‘We are bullish on the continued strong demand for our products,’ CEO RJ Scaringe said on Rivian’s second-quarter earnings call. Rivian increased its 2023 production forecast to 52,000.
Rivian Automotive Inc. sees continued strong demand for its electric R1T pickup and R1S crossover and will not join EV rivals such as Tesla Inc. and Lucid Motors in cutting prices to stimulate sales, CEO RJ Scaringe said on the startup’s second-quarter earnings call Tuesday.
“We take a very methodical and thoughtful approach to how we look at our vehicle pricing,” Scaringe said, pointing to vehicle configurations that can significantly raise or lower the price, creating a broad price band for the R1 products.
“As we think about the positioning of the product, the capabilities of the product — on-road, off-road, dynamically — and the feature set that’s in the vehicles, we feel quite comfortable with the positioning of what we’ve done,” Scaringe said in response to an analyst question about price-cutting.
The base R1T starts at $74,800, with shipping, and the base R1S starts at $79,800, with shipping. Higher trims with larger battery packs, four motors and other amenities can push the models closer to $100,000.
Rivian no longer provides the exact number of its order backlog, as it did last year, but Scaringe said orders will take Rivian many months to fulfill at current production rates.
“We feel very confident in the continued backlog we have,” Scaringe said in response to a question about demand, which has weakened at some EV rivals. “We have deep visibility into 2024 with the backlog that’s established.”
One sign of Rivian’s healthy demand, Scaringe added, are residual values for its used vehicles on the market.
“The R1 products within the truck and SUV segments are among the best residual values of any product in those categories, regardless of electric or combustion,” Scaringe said. “Our vehicles are maintaining their value extremely well.”
Rivian raised its production forecast for 2023 to 52,000 vehicle from 50,000 previously as supply-chain constraints ease for the Irvine, Calif., automaker. The forecast includes the EDV electric delivery vans that Rivian makes for Amazon at the startup’s Normal, Ill., plant alongside the R1 consumer products.
Transaction prices falling
EV transaction prices have been falling this year, led by Tesla’s sharp price cuts earlier and higher sales incentives. That has pushed EV makers, including legacy automakers, to follow suit as supply outstrips demand.
Automaker sales incentives on EVs averaged about $4,000 per vehicle in July, about double the average in the year-earlier month, J.D. Power said.
Competitor Lucid sharply cut prices on its Air sedan on Saturday and Ford sliced about $10,000 off its base F-150 Lightning electric pickup last month, making it about $23,000 less expensive than a base R1T. Tesla is also poised to launch its Cybertruck electric pickup later this year but has not announced the model’s final pricing.
As part of its second-quarter financial report, Rivian reported a $1.2 billion net loss compared with red ink of $1.7 billion during the same quarter last year. Revenue tripled to $1.1 billion.
The company also said it expects a smaller operating loss in 2023. Shares rose about 2 percent in after-hours trading.
The higher production forecast comes after the EV maker delivered 12,640 vehicles in the April-June period, beating analysts’ estimates of 11,000.
Rivian also reported a major improvement in its gross margins, which stood at negative 37 percent in the quarter, compared with negative 81 percent in the first quarter. It now expects a $100 million improvement to its operating loss this year at $4.2 billion.
As the company grew deliveries and built efficiencies in the April-June quarter, it posted an adjusted loss of $31,595 per vehicle sold, compared with a loss of $67,329 in the previous three months.
Cash and cash equivalents at the end of the quarter were $9.26 billion, compared with $11.57 billion as of December 2022.
“Our focus very much remains in not only continuing to ramp production in our Normal production facility,” Scaringe said, “but importantly driving costs down across the business on our path to profitability.”
— Reuters and Automotive News staff contributed to this report.
