Rivian (RIVN) Q4 and full year 2022 earnings preview: The moment of truth

Rivian (RIVN) is set to release Q4 and full year results for 2022 on Tuesday, February 28, after the market close in what is shaping up to be a significant one as the young EV maker looks to overcome recent hurdles as it ramps production.

Here’s a brief preview of what Wall St and investors expect from Rivian’s fourth quarter results.

Rivian Q4 2022 deliveries

Rivian revealed last month it had produced 10,020 electric vehicles at its Normal, Illinois manufacturing facility during Q4 2022 while delivering 8,054 during the same period.

For the full year, Rivian produced 24,337 EVs and delivered 20,332. Despite slightly missing the company’s 25,000 full-year production guidance, it’s still an impressive accomplishment, given it only produced 1,015 vehicles by the end of 2021 (delivering 920).

Rivian’s Illinois factory will be capable of producing 150,000 EVs annually when it’s fully operational (with plans to increase it to 200,000), but until then, the automaker continues to burn through cash.

Rivian profitability

On a recent analyst call, Rivian’s CEO RJ Scaringe said it’s been a “challenging year” as the company launched four products (two versions of the EV van, the R1T, and the R1S) while trying to scale production.

In the third quarter of 2022, Rivian’s losses widened to $1.7 billion, as the company said on its Q3 earnings call:

As we produce vehicles at low volumes on production lines designed for higher volumes, we have and will continue to experience negative gross profit related to labor, depreciation, and overhead costs.

Rivian is working to improve its capital efficiency by ramping up manufacturing capabilities. The company recently added a second shift to accelerate production.

The company has noted it has the funds ($13.3 billion cash and equivalent) necessary to continue operations until at least 2025 with a substantial long-term contract from Amazon to supply over 100,000 Rivian EDVs, slated to roll out by 2030.

Rivian Q4 and full-year 2022 earnings expectations

Analysts expect Rivian to report earnings-per-share (EPS) of $-1.94 compared to $-1.88 in the third quarter.

In addition, Rivian is forecasted to report Q4 revenue of $742 million, up from $536 million in the third quarter and only $52 million in the same period last year.

Wall Street is expecting Rivian to continue burning cash with losses to remain around the same as in Q3 with about $1.7 billion.

Rivian Q4 earnings preview: What to look for

The biggest issue Rivian is facing right now is that it’s losing money on every vehicle it produces. The company was losing as much as three times ($1.7 billion loss with just over $500 million in revenue) what it was charging per vehicle in the third quarter, and that trend is expected to continue for some time.

Scaringe says these issues are “well understood” as the company shifts its focus to reducing costs and driving volume this year, which will steer them toward positive gross margins.

As the company works to lower costs and improve operating efficiency, Rivian announced earlier this month it would be laying off 6% of its workforce.

RIVN stock is down over 70% in the past year as investors have fled for safer assets.

If the company wants to regain investor confidence, it will start by showing it has a clear path toward positive gross margins. Even if Rivian makes great EVs, if it can’t build them profitably, investors will not be interested.

Check back tomorrow for Rivian’s Q4 earnings results.