Rivian Sticks to Q4 Profit Goal Despite Production Setback

Rivian Automotive Inc. reported it expects to achieve a positive gross profit in the upcoming fourth quarter, despite facing a supply chain issue that disrupted the production of its electric vehicles (EVs). The company attributes its positive outlook to a higher sales mix of premium vehicle models and revenue generated from regulatory credits. In the third quarter, Rivian recorded an adjusted loss of 99 cents per share, which exceeded analysts' expectations of a 92-cent loss. The supply chain bottleneck, attributed to miscommunication with a supplier, required Rivian to halt production of certain models, including the R1 SUV and delivery vans for Amazon, and led to a downward revision of its annual production target to 49,000 vehicles, down from 57,000. Despite the challenges, Rivian maintained its delivery target of up to 52,000 vehicles for the year. The manufacturer acknowledged that the supply shortage would negatively impact its profitability, projecting adjusted negative earnings before interest, taxes, depreciation, and amortization of up to $2.88 billion for 2024, marginally worse than previous forecasts. Rivian's losses per delivered vehicle have increased significantly, from over $32,700 to more than $39,000. To boost its bottom line, the company is relying on increased revenue from the sale of regulatory credits, though this has seen a decline recently, falling from $17 million in the prior quarter to just $8 million. The company is taking steps to reduce costs as it prepares to launch the more affordable R2 SUV in 2026. In the current landscape, Rivian's struggle highlights a larger issue in the EV sector, where supply chain disruptions are affecting production capabilities amidst slowing demand. This raises critical questions about the sustainability of rapid EV expansion and emphasizes the importance of robust supply chain management in the automotive industry. New entrants like Rivian must navigate these challenges effectively to maintain competitiveness against established players and meet rising consumer expectations.