On paper, electric vehicle manufacturer Rivian had a robust third quarter as the Irvine, Calif.-based company, said it’s online to deliver 52,000 vehicles for the fiscal year against expectations of 50,000 vehicles rolling out of manufacturing plants.
In the quarter, Rivian delivered 16,304 vehicles at its Normal, Ill. manufacturing plant. That’s up 23,000 from the second quarter, the company noted. The delivery number also beats analyst expectations of 14,740 units delivered.
Related: Amazon Makes a Big Bet on Rivian, But That's Not Its Only EV Play
While those numbers look promising for Rivian, there’s a buzz developing over how much cash the company is losing in each vehicle it builds.
Huge losses on vehicle sales
The company sells its vehicles for about $80,000 each but it’s losing $33,000 on each vehicle sold due to high production costs, The Wall Street Journal reported. That’s the case even as the average EV sales price has fallen to $53,376 in August 2023 according to Cox Automotive.
“EV prices continue to fall, led again by market leader Tesla,” Cox noted in a recent research note. In August, the average price paid for an electric vehicle was $53,376, down from more than $65,000 one year ago. The average Tesla vehicle price has plummeted 21% on a year-over-year basis.
In that market environment, pushing cars out of the lot at $80,000 per vehicle is a scenario Rivian wants to avoid. Even so, the EV manufacturers seem to be sparing no expense in building high-end trucks and SUVs, which account for about 83% of all company sales, according to Motor Intelligence.
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While Rivian is succeeding in moving vehicles out of factory production and into customers' hands (its June 2023 production numbers were up 189% on a year-to-year basis), the company's trucks and SUVs are expensive to build. The Journal reports that the money it loses on each vehicle it produces amounts to the starting price of a basic Ford F-150 truck.
Rivian
Rivian reducing production costs
Company founder and CEO RJ Scaringe has said efforts to curb production costs are succeeding, as Rivian has accelerated its manufacturing processing times and capitalized on swifter global supply chain parts deliveries.
“Production continues to ramp, which is translating into improved profitability and capital efficiency,” Scaringe said in an August conference call. “We are also driving material cost reductions through commercial and engineering design updates.”
“Maintaining our cost reduction efforts through consistent focus and collaboration across all levels of the company is a core part of the culture we're building,” he added.
Rivian stock is trading at $24 per share on Oct. 2 and is up 31.6% on a year-to-date basis.
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