Rivian Automotive’s investor event on Thursday centered on cost-cutting efforts, efficiency gains, and in-house technologies but wasn’t enough to maintain the company’s recent stock surge. Shares of the all-electric vehicle startup fell by about 2% to 6% during the event, diminishing some of the 23% gain from the previous day following news of a potential $5 billion investment by Volkswagen Group. Rivian’s stock closed Thursday down 1.8% to $14.47 per share, marking a 39% year-to-date decline amid investor concerns about cash burn and a slowdown in EV sales.
During the event, Rivian reconfirmed its 2024 guidance, including the production of 57,000 vehicles and a path to positive gross profit in the fourth quarter, factoring in regulatory credits. The company also outlined long-term goals, such as achieving positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2027. CEO RJ Scaringe emphasized the urgency of driving toward profitability and positive free cash flow.
Rivian detailed long-term financial targets, including a 25% gross margin, 10% free cash flow, and an adjusted profit margin in the “high teens,” though no specific timeline was provided. Scaringe highlighted efficiencies in products and manufacturing that are expected to lead to a 20% reduction in material costs for current vehicles and a 45% reduction for upcoming “R2” vehicles, set to begin production in early 2026. These reductions include physical savings and lower costs on complex systems such as battery packs and electrical hardware.
Rivian’s software expertise is central to Volkswagen’s $5 billion investment plan, including a joint venture to develop electrical architecture and software technology. Volkswagen is expected to utilize Rivian’s technology for its vehicles starting in the latter half of the decade. This partnership does not extend to battery technologies, vehicle propulsion platforms, high voltage systems, or autonomy and electrical hardware.
Rivian’s finance chief, Claire McDonough, reaffirmed that the capital from Volkswagen is expected to strengthen the company’s balance sheet, which had $7.9 billion in cash at the end of the first quarter. This influx will support the production ramp-up of Rivian’s smaller R2 SUVs at its plant in Normal, Illinois, starting in 2026, and the production of its midsize EV platform at a currently paused plant in Georgia.
Rivian anticipates its next-generation all-electric vehicles will drive growth and targeted profitability in the latter half of this decade. The company expects R2 vehicles to represent up to 72% of its 200,000-unit production capacity at its Illinois plant. The automaker’s $2 billion plant in Georgia, whose construction was paused to save capital, is expected to produce 400,000 units on two lines. Rivian plans to reduce capital expenditures by $2.5 billion through 2025, focusing on material cost reductions and operating expenses.
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