R1S sport utility vehicle being manufactured.
Courtesy Rivian
Electric-truck startup Rivian Automotive quietly passed a milestone Monday. The company hosted its first annual meeting as a publicly traded company. Rivian also released a new letter to shareholders reviewing the past year as well as looking ahead.
Annual meetings aren’t always a big deal for investors. They are a chance to take care of some corporate business and vote on various shareholder proposals. Still, this is Rivian’s first and the letter has some tidbits investors will want to know and remember.
Here are three noteworthy items along with some recent context.
Cash Is King
Rivian (ticker: RIVN) ended the first quarter with more than $17 billion in cash on its balance sheet. Just how long that cash will last is the big question for shareholders. Rivian plans to spend more than $7 billion in 2022 on capital and operating expenses.
Rivian said it has “focused [its] roadmap” to ensure that the cash pile funds the company through 2025 and through the launch of its second vehicle platform, the R2.
Wall Street agrees with the company. Analysts forecast between $13 billion and $14 billion in cash burn, cumulatively, between 2022 and 2024.
Rivian’s first two commercial products, the R1T pickup truck and R1S sport utility vehicle, are built on a common platform. The R2 would support new, different-sized models. The second platform is analogous to how Tesla (TSLA) developed its business. First, Tesla launched the Model S and X. The Model 3 and Model Y share Tesla’s second platform.
Batteries Are Key
The battery supply chain is a big deal for all EV companies and EV investors. Rivian is no exception, and the company estimates battery production will increase 20-fold over the coming 10 years.
Rivian is looking to strengthen partnerships with battery makers and other companies along the battery supply chain to make sure it has competitive battery costs. That strategy is the one being pursued by most large auto makers that plan to make millions of EVs a year by the end of the decade.
Now They Have to Build Vehicles
The biggest challenge for Rivian in the year ahead is ramping up production.
Building cars isn’t easy. “Scaling vehicle production is non-trivial as each unit represents a complicated symphony of component supply,” read the letter.
The company plans to ship 25,000 units in 2022. The company has enough capacity for about 150,000 units, but Wall Street doesn’t predict sales will rise north of 100,000 units until 2024. That’s also the year analysts project positive gross profit for a full year. Beating those analysts’ estimates will be key for the stock in coming quarters.
The stock could use good news. Through Monday, Rivian shares have fallen about 72% this year, far worse than the 14% and 9% comparable, respective drops of the S&P 500 and Dow Jones Industrial Average.
A slower-than-expected production ramp, combined with inflation and rising interest rates, have sapped some investor enthusiasm for Rivian stock.
Write to Al Root at [email protected]
