CEO of Rivian RJ Scaringe at the Company’s Customer Interaction Center outside of its plant on April 11, 2022 in Normal, Illinois.
Michael Wayland / CNBC
Manufacturer of electric vehicles Rivian Automotive report earnings for the first quarter after the market closed on Wednesday. Wall Street analysts polled by Refinitiv expect a loss of $ 1.44 per share on revenue of about $ 130.5 million, but these figures are only a small part of the story.
The bigger story is Rivian’s prospects for the next few quarters. Like most automakers, Rivian is battling disruptions in the global supply chain that began during the initial blockades of Covid-19 and worsened after Russia invaded Ukraine in February. CEO of RJ Scaringe warned investors in March that Rivian will not be able to produce as many cars in 2022 as originally planned, despite an increase in the book of orders.
The electric truck manufacturer may also face questions about whether the largest investors – Amazon and Ford Motor – lose confidence in the company. On Monday, shares of Rivian fell more than 20% after CNBC Ford sold eight million of its total 102 million startup shares.
Here are three topics that may appear in Rivian’s results when reports last week from high-profile companies in the EV space – Fisker, Nicholas and Lucid Group – offer any instructions:
Demand for all types of EV is very high
Fisker, Nicola and Lucid reported strong order books when they published quarterly results last week.
Lucid said that now has over 30,000 orders for his expensive Air sedan, from more than 25,000 in the previous quarter – and that doesn’t include a recent order of up to 100,000 Lucids over the next 10 years from the Saudi government, said CEO Peter Rollinson.
Nicola said she had received “purchase orders, letters of intent and memoranda of understanding.” more than 500 heavy trucks with rechargeable electric batteries. It may not sound like much, but Nikolai has something to prove allegations that founder Trevor Milton misled investors. (Milton denied the allegations, but they nonetheless led to it abrupt departure.) That number of orders is also likely to grow as more fleets evaluate the Tre-powered semi-truck, which has received very positive feedback from customers, the company said.
As for Fisker, it now has more than 45,000 bookings for its stylish Ocean SUV, due to be released later this year. In fact the demand is so strong that CEO Henrik Fisker said he is working with the company’s manufacturing partner, Magna International, to increase production capacity from the planned 50,000 per year to three times by the end of 2023.
Back in March, Rivian said yes about 83,000 bookings for its R1T pickup and R1S SUV. On Wednesday, investors will be interested to see where this figure will be.
Problems with supply chains are still a big problem
Automakers of all sizes have been battling a global shortage of semiconductors since last year as a result of growing demand for personal computers and gaming devices during the Covid lockout. More recently, the Russian invasion of Ukraine has led to a shortage of some components and rising prices for basic goods.
Fisker won’t start production until mid-November, but both Lucid and Nicola have already had to drop expectations about total production this year. In February, Lucid cut production plans for the full year from 20,000 cars to 12,000 to 14,000. A shortage of chips was a factor in the decision, Rollinson said, but also a lack of more conventional materials such as glass and carpet. Lucid reiterated these instructions in last week’s income statement.
Nikola may probably sell more than 500 trucks this year depending on demand, but he expects to build only 300 to 500 due to a shortage of spare parts. Although further expansion continues, the Nicola plant in Arizona already has the capacity to produce 2,500 trucks a year. But the company isn’t sure it can provide enough chips – particularly control units for its battery modules, CEO Mark Russell told investors on Thursday.
In addition, Rivian has reduced its production forecast for 2022. In March, he said he expects to build 25,000 cars this year, compared to the 50,000 predicted in his initial public offering of goods last year. Wall Street will be looking for capacity information if the company reports this week.
Raising more money will be difficult
How Tesla investors know that raising cash is not difficult when the company’s stock price is high. But when stocks are under pressure, fundraising can be challenging.
As Rivian shares fell about 90% from their 2020 high, the company had to cancel deals with private funds to raise cash on less favorable terms. In its latest deal, announced last week, the private investor agreed to buy $ 200 million in convertible bills, which will pay 8% interest if Nikola repays in cash and 11% if it repays in cash.
Lucid still has a lot of money from the deal that led to the public, nearly $ 5.4 billion, CFO Gray House said Thursday. But with big plans to expand its own plant in Arizona and a planned second plant in Saudi Arabia – a total of $ 2 billion in planned capital expenditures in 2022 – even the relatively wealthy Lucid may find it takes more money before it can get to sustainable profitability. If stock prices don’t jump, it can be difficult to get multibillion-dollar growth without substantially diluting existing shareholders.
Fisker said it still has about $ 1 billion in cash, but much of that is earmarked for costs associated with launching Ocean SUV production. Its chief financial officer, Gita Gupta-Fisker, said she expects Fisker’s operating and capital expenditures to be between $ 715 million and $ 790 million this year.
At this rate, Fisker may need to raise $ 1 billion or more in additional capital in the second quarter of 2023 – and, like Lucid, its shares are far from high, making a large secondary offer a challenge.
But unlike its competitors, Rivian may not have to worry about cash any time soon. At the end of 2021, he had $ 18.4 billion, and in March he said he expects to burn about $ 8 billion by the end of 2023 as he works to increase production of R1S, R1T and electric vans. for Amazon.
This cash advantage may be that Rivian needs to recover stock value in an EV environment facing production challenges.
Clarification: This article has been updated to clarify that Fisker has over 45,000 bookings for its Ocean electric SUV.
https://www.cnbc.com/2022/05/09/rivian-rivn-q1-2022-earnings-preview.html
