Rivian CEO Calls 2027 an Inflection Year, Five Years After IPO

Shared courtesy of our partners

Five years after Rivian went public, its founder says the next twelve months will show whether the company's bets on the R2 SUV and on autonomy pay off.

A stock far below its debut

Rivian shares began trading on the Nasdaq on Nov. 10, 2021, at $78. They are down more than 80% since then, including a decline of nearly 30% this year. CNBC notes that most of the electric-vehicle companies that listed in the same period no longer exist.

CEO RJ Scaringe acknowledges that not everything went to plan. He points to supply chain shortages, geopolitical tension and slower consumer adoption of EVs. Even so, he told CNBC in an interview: "2027 is really an inflection year for us."

The R2 carries the plan

The R2 is a midsize SUV that Rivian wants to sell to a wider, mainstream market. Its entry-level model costs about $45,000. Rivian delivered a record 19,248 vehicles in the third quarter, up 46% from a year earlier. R2 was already the best seller by volume, ahead of the R1 models and the commercial van.

Scaringe says the path to profit and to much larger revenue is built around R2 and its later variants. Costs per vehicle are moving the right way. Rivian said each one cost it more than $12,000 less to make than a quarter earlier, with more R2s in the mix and fixed costs spread wider.

Profit and cash burn at the same time

Rivian booked $176 million of gross profit in the third quarter. The automotive side posted an $80 million gross loss. Software and services made $256 million of gross profit at a 42% margin.

A new multibillion-dollar plant in Georgia adds to spending. It is meant to produce up to 300,000 units a year once its first phase is built in late 2028. The Normal, Illinois factory can build 215,000 vehicles a year, including up to 155,000 R2s. Scaringe has said the Georgia site is needed to reach net profitability.

Cash and short-term investments stood at $5.5 billion at the end of the quarter. Rivian puts its total future liquidity at about $13 billion, counting credit, money from partnerships with Volkswagen and Uber, and a $4.5 billion Department of Energy loan for the Georgia plant. Scaringe said the company will be opportunistic about raising more capital. "We're like very focused on getting the profitability," he said.

Deutsche Bank analyst Edison Yu wrote in an Oct. 30 note that a multi-year path to breakeven is less attractive to investors, even if credible.

Driving software as the next lever

The next step in autonomy is "point-to-point" driving, where a car drives itself between destinations and the driver watches for problems. Tesla is the only automaker offering it now. Rivian plans to roll it out in stages across the next few months, employees ahead of customers. Autonomous vehicles with Uber are expected by 2028.

Scaringe says Rivian intends to match Tesla and then exceed it, using several types of sensors to see better in bad weather. More detail is due at an investor technology event on Dec. 9.

Source: CNBC