into the black.
It’s worth noting that Rivian already raised pricing on its models by up to 20% last year, with the least expensive R1T starting just short of $80,000. Some analysts note, however, that it would need to raise prices by another $20,000 in addition to cutting manufacturing costs if Rivian wants to turn a profit by next year. That’s a huge ask, considering rivals are jumping into the market below where Rivian is positioned, even at this point in time. Tesla, for example, is readying its Cybertruck to deliver to customers, and is maneuvering to undercut the competition across the rest of its lineup.
Rivian’s Q2 losses are still lower than the first half of 2022 as it ramps up production, however.
The WSJ, again pulling from this report noting the six months of 2023 ending on June 30, notes the company has “blown through half of its $18 billion cash pile” in the past two years. At the end of the first-half of this year, Rivian says it has about $9.26 billion cash-on-hand.
Rivian has not publicly made a comment on its cost-cutting goals. However, it does plan to achieve profitability by the end of 2024, and some of the data suggests the company is headed in the right direction to do that. Its production figures (13,992 vehicles in Q2) was up from 9,395 vehicles in the first quarter.
While the $32,595-per-vehicle loss figure is alarming at first glance, what some current reports fail to note is that the figure is signficantly lower than past quarters. Rivian’s 37% loss margin per vehicle is lower than Q1, where it was losing nearly double that amount ($67,329) on every vehicle it sold. Primarily, that substantial shift boils down to the fact that it delivered far fewer vehicles. Even in the last quarter of 2022, where it delivered more vehicles than in the first part of 2023, it reported a loss of $124,162 per unit. The story summarily looks less rosy the farther back you go in the financial data.
So, the company has narrowed its losses over the past several quarters. That’s not to say, of course, that cutting costs to achieve profitability won’t or shouldn’t happen. Balancing manufacturing costs to ramping up production and sales volumes are crucial to any automaker’s success, though how much it may ultimately cut costs (and perhaps raise prices) may depend on its third-quarter financial results.
Right now, Rivian announced it delivered 15,564 vehicles this past quarter (July through September), making it the best quarter yet. That is one sign that economies of scale may reduce the losses from $33,000 per vehicle sold, but we’re lacking the complete picture for a few more weeks.
The company will publish its quarterly financial results after the market closes on November 7. We’ll keep an eye on Rivian’s financial outlook at that time and update this story with that information. We’ll know then whether the company narrowed its losses even further, and if it is indeed even closer to burning through the rest of its cash reserves before it can achieve profitability by late next year.
