SAN FRANCISCO - Rivian said on Feb 21 it would cut its workforce by 10 per cent and forecast electric vehicle (EV) production for 2024 that was far below estimates, hurt by downtime for factory upgrades and slowing demand due to high interest rates.
Shares of the company tumbled about 16 per cent in extended trading after Rivian said it expects to produce 57,000 vehicles in 2024, well below estimates of 81,700 units, according to eight analysts polled by Visible Alpha. It produced 57,232 vehicles in 2023.
“There is a host of macro level challenges... Consumers are behaving more consciously,” Rivian chief executive officer RJ Scaringe told Reuters.
That and a weeks-long production downtime at its Illinois factory in 2024 meant to improve efficiency are reflected in the full-year production target, he said.
Amazon.com-backed Rivian has been burning through cash to ramp up production of its R1S SUV and R1T pickup trucks as it spends on building a new factory in Georgia and loses thousands of dollars on every vehicle it builds.
“The effect (of interest rates) is more pronounced on more expensive vehicles of course and EVs still average higher price,” Rivian investor and investment banker Vitaly Golomb told Reuters, adding that “a lot is riding on” the company’s smaller and cheaper R2 SUV set to be unveiled in March.
The company’s cash burn comes when demand for EVs has slowed, with Tesla CEO Elon Musk warning that high interest rates are making cars unaffordable.
Mr Scaringe said in a conference call with analyst: “Our order bank has notably reduced over time as deliveries have more than doubled in 2023 versus 2022 and along with the impact of cancellations.”
Lucid, another new player in the EV market, also forecast production for 2024 that was much lower than Wall Street’s expectations, even after it cut prices of its Lucid Air luxury electric sedans last week.
Lucid expects to make 9,000 units in 2024, up from 8,428 vehicles in 2023. Wall Street estimates Lucid to produce 22,594 units, according to five analysts polled by Visible Alpha.
Rivian has been posting a loss on every vehicle it sells, but it expects to record its first quarter of positive gross margin later in 2024.
The company, which said it expects to post gross profit for the first time in the fourth quarter, reported a net loss of US$1.52 billion (S$2 billion) for the fourth quarter ended Dec 31, compared with a loss of US$1.72 billion a year earlier. REUTERS
