GuruFocus - Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rivian Automotive Inc (NASDAQ:RIVN) achieved a 20% reduction in material costs for their second-generation R1 platform compared to the first generation.
- The company produced 13,157 vehicles and delivered 10,018 vehicles in Q3 2024, generating $874 million in revenue.
- Rivian Automotive Inc (NASDAQ:RIVN) is on track to launch the R2 program with a starting price of $45,000, aiming for a substantial reduction in costs and maintaining strong market share.
- The partnership with Volkswagen (ETR:VOWG_p) is progressing well, with a joint venture expected to close by the end of Q4 2024, providing additional capital for growth.
- Rivian Automotive Inc (NASDAQ:RIVN) expects to achieve a modest GAAP gross profit in Q4 2024, driven by increased revenue per unit and improved cost efficiencies.
- Rivian Automotive Inc (NASDAQ:RIVN) faced significant supply chain challenges in Q3 2024, impacting production and leading to a gross loss of $392 million.
- The company experienced a decrease in Q3 deliveries due to production disruptions and a challenging consumer environment.
- Rivian Automotive Inc (NASDAQ:RIVN) revised its 2024 annual adjusted EBITDA guidance to a loss between $2.825 billion and $2.875 billion due to lower production volumes.
- The company is dealing with a component shortage affecting the production of Endura motors, impacting their ability to meet production targets.
- Rivian Automotive Inc (NASDAQ:RIVN) anticipates a shutdown in 2025 for plant upgrades, which may affect production continuity.
A: Claire McDonough, CFO: One of the primary drivers of improvement in gross profit is the growth in revenue per unit, driven by $300 million in regulatory credit sales and improvements in average selling prices. For 2025, we will launch our quad motor offering, which will also drive ASP increases. We are targeting a positive gross profit for 2025, but will provide more details in our Q4 earnings call.
Q: What percentage of your volume in the quarter was preordered versus sold out of dealer inventory, and how is that changing?
A: Claire McDonough, CFO: In Q3, we saw an uptick in early preorder pricing volumes as customers utilized early lower pricing to purchase Gen 1 vehicles. Lease penetration was 42%, and most of our customers don't qualify for the $7,500 tax credit on financed or cash purchases.
Q: Can you decompose the COGS per unit and the improvements expected into 2025?
A: RJ Scaringe, CEO: In Q4, we project a 20% reduction in material costs compared to Q1. We're driving efficiency in plant operations, and the hours per unit are coming down. The Gen 2 platform will be in production for the entirety of 2025, allowing us to drive lean manufacturing principles and operational efficiency.
Q: Can you provide an update on the Volkswagen joint venture and the collaboration status?
A: RJ Scaringe, CEO: We have built a demonstrator vehicle using our electrical architecture and software stack. The partnership will see our technology across many Volkswagen Group products and brands. The joint venture is expected to close before the end of Q4.
Q: How competitive will the R2 be at a $45,000 price point in 2026?
A: RJ Scaringe, CEO: The $45,000 starting price corresponds to a lower performance spec with over 300 miles of range. We believe the R2 will provide unique form factors and performance, offering customers choice in the sub-$50,000 price range. The R2 is designed to capture market share with compelling attributes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.