Rivian Releases First Post-IPO Earnings Report

On December 16th, high-end electric pickup and SUV maker Rivian Automotive RIVN reported it made just $1 million in revenue despite having a market cap of $100 billion post-its-IPO, leading many to think that it greatly resembles Tesla TSLA shortly after the EV pioneer went public. But, Rivian isn't operating in the same environment, losses are piling up and the up-and-coming EV manufacturer revealed it will produce fewer vehicles than expected in 2021, and investors were disappointed with the latest report.

Third Quarter

During the quarter that ended on September 30th 11 EVs were delivered, generating revenue of approximately $1 million but resulting in a net loss of $1.23 billion. Omitting the loss from convertible notes, net loss would amount to $776 million. Net loss per share of $12.21 was far worse from Wall Street's expectation of $6.68 loss per share.

On a brighter note, Rivian ended the quarter with $5.2 billion in cash. Its public debut brought in $13.7 billion and with other smaller funding sources, says it has around $19.9 billion to work with on its goals such as expanding its Illinois factory's manufacturing capacity  along with building a second factory in Georgia scheduled for construction next year. Illinois' annual output will be expanded from 150,000 to 200,000 vehicles  with the manufacturing capacity of Georgia plant being 400,000-vehicles but not before 2024.

It's Still Mostly Speculation

Despite favorable metrics and appealing goals, they are mostly speculation for now. Going from producing 11 vehicles in a quarter to 150,000 per quarter in just three years is a steep challenge even with appropriate funding. While $20 billion that Rivian has is almost two-thirds of Ford Motor's F intended EV spending, the Blue Oval has a century-old legacy, with the know-how, mass production and immense resources of machinery, technical staff, and brand recognition across the globe.

Rivian might no longer count on Ford's technical assistance after the latter decided to "go it alone" on its EV program in November, canceling their joint EV production plans. Considering that Ford may no longer be a manufacturing partner as in a recent CNBC interview, Ford CEO Jim Farley said the company is considering selling its 12% stake in Rivian once lock-up expires to reward its shareholders or invest in its own rapidly accelerating EV push, production could become challenging for Rivian.

Its Post-IPO Position Somewhat Resembles Tesla's

At the first glimpse, Rivian's state resembles that of Tesla when it also had negligible revenue and a lot of imagination and projections. But despite the similarities, Rivian is operating in a much different market than Tesla at its public launch a decade ago. Tesla was a pioneer, the first of its kind. Rivian is the first to deliver the electric pickup but it is still operating at a market that Tesla dominates. Moreover, Ford recently stopped accepting reservations for its upcoming electric version of its F-150, America's best-selling vehicle, at 200,000 trucks because production couldn't keep up with demand. Moreover, it is building $30 billion worth of EV and EV battery facilities by 2025 to expand its manufacturing capacity.

Intense Global Competition

With consistent production of 10,000 vehicles per month and plans to expand to 25 countries over the next few years, Chinese EV manufacturer Nio NIO recently unveiled a mid-sized electric sedan, the ET5, that is challenging even Tesla Model S Plaid. Atlis Motor Vehicle and Hercules Electric Vehicles will be rolling out their electric pickups, both of which will be configured with Worksport Ltd's WKSP groundbreaking solar technology TerraVis.

All in all, Tesla was operating with close-to-zero serious competition, whereas Rivian is trying to break into an EV market already crowded with successful rivals. Major challenges are ahead such as ramping up production possibly without Ford's know-how and production assistance while facing numerous powerful competitors and significant costs as new manufacturing plants and a nationwide charging network don't come cheap.

Disappointing Production

As of December 15^th, Rivian only produced 650 R1T vehicles and delivered 384 of them, along with producing and delivering two R1S vehicles in mid-December. When it delivered its first R1T in September, its goal was to end the year with 1,200 vehicles.

Generating only $1 million in revenue and ending up with a net loss of $2.23 billion for the nine months ended September 30^th, 2021, took a toll on its income statement.

Moreover, there is the $5 billion investment in a second manufacturing plant in Georgia with construction expected to begin next summer. Rivian also has existing financial obligations, and then there is the cost of building its Adventure Network of charging stations which will be everything but cheap.

The Bright Side

The earnings report wasn't all bad with 71,000 reservations for R1T coming from U.S. and Canada. That number comes on top of Amazon.com Inc AMZN's order for 100,000 electric delivery vans to be delivered before the end of the decade, with the first few already on the road. Additionally, Rivian's R1T pickup recently received the MotorTrend 2022 Truck of the Year award, confirming strong demand that shows Rivian has what it takes to become the Tesla of electric pickups.

The Verdict

Rivian is just a few months into production and it just went public so given the context, it's too early to say if it can catch up to Tesla in any sense. It is closely following Tesla's playbook and laying the groundwork to achieve the same success, but it still needs to prove itself.

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