Rivian Automotive RIVN reported a quarterly gross profit of $170 million for the first time in the fourth quarter owing to the sale of regulatory credits and not merely by cutting costs, according to Fund Manager Gary Black.
Analyst Take: Black, Managing Partner at The Future Fund LLC, said in a post on X that in the absence of regulatory credit sale revenue, the company would have lost about $13,000 for every vehicle sold in the quarter.
“My sense is Rivian stockpiled their reg credits and then sold them all in 4Q to be able to show they were gross profit positive. Investors should be able to see right through that,” Black said.
“At $99K COGS per vehicle, Rivian is still a long way from making money and absent VOW and AMZN as sugar daddies they would probably be history,” Black said, referring to Rivian’s partnerships with German automaker Volkswagen and online retailer Amazon.com.
Rivian Earnings: Rivian, in its earnings report, said that $110 million of its gross profit in the quarter came from the automotive segment and $60 million from the software and services segment.
The automotive segment includes the sale of new consumer and commercial vehicles as well as regulatory credits. The company said that it incurred revenue of $299 million purely from the sale of regulatory credits in the three months through the end of December. Throughout the year, the company reported only $325 million in revenue from regulatory credits, implying a majority of them were sold in the last three months.
The company also reduced its automotive cost of goods sold by $31,000 per vehicle delivered in the fourth quarter to turn a positive gross profit, it said.
Rivian expects to achieve modest gross profit for 2025 as well.
Big Shot Trajectory: EV giant Tesla recorded a quarterly profit for the first time in the first quarter of 2013. However, Tesla turned a full-year profit only in 2020. The company reported a profit of $721 million for the year, spurred by higher revenue from regulatory credits of about $1.6 billion.
EV makers receive these credits for building and selling environmentally friendly vehicles. These companies then sell them to rivals who have fallen short of their credit numbers mandated by law for revenue.
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