Electric pickup truck maker, Rivian (RIVN), released its highly anticipated Q2 earnings yesterday, confirming a $1.7 billion loss as the EV maker races the competition towards profitability.
A challenging business environment in Q2 is forcing Rivian to cut its financial earnings outlook for the year. The EV maker says it expects a wider loss of $5.4 billion in 2022, compared to the $4.75 billion guidance in the first quarter.
Higher material costs and ongoing supply chain issues are major headwinds in the EV industry right now. For Rivian, or really any EV startup, the goal is to achieve positive gross margins.
Rivian generated a negative gross profit in the second quarter of $704 million. As the company scales production, a negative gross profit is to be expected. With this in mind, Rivian expects to continue running at a loss with rising labor and overhead costs.
Though inflation has eased some in the past few months, material costs remain elevated. As a result, Rivian expects this to continue pressuring the business in the near term.
Ramping EV production is no easy task. It’s very costly between raw material prices (lithium, Cobalt, Nickel, etc.), labor, and expenses related to the massive facilities needed to produce them, not to mention production lines, heavy equipment, etc.
Rivian’s operating expenses rose 73% to over $1 billion, compared to $580 million in Q2 2021. In total, Rivian posted a net loss of $1.7 billion in the second quarter.
This comes after the company announced a round of layoffs, cutting 6% of its workforce to cut costs and accelerate production. On the other hand, there are several positives from Rivian’s Q2 earnings.
Positive takeaways from Rivian’s Q2 earnings report
Although profitability is a major concern for Rivian, the company is progressing in the right direction. For one thing, demand remains high for its EV models.
Net backlog for Rivian’s R1 models (R1T truck and R1S) grew 8,000 from Q1, reaching about 98,000. Rivian notes in its Q2 earnings shareholder letter:
All of these preorder holders have been attracted by organic growth and brand awareness, without any paid marketing or media. Our average daily preorder rate accelerated in the second quarter of 2022 compared to the first quarter of 2022.
In Q2, Rivian produced 4,401 vehicles, 72% more than the first quarter of 2,553. Meanwhile, the EV maker delivered 4,467 vehicles, a 264% increase from Q1.
Rivian remains confident in its prior guidance of 25,000 EVs produced in 2022. That said, the company is planning for a second shift to add production in the third quarter.
Lastly, here are a few major updates from Rivian’s Q2 earnings:
- This past month, Amazon announced its rolling out its Rivian EDVs in several major cities, including Chicago, Nashville, San Diego, and Seattle.
- In June, Rivian launched Rivian Adventure Network, charging locations at state and national parks. The company aims to open 3,500 fast chargers at 600 sites in the US and Canada.
Altogether, Rivian posted higher-than-expected revenue of $364 million in its Q2 earnings. The company ended the quarter with $15.4 billion in cash and equivalents. With this in mind, the EV marker is upbeat about its financial situation and ability to launch the Rivian R2 in 2025 at its new Georgia factory.
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Author: Peter Johnson
Source: Electrek
