(Reuters) -Electric-vehicle maker Rivian Automotive will benefit late this year and in 2024 from a significant deflation for battery material prices, finance chief Claire McDonough said at a technology conference on Thursday.
Prices for raw materials used in batteries surged to record highs in recent years on burgeoning demand for EVs, coupled with tight supplies due to the pandemic that were exacerbated by Russia's invasion of Ukraine.
This year, tapering demand for EVs has led to a drop in prices of batteries and a further fall is expected through the year, market research firm TrendForce said earlier on Thursday.
McDonough said at a Goldman Sachs (NYSE:GS) conference that impacts of falling commodity prices will likely be felt in the fourth quarter of the year and into next year. Lower costs of battery raw materials could potentially boost margins for Rivian and its rivals who have struggled with high costs and dwindling cash balances.
Rivian, whose shares have risen about 27% so far this year, is also ramping up production of its in-house drive unit, which is expected to help reduce dependence on third-party suppliers, cut costs and improve production.
Strong demand, a production ramp-up and a clear path to profitability next year have helped Rivian stand apart from peers that have struggled with tough competition, output hurdles and the effects of Tesla (NASDAQ:TSLA)'s price war.