Rivian Automotive will report second-quarter earnings on Aug. 6 after announcing higher sales, cost cuts and a $5 billion investment from Volkswagen Group as part of a joint venture between the automakers.
But the electric vehicle startup is facing pressure on vehicle profit margins due to higher sales incentives in the April-June period compared to a year ago, according to data from Motor Intelligence.
Rivian’s second-quarter sales rose 9% to 13,790 vehicles despite a factory shutdown in April to adapt to lower production costs and refresh the R1T pickup truck and R1S crossover for the 2025 model year, the company said in July.
Factory sales incentives also increased in the quarter, to $4,415 for the R1T, compared with $255 in the same period last year, and $2,830 for the R1S, compared with $271 a year earlier, Motor Intelligence said.
Production costs in the second quarter will reflect a mix of primarily 2024 model-year vehicles along with some refreshed 2025 models with the lower cost structure, CEO RJ Scaringe said at an event in May. As such, most of the cost savings won’t be seen until the third quarter, he said.
Rivian has been burning cash since it began producing vehicles in late 2021. It also makes delivery vans for Amazon, its largest shareholder.
In the first quarter, the Irvine, California-based automaker reported a net loss of $1.4 billion. Rivian said it had $7.9 billion in cash and equivalents at the end of that quarter. It reported a net loss of $5.4 billion for the calendar year 2023.
Despite the cash burn, Rivian is on track to profitability, executives said at an investor event in June, boosted by investment from Volkswagen. Some of the money will be used for a joint venture to incorporate Rivian’s electric architecture into future VW Group vehicles, the companies said.
Rivian is also using the new architecture, which it developed for the updated R1 models, in its own low-cost vehicles starting in 2026.
While Rivian’s current R1 vehicles start at more than $70,000 with shipping, the electric vehicle maker is preparing its factory in Normal, Illinois, for the launch of a smaller crossover, the R2, that will start around $45,000. It plans an even lower-cost R3 model, but did not give a timeline or price target for it.
Wall Street analysts upgraded Rivian’s stock price following the Volkswagen investment.
“Rivian has a better chance of success as an auto/technology supplier than as a manufacturer,” Morgan Stanley analyst Adam Jonas said in a July 17 note. Jonas said there was potential for a deeper collaboration between Rivian and Volkswagen that could involve joint development of EVs. Jonas is bullish on Rivian’s stock price.