Opinion: Rivian and Lucid earnings show EV makers going in different directions

Contrasting results and forecasts from electric-vehicle makers on Tuesday showed that Rivian Automotive Inc. has a more tangible business model than Lucid Group Inc.

Overall, Rivian
showed it was focused on cost-cutting efforts during its call with analysts to discuss its third quarter, as executives described a big technology upgrade at its factories that will cut manufacturing costs going forward. Rivian also raised the bar after its earnings, with higher vehicle projections for the full year, and said its deal to provide delivery vans for Amazon.com Inc.
is no longer exclusive. Its shares jumped 4.5% in after-hours trading.

“We believe these changes will meaningfully reduce our material costs and position Rivian to exit 2024 with a much improved margin profile,” Chief Financial Officer Claire Rauh McDonough told analysts.

In contrast, luxury EV maker Lucid Group
lowered its projections for vehicles this year to between 8,000 and 8,500, down from 10,000, as it reported falling third-quarter revenue and a wider net loss. Its shares fell 4.2% in after-hours trading.

Lucid said its forecast was taking into account the vehicles it can deliver for the rest of the year. Many are going to government and retail customers in Saudi Arabia. Lucid recently opened a plant in Saudi Arabia, where the vehicle kits it builds in Arizona will be shipped, and then assembled and delivered.

Rivian is focused on electric pickup trucks and vans, and its pickups start at around $73,000. While the current economic environment is a much tougher one to sell electric vehicles right now, Lucid is having an even harder time. Its Lucid Air starts at about $100,000.

Read also: Sluggish EV and auto sales could continue next year, based on these chip maker forecasts

One analyst asked Lucid Chief Executive Peter Rawlinson what would trigger a move by the company to modify its ambitions, given the current interest-rate climate that has made it more difficult for consumers to buy with credit. Rawlinson said Lucid was very prudent, and that the company’s CFO was doing a great job at optimization.

“We’re looking at all measures here, looking at our efficiency of making the cars, looking our working capital, looking at inventory all aspects of the business,” he said. “We’re also pushing like crazy to improve our delivery numbers.” Rawlinson added that its forthcoming Gravity electric SUV is a “transformative product” coming in late 2024, “with a considerably greater market potential” that will transform Lucid.

For both of these companies, their hefty capital investment costs have been making investors nervous about potential future profitability, as the market for EVs has slowed this year. While Rivian has said it is extremely focused on lowering its costs, last month it announced it was raising another $1.5 billion in a private-debt offering, surprising investors with the timing, and making some nervous that the company was going through its cash too fast.

Investing in either of these EV makers is not for the faint of heart, but Rivian appears to have a more solid business that so far has sustained hits in the current economic climate. The same may not be true for Lucid, which looks like an even riskier play right now.

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