The results and predictions from electric vehicle manufacturers on Tuesday indicated that Rivian Automotive Inc. possesses a more stable business model compared to Lucid Group Inc.Thank you for reading this post, don't forget to subscribe!
During a call with analysts to discuss its third quarter, Rivian RIVN demonstrated its focus on cost-cutting initiatives. Executives discussed a significant technology upgrade at their factories, which is expected to further reduce manufacturing costs. Rivian also raised its vehicle estimates for the full year after reporting its earnings, and mentioned that its exclusive deal with Amazon.com Inc. to provide delivery vans for AMZN will no longer be exclusive. As a result, its shares surged by 4.5% during after-hours trading.
“We anticipate that these changes will substantially diminish our material costs and position Rivian to conclude 2024 with a better margin profile,” said Chief Financial Officer Claire Rauh McDonough during the analyst briefing.
On the other hand, luxury electric vehicle manufacturer Lucid Group LCID lowered its vehicle forecast for this year to a range of 8,000 to 8,500 units from 10,000 units. This adjustment came after the company reported a decline in revenue and a widening net loss in the third quarter. Its shares declined by 4.2% during after-hours trading.
Lucid clarified that its forecast considers the vehicles it can deliver for the remainder of the year, which includes visits to government and retail clients in Saudi Arabia. Lucid recently inaugurated a plant in Saudi Arabia, where vehicle kits manufactured in Arizona will be shipped, and then assembled and distributed.
Rivian centers its efforts on electric pickup trucks and vans, with prices for its pickups starting at approximately $73,000. While it is challenging to sell electric vehicles in the current economic climate, Lucid is facing even tougher circumstances. Pricing for the Lucid Air begins around $100,000.
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One analyst asked Lucid Chief Executive Peter Rawlinson about the steps the company plans to take in order to revise its ambitions in light of the current interest rate environment, which has made it more difficult for consumers to make credit-based purchases. Rawlinson stated that Lucid is exercising prudence and commended the company’s CFO for adapting well to the situation.
“We are carefully considering all measures, such as improving our car production efficiency, assessing our working capital, and evaluating all aspects of the business,” he stated. “We are also strongly pushing to improve our delivery numbers.” Rawlinson also mentioned that Lucid’s upcoming Gravity electric SUV, scheduled for release in late 2024, is a “game-changing product” with “significantly greater market potential” that will replace Lucid’s current offerings.
For both of these companies, the high costs associated with capital investment are causing concern among investors regarding future profitability, given the slowdown in the EV market this year. While Rivian has emphasized its efforts to reduce costs, it surprised investors last month by announcing a private debt offering to raise an additional $1.5 billion, leading to concerns that the company is depleting its cash reserves too quickly.
Investing in any of these EV manufacturers requires a high tolerance for risk, but Rivian possesses a more robust business that has continued to weather the current economic climate thus far. The same cannot be said for Lucid, which appears to be an even riskier investment at present.