Rivian, the electric car company, got two pieces of good news this week. First, it bested Tesla in the widely followed J.D. Power 2023 U.S Electric Vehicle Experience Ownership Study. If Rivian had cars to buy, this would be extraordinarily good news. Its lack of inventory means the award matters only modestly.
The other good news is that, according to Bloomberg, Rivian’s CEO Robert “RJ” Scaringe said the company might produce 62,000 vehicles this year. That is up from publicly stated forecasts of 50,000. Since the concern about Rivian’s production capacity has been enduring, this may break the bad news cycle of low production, which triggered stock sell-offs.
Another wave of bad news started a month ago when Rivian said it would fire about 1,000 people. That raised the question about its cash position. It begs the question of why it has to cut costs. In the most recent quarter, Rivian posted a $1.7 billion loss on revenue of $536 million. For 2022, it lost $6.7 billion on revenue of $1.7 billion last year. Perhaps its $11.6 billion in cash is not enough to survive to the point where it is profitable.
The news about 62,000 vehicles is particularly good because of production problems last year. In the final quarter, it produced 24,337, which was below expectations.
Rivian still has two distinct disadvantages. The first is that it is a tiny producer. Last year it tried to dodge that by saying it has about 100,000 backorders. That is misleading, given that these could be canceled at any time.
Rivian is in an industry racked by production competition and price cuts. No global company has a chance to catch Tesla soon. It will sell as many as 2 million cars this year and has already cut prices to do so. Ford has answered with a price cut of its own, which will ripple across the EV market. Rivian may also need to come to market with vehicles that carry lower prices.
The new production announcement is impressive, but not enough to save the company. (Click here for the 13 biggest electric vehicle business failures in American history.)
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