Photo: Rivian | Edited
Rivian announced its production and delivery numbers in January, but investors are waiting for the Q4 2022 financial results, planned to be released on February 28. Analysts expect the startup to post a financial loss similar to the third quarter, which was $1.7 billion.
Rivian was, one year ago, the most promising startup in the auto industry and the one most likely to share Tesla’s success story. The startup had everything investors dreamed of: compelling products, impressive technology, a great team, and powerful backers willing to lend loads of money to keep it afloat. Rivian appeared eager to deliver, and it was the first carmaker to launch an electric pickup into the market. Not only that, but it was actually quite good, especially for a startup.
After that, things started to unravel, and people lost faith that Rivian could make it through to the end of the journey from a promising startup to an accomplished carmaker. The products are still compelling, but the demand has waned as more competitors launch new EVs in their respective segments. The powerful backers have also lost faith, with Ford, for instance, selling its entire stash of Rivian shares and launching an electric pickup on its own. The team has diluted, as talent has fled the company and others have been laid off.
What’s left for Rivian is its technology and a big coffer of money from the 2021 IPO, which is not infinite. Technology alone doesn’t do much without the cash to put it to work; when that money is gone, it’s the end of the line. Based on the current spending, Rivian funds would last two more years unless it reaches profitability. Analysts cited by Automotive News expect the startup to announce another $1.7 billion loss for the fourth quarter of 2022, comparable with the third-quarter loss.
The cash burn is investors’ number one worry now, as the economy looks set for a recession that would make it more difficult to raise new money. Rivian’s potential customers would also find it harder to finance a purchase in harsh economic conditions. On the other hand, Rivian’s CEO, RJ Scaringe, is optimistic that the carmaker is back on track after struggling with supply chain issues and skyrocketing production costs.
Rivian produced over 24,000 vehicles in 2022, narrowly missing the 25,000 production target. Still, over 4,000 remained in its inventories, as Rivian only found customers for 20,000 cars. This raises the issue of demand, considering that Rivian’s products have a price that starts at $75,000. The startup needs a more affordable model, but that leads back to the cash burn problem.
Rivian is facing similar problems to Tesla in its early days. The EV market leader needed a decade to become profitable. It nearly went bankrupt, as CEO Elon Musk revealed, despite having the advantage of being the only luxury EV maker on the market at the time. Unlike Tesla, Rivian faces intense competition from legacy carmakers and EV makers at a time it is trying to become profitable. Musk warned Rivian twice about changing course and becoming profitable as it “tracked toward bankruptcy.”
After that, things started to unravel, and people lost faith that Rivian could make it through to the end of the journey from a promising startup to an accomplished carmaker. The products are still compelling, but the demand has waned as more competitors launch new EVs in their respective segments. The powerful backers have also lost faith, with Ford, for instance, selling its entire stash of Rivian shares and launching an electric pickup on its own. The team has diluted, as talent has fled the company and others have been laid off.
What’s left for Rivian is its technology and a big coffer of money from the 2021 IPO, which is not infinite. Technology alone doesn’t do much without the cash to put it to work; when that money is gone, it’s the end of the line. Based on the current spending, Rivian funds would last two more years unless it reaches profitability. Analysts cited by Automotive News expect the startup to announce another $1.7 billion loss for the fourth quarter of 2022, comparable with the third-quarter loss.
The cash burn is investors’ number one worry now, as the economy looks set for a recession that would make it more difficult to raise new money. Rivian’s potential customers would also find it harder to finance a purchase in harsh economic conditions. On the other hand, Rivian’s CEO, RJ Scaringe, is optimistic that the carmaker is back on track after struggling with supply chain issues and skyrocketing production costs.
Rivian produced over 24,000 vehicles in 2022, narrowly missing the 25,000 production target. Still, over 4,000 remained in its inventories, as Rivian only found customers for 20,000 cars. This raises the issue of demand, considering that Rivian’s products have a price that starts at $75,000. The startup needs a more affordable model, but that leads back to the cash burn problem.
Rivian is facing similar problems to Tesla in its early days. The EV market leader needed a decade to become profitable. It nearly went bankrupt, as CEO Elon Musk revealed, despite having the advantage of being the only luxury EV maker on the market at the time. Unlike Tesla, Rivian faces intense competition from legacy carmakers and EV makers at a time it is trying to become profitable. Musk warned Rivian twice about changing course and becoming profitable as it “tracked toward bankruptcy.”
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