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The
JV, which will give VW access to Rivian's electrical
architecture and software, is a "vote of confidence" in the
American automaker's prospects as it looks to produce and sell
less expensive R2 and R3 crossovers to compete with Tesla's
bestselling Model Y SUV.
Amazon.com-backed Rivian still lost about $39,000 per vehicle
sold in the first quarter, but analysts expect the company to
post its first quarterly gross profit in the fourth quarter.
Rivian halted production for three weeks in April to implement
cost-saving measures. Reuters reported last week the company has
retooled its manufacturing process, resulting in a 35% reduction
in the cost of materials for vans and savings of "similar
magnitude" for its other lines.
"Rivian will be sharing more about the R2 and R3 models, as well
as details on the deal with Volkswagen," said Michael Shlisky,
analyst at D.A. Davidson. "I am sure financial details will be
discussed, but they may wait until next week to share Q2 sales
figures and guidance updates."
Demand for electric vehicles has faltered amid high borrowing
costs, and as buyers turn to cheaper gasoline-electric hybrid
vehicles.
Wall Street expects Rivian to post second-quarter deliveries of
10,282 units and production of 9,369 vehicles, when it reports
quarterly figures next week, according to analysts polled by
Visible Alpha.
Even Tesla is struggling and is expected to report its first
drop in annual sales this year. It has slashed prices and is
offering incentives to sell more vehicles.
Among EV startups, Rivian is best placed to survive weak demand,
thanks to the investment from VW. Some of its peers such as
Fisker have filed for bankruptcy.
Rivian had nearly $6 billion of cash and cash equivalents at the
end of the March quarter.
To save cash, Rivian plans to make the new models at its
existing Illinois facility and paused investments in a
previously announced plant in Georgia.
Rivian's stock has lost more than a third of its value this
year, even after its best-ever one-day gain of 23% on Wednesday,
partly due to the company sticking to its production forecast of
57,000 for the year - roughly the same as 2023.
(Reporting by Akash Sriram in Bengaluru; Editing by Sayantani
Ghosh and Saumyadeb Chakrabarty)
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