Rivian Racks Up $4.7 Billion Loss, Sees Supply Snags Curbing EV Output

Rivian, the best-funded electric vehicle startup in U.S. history, said losses during its initial year of electric truck production were nearly $5 billion and that ongoing tight supplies of computer chips, components and raw materials mean it can only build about 25,000 pickups, SUVs and delivery trucks this year.

The California-based automaker, founded by CEO RJ Scaringe, reported a net loss of $2.5 billion in the fourth quarter of 2021 and $4.7 billion for the full year. Annual revenue was $55 million, coming from deliveries of just 920 of its high-end vehicles. The company has orders for about 83,000 R1 T pickups and R1 S SUVs, though it will take until next year to get those to customers. Amazon, an early investor, is also waiting to get 100,000 electric delivery trucks.

“The challenges our suppliers are facing vary, including company-specific production issues, Covid-related delays and semiconductor allocations,” Scaringe said on a results call with analysts. Rivian’s production guidance for the year is conservative and “we’re certainly working as hard as we can to exceed that 25,000,” he said. Still, “it’s impossible to predict everything, especially in this environment.”

The company’s shares, which fell 6.4% to $41.16 in Nasdaq trading Thursday ahead of the results announcement, dropped a further 12% to $35.99 in after-hours trading. The stock has plummeted 60% this year and is down 76% since peaking at $172.01 on Nov. 16, 2021.

Shares of electric vehicle makers, including Tesla, Lucid, Fisker and Nikola, have all been hammered this year as production is expected to be hamstrung by supply headaches that show no sign of easing–even as surging oil prices boost the appeal of zero-emission cars and trucks. Adding to the shortage of computer chips and specialty components, there’s growing concern that costs for raw materials used in batteries including nickel, which is mined in Russia, as well as cobalt and lithium, will continue to spike–in the case of nickel as a result of Russian President Vladimir Putin’s invasion of Ukraine that triggered devastating economic sanctions.

Despite the weaker-than-hoped outlook for 2022, Rivian remains well-positioned over the long term owing to its unusually large cash horde. The company said it ended 2021 with $18.4 billion in cash and equivalents, and that it has an additional fundraising capacity with an asset-based revolving credit line. It raised about $11 billion as a private company, from backers including Amazon and Ford, and a further $13.7 billion from its 2021 IPO.

That cash cushion means it should be able to weather rocky conditions in 2022 and proceed with construction of a second plant in Georgia, budgeted at $5 billion, to bolster output at its Normal, Illinois, factory that will have capacity to produce 150,000 vehicles annually by next year.

Scaringe lost his status as a billionaire this month after investors sold off Rivian shares when the company angered customers waiting for vehicles by announcing price increases on March of as much as 20%, even for those who had pre-ordered R1 models at the original price. The company reversed that decision for those waiting to take delivery, and Scaringe apologized for the move in Thursday’s call.

“We recognize this was a mistake and quickly moved to honor the original configured pricing for our pre-March 1 pre-orders,” he said. “Our relationship with customers is the most important aspect of what we’re building. We believe our early customers are critical for establishing the brand foundation needed to support many millions of sales across our future vehicle portfolio.”

The company is also preparing to offer vehicles with lower-cost, lower-range lithium iron phosphate, or LFP, batteries starting next year. Those cells don’t use nickel and other materials in conventional lithium-ion batteries, which may help insulate the company from some commodity price swings. Rivian will initially use LFP batteries in the delivery trucks it’s making for Amazon, and gradually introduce them for R1 T and R1S models in 2023.

While Rivian is seen as a potential strong competitor with Tesla, it will need years to catch up to Elon Musk’s industry-leading EV producer. Notably, if Rivian only hits its 25,000-unit target this year, it will also resemble Tesla’s slow production ramp-up. Musk’s company built fewer than 2,500 electric Roadsters from its production start in 2008 through 2011. Tesla shifted to its post-startup phase with the Model S that came out in 2012. It built 2,800 that year and 23,000 in 2013, or 23,800 in the first 18 months of production at its Fremont, California, plant.

“We’re no doubt experiencing one of the most challenging supply chain environments the automotive industry has ever seen,” Scaringe said. “But as we look out 10 years from now, our products, our technology and our brand platform will help us capture substantial market share in the transportation space.”