Article: EV startups burn through cash (except Rivian)

[Sgt Beavis]

https://www.reuters.com/business/au...-through-more-cash-demand-falters-2023-08-03/

Aug 3 (Reuters) - U.S. electric vehicle startups are expected to show the impact of Tesla's price war when they report quarterly results over the next few days, with investors awaiting details on how the companies are managing cash amid a funding drought.

Even market leader Tesla (TSLA.O) has warned of "turbulent times" and traditional automakers with deeper pockets including Ford Motor (F.N) are losing money on EVs. The squeeze has already claimed its first casualty in electric truck maker Lordstown Motors (RIDEQ.PK), which filed for bankruptcy in June.

Companies including Lucid (LCID.O) and Nikola (NKLA.O) are likely to report another quarter of steep cash burn, as they continue to struggle with production and demand.

"The only ones that have a chance besides Musk are the legacy auto providers and so far they are proving that they are losing money hand over fist trying to get into the EV game," said Thomas Hayes, chairman of hedge fund Great Hill Capital. Hayes follows the EV industry closely but holds no shares.

The one standout seems to be Amazon-backed Rivian Automotive (RIVN.O), which is likely to report a three-fold surge in revenue to $983.1 million for the April-June quarter.

The company's cash outflow likely slowed to $1.19 billion in the second quarter, down by about $600 million from the January-March period, according to 13 analysts polled by Visible Alpha. Gross margins likely improved to a negative 51.3% from negative 58.6%.

"Rivian's competitive advantages are shining brighter, with the company emerging as a demand creator when considering that the majority of its buyers have never previously purchased a pickup truck," Needham analyst Chris Pierce said.

At least 8 analysts have raised their price target on the company's stock, which has gained about 40% so far this year.

Lucid, which is majority owned by Saudi Arabia's Public Investment Fund, is expected to report deepening losses on Monday after it reported a fall in April-June production due to supply-chain problems.


It is set to post a cash balance of $2.76 billion for the April-June period, up from $900 million in the prior three months, after it announced a fundraise of about $3 billion, according to six analysts polled by Visible Alpha.

Nikola, which reiterated a going-concern warning in May, is expected to report a 15% decline in revenue and widening losses on Friday.

Its shares have rallied nearly 40% this year as the company attempts to reduce its cash burn with layoffs and the liquidation of a recently acquired battery business. However, that may still not be enough to meet its funding needs, analysts have said.

Fisker (FSR.N), which has healthy cash reserves and an aggressive profitability goal, is expected to report on Friday its first revenue from vehicle sales after the firm started deliveries of its Ocean SUVs in the June quarter.

But the company missed its production target in the quarter due to a parts shortage.

Investors will be keen to see Fisker's reservation numbers as their Ocean SUV does not qualify for the $7,500 federal tax credit.

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[Donald Stanfield]

Nice. This is what we want to see, a robust demand for R1 vehicles. It's not surprising though given how good they are.

 

[Sgt Beavis]

Nice. This is what we want to see, a robust demand for R1 vehicles. It's not surprising though given how good they are.

Yea, quality and capability are quickly becoming Rivian’s hallmarks.

 

[COdogman]

If they can get that GA plant online and start selling the R2 on schedule they should be in pretty good shape.

 

[virgnia_rivian]

Reputation and a good product. Traditional and non traditional car reviewers have gushed over the R1s. With that said, RIVN has also adapted quickly and made some good business decisions. They also have the biggest pot of money of all of the startups.

If Rivian's reputation continues to grow, demand for the R2 will be strong. We can also hope interest rates will have started to come down by then. I think higher loan rates are hurting the industry as a whole.

 

[NineElectrics]

Um, Rivian negative free cash flow of $1.8 billion in the first quarter of 2023 alone and burned through $6.4 billion in 2022. For the upcoming quarter cash flow is expected to be negative $1.19 billion. So, the editorialized title of this thread does not match reality. Rivian is still very much burning through cash, just like others.

 

[Donald Stanfield]

Um, Rivian negative free cash flow of $1.8 billion in the first quarter of 2023 alone and burned through $6.4 billion in 2022. For the upcoming quarter cash flow is expected to be negative $1.19 billion. So, the editorialized title of this thread does not match reality. Rivian is still very much burning through cash, just like others.

They are supposed to be burning through cash Debbie Downer. That's how startups work. They are burning through LESS than expected and heading towards profitability QUICKER than expected.

 

[EBEG]

Um, Rivian negative free cash flow of $1.8 billion in the first quarter of 2023 alone and burned through $6.4 billion in 2022. For the upcoming quarter cash flow is expected to be negative $1.19 billion. So, the editorialized title of this thread does not match reality. Rivian is still very much burning through cash, just like others.

You aren't wrong that Rivian continues to spend more than they take in, but the difference is that Rivian, unlike the others, has real revenue offsetting a decent chunk of the start up spend. And their revenue is increasing substantially quarter-to-quarter. If Rivian were not starting the R2 line, they would likely be close to actual profitability on the R1.

 

[NineElectrics]

You aren't wrong that Rivian continues to spend more than they take in, but the difference is that Rivian, unlike the others, has real revenue offsetting a decent chunk of the start up spend. And their revenue is increasing substantially quarter-to-quarter. If Rivian were not starting the R2 line, they would likely be close to actual profitability on the R1.

I'd like to believe this, but from https://www.rivianforums.com/forum/threads/georgia-plant-update-what-i-saw-on-my-visit.13443/ all I see of the R2 is dirt. I don't think they're constructed buildings, purchased any of the capital equipment, begun to pay suppliers, hired line workers, etc. So, how is the R2 costing Rivian a billion dollars a quarter at this point?

 

[usofrob]

Engineers cost money, and lots of it.

 

[Craigins]

We should have a "Do Not Feed Trolls" sign here.

 

[Sgt Beavis]

We should have a "Do Not Feed Trolls" sign here.

If you’re referring to NineElectrics, he’s not trolling. Not even close.

 

[Craigins]

If you’re referring to NineElectrics, he’s not trolling. Not even close.

I am, he is, and he's now on my ignore list.

 

[EBEG]

Engineers cost money, and lots of it.

Not to mention lawyers, accountants, consultants, setting up supply chains, commissioning custom building and manufacturing equipment, architects, etc.

 

[Aardvark]

Excellent. Maybe my RIVN portfolio will go from deep burgundy blood red to just cherry red (with hints of black when the GA plant is operational in 2 years)!
Thanks for posting, @Sgt Beavis

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