© Reuters. An electric pick-up truck is pictured at the Rivian Automotive Inc facility in Costa Mesa, California, U.S.,November 1, 2023. REUTERS/Mike Blake
By Abhirup Roy and Akash Sriram
(Reuters) -Rivian Automotive raised its production forecast for the full year by 2,000 vehicles to 54,000 units on the back of sustained demand for its trucks and SUVs, sending its shares up 3% in volatile after-hours trading.
Rivian (NASDAQ:)’s upbeat forecast on electric-vehicle production is a small positive for an industry reeling from the double whammy of high inflation that has dulled buyer appetite and price cuts at market leader Tesla (NASDAQ:) to stimulate demand.
Last month, Tesla CEO Elon Musk said macroeconomic conditions were “stormy” and that he was concerned about the impact of high interest rates on car buyers, after the company missed Wall Street expectations on third-quarter gross margin, profit and revenue.
Smaller rival Lucid (NASDAQ:) cut its production forecast on Tuesday “to prudently align with deliveries”, sending its shares down 3%. It now expects to produce 8,000–8,500 vehicles this year, down from its earlier projection of more than 10,000 units.
“I’m actually surprised to be honest at how much we’ve seen others pull back,” Rivian Chief Executive RJ Scaringe said in an interview with Reuters.
“I think it’s going to create, unfortunately, somewhat of a vacuum of products in the market and therefore for the companies that continue to invest are going to have less competition in that 2026 time frame,” Scaringe added.
After multiple quarters of supply chain problems that hurt production and battered its stock, Rivian may be starting to turn a corner, some analysts have said. The company on Tuesday trimmed its capital expenses and loss forecasts for the year.
The company was cutting costs through negotiations with suppliers and updates to components and systems, Scaringe said. Rivian will also shut down a vehicle assembly line this quarter to make upgrades, which the CEO said partly kept him from raising the annual production outlook even more.
“Rivian showed resilience,” said Alec Lucas, analyst at Global X. “Rivian appears to be benefiting from a more favorable commodity pricing environment, order book realization and progress toward scale.”
He said Lucid’s 2023 results “were reflective of efforts to scale production as well as an ongoing restructuring initiative.”
Car prices at both Lucid, which is backed by Saudi Arabia’s Public Investment Fund, and Amazon-backed Rivian start at more than $70,000. That is similar to Tesla’s luxury sedan Model S but much higher than the cheapest Tesla model at around $38,000.
Rivian has stayed away from cutting prices and has instead taken to making its Enduro powertrains in-house to reduce its dependency on suppliers and slash costs, a move widely appreciated by investors and analysts.
The company, which on Tuesday reported better-than-expected third-quarter revenue, previously said sales of its higher-priced SUVs have been strongly outpacing sales of its pickup truck R1T, improving the average selling price of its vehicles.
Last month, it reported third-quarter deliveries above market expectations.
Rivian also said on Tuesday it will end its exclusivity deal to largest shareholder Amazon (NASDAQ:) for its electric delivery van, opening the door for more customers around the world.
Rivian added it was speaking with more customers who are interested in the Rivian Commercial Vehicle platform, which underpins its electric delivery vans, and reiterated its commitment to fulfilling the order of 100,000 vans to Amazon by 2030.
Revenue of $1.34 billion for the July-September period was largely in line with Wall Street estimates, according to LSEG data. Cash and cash equivalents of Rivian at the end of the September quarter were $7.94 billion, compared with $9.26 billion in the preceding three-month period.
The company reported a net loss of $1.37 billion, compared with a loss of $1.72 billion a year earlier.
Lucid’s losses narrowed as well, but its revenue fell short of estimates. Its third-quarter production fell nearly 30% to 1,550 vehicles.
