By Akash Sriram and Abhirup Roy
(Reuters) - Rivian is expected to report on Thursday its first drop in quarterly revenue since going public three years ago, after a shortage of parts forced the maker of electric SUVs and pickups to slash its 2024 production target last month.
CEO RJ Scaringe will likely face tough questions from analysts and investors on how long the shortage is expected to continue, the company's plans to resolve the issue and whether the disruption will derail its plan to turn a gross profit this quarter.
"The company did reduce guidance, but we wonder if another reduction will be necessary if the issues bleed into November," analysts at D.A. Davidson said in a note.
Rivian's plight comes amid a broader slowdown in demand for EVs as high interest rates sour consumer sentiment, leading many to choose less expensive hybrid vehicles instead.
Rival Ford has been scaling back its EV plans. Months after nixing a planned three-row electric SUV, Ford said in October it would halt production of its F-150 Lightning EV pickups for six weeks. These trucks compete with Rivian's R1T pickups.
A lot hinges on the rollout of Rivian's smaller, cheaper R2 SUVs in 2026.
To ensure it has enough money until then, Rivian has slashed costs, including a major factory retooling by shutting down its only plant for three weeks earlier this year and re-negotiating supplier contracts.
A surprise $5 billion lifeline from German automaker Volkswagen (ETR:VOWG_p) Group earlier this year has also reassured investors. The two automakers agreed to a technology joint venture.
"We want to make sure the company remains on-track with the milestones that must be met to complete the equity, debt, and licensing part of the $5 billion deal," Davidson analysts said.
Amazon-backed Rivian reduced its full-year production target to between 47,000 and 49,000 vehicles from 57,000 units. It reaffirmed its annual deliveries forecast of 50,500 to 52,000 vehicles, despite delivering fewer-than-expected vehicles in the third quarter.
Analysts at J.P.Morgan said the shortfall does not appear supply related. "To us, the implied softer demand trend suggests at least some risk to the outlook for full year deliveries," they said in a note.
Analysts on an average expect Rivian to report third-quarter revenue of $1 billion, down 25% from a year earlier, and a loss of 92 cents per share, narrower than the $1.19 per share last year.
Rivian's stock has fallen 55% this year, while that of market leader Tesla (NASDAQ:TSLA) is up 1%.
Shares in luxury EV maker Lucid, which is also set to report quarterly earnings on Thursday, has nearly halved this year. The company, backed by Saudi Arabia's Public Investment Fund, will open orders for its Gravity SUV on the same day.