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.
Rivian’s Cost-Cutting Efforts
During its call with analysts to discuss its third quarter, Rivian showed its strong focus on cost-cutting efforts. Executives described a significant technology upgrade at its factories, which will effectively reduce manufacturing costs going forward. Rivian’s commitment to streamlining its operations was further demonstrated by the announcement of higher vehicle projections for the full year. It is important to note that Rivian’s deal to provide delivery vans for Amazon.com Inc. is no longer exclusive. These positive developments prompted a 4.5% jump in Rivian’s shares during after-hours trading.
Chief Financial Officer Claire Rauh McDonough commented, “We believe these changes will meaningfully reduce our material costs and position Rivian to exit 2024 with a much-improved margin profile.”
Lucid’s Lowered Projections
In contrast, luxury EV maker Lucid Group reported falling third-quarter revenue and a wider net loss, resulting in a change in their vehicle projections for this year. Lucid now expects to deliver between 8,000 and 8,500 vehicles, down from the initial estimate of 10,000. This revision took into account the vehicles that can be delivered for the remainder of the year, primarily targeting government and retail customers in Saudi Arabia. To facilitate this, Lucid recently opened a plant in Saudi Arabia where the vehicle kits from Arizona will be shipped for final assembly and delivery. Unfortunately, these developments led to a 4.2% decrease in Lucid’s shares during after-hours trading.
Rivian’s Focus on Electric Trucks and Vans
Rivian has established itself as a prominent player in the electric pickup truck and van market. Its lineup of pickups, starting at around $73,000, has garnered significant attention. However, the current economic environment presents its own set of challenges for electric vehicle sales. Despite these obstacles, Rivian has managed to carve a unique position for itself.
Lucid’s Struggles
On the other hand, Lucid faces an even tougher market as it aims to sell its luxury EV, the Lucid Air, with prices starting at about $100,000. These higher price points, coupled with the current economic landscape, make it increasingly challenging for Lucid to secure a strong foothold in the market.
In conclusion, Rivian demonstrates a strong commitment to cost-cutting and technological advancements, positioning itself for long-term success. Conversely, Lucid grapples with lowered projections and broader challenges in the luxury EV market. Despite the shared industry, each company presents a distinct outlook based on their respective strategies and market positioning.
Sluggish EV and Auto Sales Pose Challenges for Lucid and Rivian
Lucid’s Prudent Approach to Overcoming Challenges
During a recent discussion with Lucid Chief Executive Peter Rawlinson, an analyst inquired about the company’s plans to adapt to the current interest-rate climate, which has made it more difficult for consumers to purchase vehicles on credit. Rawlinson assured that Lucid is taking a cautious approach, with the company’s CFO effectively optimizing operations.
Rawlinson emphasized that Lucid is evaluating various measures to enhance efficiency, including streamlining car production, managing working capital, and optimizing inventory. Additionally, the company is focused on improving delivery numbers. He also revealed that Lucid has an upcoming release—the Gravity electric SUV—scheduled for late 2024. Rawlinson believes that this innovative product has significant market potential and will be a game-changer for Lucid.
Investor Concerns Regarding Capital Investment Costs
Both Lucid and Rivian face investor concerns regarding their substantial capital investment costs. Slower growth in the EV market this year has raised questions about future profitability. To address this issue, Rivian has consistently emphasized its commitment to reducing costs. However, last month, the company surprised investors by announcing a $1.5 billion private-debt offering, causing some anxiety about its cash flow management.
While investing in either company carries a level of risk, Rivian appears to have a more stable business model that has endured economic challenges thus far. On the other hand, Lucid’s current position may be viewed as riskier in the industry’s current climate.
