Rivian Shaken by Unexpected Layoffs

"Rivian recently said it would come to market with its R2 SUV, which is priced at about $44,000. It arrives too late for a company that has overpriced its current products. Its R1T pickup and R1S SUV, its only other products, have starting prices of $70,990 and $76,900, respectively. With extra features, those prices rise closer to $100,000. That is a huge disadvantage in a market that is waiting for EVs priced below $25,000, which many Chinese EVs are already."

"Rivian announced earnings recently that are another reminder of how small the chance is that it can survive as larger companies try to shoehorn themselves into the market. On the one side is Tesla, wounded but the U.S. market share leader. On the other side are legacy behemoths like GM that have invested tens of billions of dollars in what they still see as the future of the industry."

"In the second quarter, Rivian's loss was higher than expected. It had supply chain problems because of rare earth issues, brought on by a trade war with China. Its adjusted loss was $0.80 per share, against Wall Street expectations of $0.65. The bottom line will be worse than expected at a $2.0 billion to $2.3 billion loss this year. That is much more than the $1.7 billion to $1.9 billion loss management had forecast earlier."

Rivian has experienced major setbacks including layoffs, steep stock decline, and limited market share. The stock is down about 90% over five years while the S&P 500 rose 38%. Current vehicle lineup is expensive, with R1T and R1S starting near $71,000 and $77,000 and optioned models approaching $100,000. Rivian plans a cheaper R2 SUV priced around $44,000, but market demand centers on EVs under $25,000. Production fell, with 5,979 vehicles produced and 10,661 delivered in the second quarter, a 22% production decline year over year. Second-quarter results showed larger-than-expected losses and supply-chain issues tied to rare-earth trade tensions with China, and management raised full-year loss guidance to $2.0–2.3 billion.

Read at 24/7 Wall St.