The leaders of Rivian Automotive Inc. are forecasting that the electric vehicle manufacturer will double its production in 2023, a smaller increase than market watchers had been expecting, while it also focuses on integrating new battery and motor technologies.
California-headquartered Rivian finished 2022 having produced 24,337 vehicles, a little more than 10,000 of which were made in the fourth quarter. For 2023, Chairman and CEO R.J. Scaringe and his team are forecasting production of 50,000 units, well below the roughly 62,000 vehicles analysts had been looking for.
A major reason for that shortfall is that the Rivian team has stopped producing its commercial delivery van this quarter to integrate its Enduro single-motor drive unit, which comes with a new lithium iron phosphate battery pack. Late this year, the company also will halt the van and R1 truck lines at its Normal, Illinois, plant for similar technology upgrades.
“I’ve mentioned it before but the ability to dramatically reduce the number of computers in the vehicle, the number of ECUs, through a zonal architecture” is critical, Scaringe told analysts on a conference call discussing Rivian’s fourth-quarter results. “These are some of the core focus areas where we're leveraging what we’ve built in terms of capability and what we’ve built in terms of technology.”
Rivian posted a net loss of more than $1.7 billion in the fourth quarter, which was an improvement from the nearly $2.5 billion loss of the last three months of 2021. Sales for the period were $663 million. The company’s adjusted EBITDA loss for the quarter was nearly $1.5 billion and totaled $5.2 billion for the full year. CFO Claire McDonough told analysts that EBITDA loss figure is expected to shrink to $4.3 billion this year as the company lowers its production costs per vehicle and raises its average sale price.
Shares of Rivian (Ticker: RIVN) were down 17% to about $15.95 on the morning of March 1 on the Q4 report and lower-than-expected production guidance. They have lost half their value over the past six months, cutting the company’s market capitalization to about $14 billion.
Capital expenditures this year are expected to grow to $2 billion from nearly $1.4 billion in 2022 as the company prepares to increase Normal’s capacity and continues to invest in a Georgia plant. Despite that change, the company’s materials, logistics and other costs per vehicle are expected to fall over the next two years, leading McDonough to forecast that Rivian will reach gross profitability by the end of 2024.
Also helping Rivian’s cause on that journey is a “much clearer picture” when it comes to problems in its supply chain, which has served up some unexpected surprises in recent quarters. Scaringe said his team has contracted with different semiconductor suppliers for its various motors and is now able to plan around possible constraints.