Rivian (RIVN) Q3 2022 earnings: Production expands 67% while reaffirming 25K target

Rivian (RIVN) released its third-quarter earnings results Wednesday after stock market close as the EV maker battles rising costs while it scales production. According to Rivian’s latest filing, the automaker missed Wall Street revenue expectations in Q3 but reaffirmed its 25,000 production goal for 2022.

Rivian Q3 2022 earnings preview

Yesterday, we released a preview of what you can expect from Rivian’s Q3 2022 earnings, including a few important updates announced during Q3.

Rivian already announced it had produced 7,363 electric vehicles at its Illinois plant and delivered 6,584 during the third quarter, which ended September 30, 2022.

The EV maker has stuck to its year-end guidance so far of producing 25,000 EVs this year despite ongoing supply chain hurdles. In the second quarter, Rivian’s backlog grew to about 98,000, with a rising average preorder rate.

In addition, Amazon confirmed it would be rolling out 1,000 Rivian EDVs for the upcoming holiday season, a portion of its 100,000 order agreement. Although the Amazon backing will help over the next few years, one of the primary things to look out for as Rivian scales production will be the cost of production.

Wall Street is looking for Rivian to post around $550 million in revenue and a quarterly loss of $1.80 per share.

Rivian Q3 2022 financial results and analysis

Rivian posted revenue of $536 million in the third quarter of 2022, missing Wall Street estimates of around $550 million.

Although revenue is important, the focus will likely be on operating costs and how the company is managing debt while Rivian builds its production capabilities.

That being said, Rivian generated a negative gross profit of -$917 million in the third quarter. Rivian notes:

As we produce vehicles at low volumes on production lines designed for higher volumes, we have and will continue to experience negative gross profit related to labor, depreciation, and overhead costs.

Rivian’s operating costs in Q3 2022 grew to $857 million, up from $694 million in the same quarter last year. Interestingly, the increase is primarily due to an increase in stock-based compensation expenses.

Overall, Rivian posted a net loss of over $1.7 billion compared to a loss of $776 million a year ago. The wider loss is because of higher input costs associated with building manufacturing capabilities.

Rivian ended the quarter with a sufficient $13.8 billion in cash despite a significant cash burn of over $1.6 billion in Q3.

Additional updates from Rivian’s third quarter earnings

Rivian’s backlog swelled to over 114,000 from 98,000 in Q2, confirming the demand for its EVs is still there. These are in addition to the 100,000 order from Amazon.

According to Rivian’s shareholder release, the company is affirming its 25,000 production guidance for 2022. In addition, Rivian still expects an adjusted EBITDA of -$5.4 billion.

The automaker continues working with Georgia, expecting to launch its R2 platform in 2026.

Rivian’s (RIVN) stock is up slightly in after-hours trading after falling over 70% so far in 2022.

With a rapidly changing macroeconomic environment (rising interest rates, inflation, etc.), introducing new electric vehicle platforms and ramping production (with high fixed costs) is a challenge. Rivian is navigating this environment so far, but widening losses and higher input costs are still concerning.

Losses stacking up is inevitable as Rivian scales production, but as production and delivery levels continue to climb, the company should start to see higher margins. Rivian says:

We expect the in-transit time from rail shipments coupled with an increase in volumes from the ramp of our second shift towards the end of the quarter will cause a larger discrepancy between production and deliveries