California-based EV startup Rivian Automotive RIVN is hoping to reap more benefits from its expected joint venture with the German Volkswagen Group in addition to an investment of up to $5 billion.
What Happened: “We believe the expected joint venture with Volkswagen Group will allow us to achieve more favorable pricing from suppliers,” Rivian CEO RJ Scaringe said on Tuesday during the company’s second-quarter earnings call. The company expects more favorable pricing on components, chipsets, and printed circuit board assemblies, among others, he added.
Rivian announced its intent to form an equally owned JV with German automaker Volkswagen in June. As part of the deal, Volkswagen has made a $1 billion initial investment in Rivian and will make additional investments of up to $4 billion subject to certain conditions for a total deal size of $5 billion. The JV is aimed at the creation of next-generation software-defined vehicle platforms to be used in both companies’ future EVs.
“Assuming all criteria are met, we expect that the full $5 billion is intended to flow to the benefit of Rivian,” company CFO Claire McDonough said. “In addition to the $5 billion of capital to Rivian, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture.”
The additional liquidity provided by the deal, the CFO said, will allow the company to ramp production of its R2 SUV at its facility in Normal, Illinois, and enable a path to positive cash flow. Rivian intends to launch the R2 in the first half of 2026.
Why It Matters: Rivian will provide additional clarity on some of the financial impacts of the JV on the company’s long-term financial forecast and trajectory once the JV is formed in the first quarter of this year, the CFO said.
Rivian expects to deliver modest positive gross profit in the fourth quarter of 2024 and for the full year 2025.
However, for the second quarter, the company reported a loss of $1.46 per share, missing a Street consensus estimate of a loss of $1.21 per share.
The company ended the second quarter with $7.9 billion in cash and cash equivalents. With a revolving credit facility, the company has $9.2 billion in total liquidity.
Price Action: Rivian shares closed up 1.30% at $14.80 on Tuesday. The stock is down nearly 29.86% year-to-date, according to data from Benzinga Pro.
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Photo courtesy: Rivian
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