Rivian Q2 earnings - released with pre and post thoughts.

[trevtremaine]

Question: while Rivian essentially gave a blanket statement about supply chain, have they sourced batteries? I remember reading that one deal had fallen through, but haven't seen anything since then. This, to me, is probably the biggest issue forthcoming to expanding production.

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[Zybane]

In listening to the call, RJ could be a politician. He gives long, drawn-out, and rehearsed explanations in responses to questions with zero substance or answers. More transparency would be appreciated and admired.

That's the world we live in now. Everything is BS.

 

[nc10]

Question: while Rivian essentially gave a blanket statement about supply chain, have they sourced batteries? I remember reading that one deal had fallen through, but haven't seen anything since then. This, to me, is probably the biggest issue forthcoming to expanding production.

The was one comment on the webcast yesterday about contracts being structured to pass through higher raw material costs, and those additional costs would be higher going forward, contributing to the higher spend this year. They have contracts, but not clear the volumes supported, and they certainly have not "locked in" battery prices.

 

[svet-am]

The article itself is pretty even but CNN is running this headline:

 

[zipzag]

Question: while Rivian essentially gave a blanket statement about supply chain, have they sourced batteries? I remember reading that one deal had fallen through, but haven't seen anything since then. This, to me, is probably the biggest issue forthcoming to expanding production.

Ironically Rivian would have benefited from a less hot overall EV market. Rivian was extremely lucky in the timing of their IPO. They have been less lucky in many areas since that event.

Fortunately their products remain well differentiated from competitors.

 

[RBR1S]

The article itself is pretty even but CNN is running this headline:

But this IS the headline. They are ramping up production of R1, of the EDV, and building a second factory to handle the R2 series. In financial world, they call it losses, but in reality it's spending money they have to make more money.

I'd be interested to know what those losses would look like if they weren't building a new factory (which will literally costs 5 billion dollars).

 

[EarlyAdptr]

I've not seen a press release or interview report officially noting this. I'm a little skeptical of indications Rivian reached 10K R1's by the end of July. At the end of June it was <7K (including 2021). I've mentioned elsewhere here, have been shown VIN's reported above 10k, and other indications on social media, but sure seems to me if they made > 3000 R1's in July, along with a significant number of EDV's, they would have announced in some official mode. 3000+ in one month would provide some real confidence to investors.

I'm not so sure of that... if they achieved that milestone - it surely would have been late in the quarter. At that point, I believe they would be in the "quiet period" not allowing them to essentially pre-announce new info until the quarterly release.

 

[svet-am]

But this IS the headline. They are ramping up production of R1, of the EDV, and building a second factory to handle the R2 series. In financial world, they call it losses, but in reality it's spending money they have to make more money.

I'd be interested to know what those losses would look like if they weren't building a new factory (which will literally costs 5 billion dollars).

It's the use of the word "surge" and other inflammatory imagery

 

[nc10]

I'm not so sure of that... if they achieved that milestone - it surely would have been late in the quarter. At that point, I believe they would be in the "quiet period" not allowing them to essentially pre-announce new info until the quarterly release.

My thought process: Rivian shared that kind of info, a milestone of 5000 units made by May 9th, in the Q1 earnings release. Rivian stated they had made 2553 vehicles in Q1, but they also stated they had made 5000 vehicles in total as of May 9th.

The quiet period is the last 4 weeks of a quarter, which would not start until Sept 3rd, I calculate

If they have achieved 10k R1 units, it would have been very recently, end of July, early August (I concede its possible, but think it unlikely). Unfortunately, during the Q2 earnings release they did not provide any indication of production between end of Q2 and the date of the earnings release. We don't have an official indication from Rivian if they have reached 10,000 R1's.

Seems like if Rivian would call out 5000 made in the Q1 release, they could and would want to hilite 10,000 made in the Aug 11 Q2 release (but there was no mention of total produced by Aug 11). Instead we learned 430,000 packages had been delivered by EDV's. Not all that helpful.....

 

[jakef801]

I think the ev credit loss sucks, but I don't think it'll be as bad as it seems like it would be. They are still increasing orders even after the price increase, and even at full tilt are over two years away from fulfilling the current orders (van included).

Inflation Reduction Act EV Tax Credit:

“First, in order to qualify, there are price and income restrictions,” said Seth Goldstein, a senior equity analyst at Morningstar.

For new vehicles, the manufacturer’s suggested retail price for sedans would need to be below $55,000 to be eligible for the tax credit. For SUVs, trucks and vans, that price cap would be $80,000.

Additionally, the credit would be unavailable to single tax filers with modified adjusted gross income above $150,000. For married couples filing jointly, that income limit would be $300,000, and for individuals who file as head of household, $225,000.

“What we’ve seen is that many [electric vehicles] are luxury autos,” Goldstein said. “And buyers of those are in higher income brackets, so that limits right away the ability to qualify for the tax credit.”

The last paragraph is significant, although those types of buyers likely couldn't care less about a $7500 tax credit. However, the 200,000 vehicle production cap will be eliminated, which will allow Tesla, Chevy, Toyota/Lexus, etc. EV & Hybrid buyers to once again qualify if the purchase price is below $80k.

 

[jakef801]

I too am still bullish on Rivian and are doing a remarkable job.

One point I disagree on is that there is a production bottleneck. If I am not mistaken this is at least the third call in which Rivian sited “Parts Supply” as the primary production limiter.

There is no doubt that there is still a definite a bottleneck due to parts supply with all automakers. Chip production & availability is just now starting its uptick, along with metals for bodies, batteries, etc. - this has not markedly trickled down to automakers in a significant way just yet. It will, sooner rather than later, I believe. I'm long on RIVN.

 

[jakef801]

Having not read the earnings transcript, was there anything significant mentioned about progress on the Georgia manufacturing plant?

 

[odingrey]

Inflation Reduction Act EV Tax Credit:

“First, in order to qualify, there are price and income restrictions,” said Seth Goldstein, a senior equity analyst at Morningstar.

For new vehicles, the manufacturer’s suggested retail price for sedans would need to be below $55,000 to be eligible for the tax credit. For SUVs, trucks and vans, that price cap would be $80,000.

Additionally, the credit would be unavailable to single tax filers with modified adjusted gross income above $150,000. For married couples filing jointly, that income limit would be $300,000, and for individuals who file as head of household, $225,000.

“What we’ve seen is that many [electric vehicles] are luxury autos,” Goldstein said. “And buyers of those are in higher income brackets, so that limits right away the ability to qualify for the tax credit.”

The last paragraph is significant, although those types of buyers likely couldn't care less about a $7500 tax credit. However, the 200,000 vehicle production cap will be eliminated, which will allow Tesla, Chevy, Toyota/Lexus, etc. EV & Hybrid buyers to once again qualify if the purchase price is below $80k.

Sure, but at least until R2 (2025) there is really no competing truck that would also qualify for the credit. Even if there was, Rivian has no lack of demand. If orders in vs orders out keep up as they are, they will be unable to fill their backlog until R2 is out and they (hopefully) qualify for that credit again.

What I'm getting at with my original quote boiled down the fact that Rivian can't churn trucks out fast enough right now. The final price matters to us, sure, but in Rivians eyes, unless they reach a position where they empty out the order queue and can't sell what's on the lot, it doesn't matter to them if the truck qualifies or not.

This rebate won't change the amount they are getting per truck, all it will do is potentially drive more orders. And they are flush on orders for the time being.

 

[jakef801]

^^^ True. If one is an investor in RIVN, as I am, you have to be LONG. Like 10 years long.

 

[nc10]

Having not read the earnings transcript, was there anything significant mentioned about progress on the Georgia manufacturing plant?

Not much. Reducing capital spend this year, I think from ~$2.6 to $ 2 billion. Offsets higher operating costs this year. But "still" expect to launch R2 vehicles in 2025. I think they mentioned completion of the georgia facilty in late 2024 on the webcast. The R2 vehicles are designed to take advantage of the new incentives.

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