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Rivian (RIVN) Q1 2022 earnings preview

Rivian CEO RJ Scaringe inside the corporate’s buyer expertise middle outdoors of its plant on Aptil 11, 2022 in Regular, In poor health.

Michael Wayland / CNBC

Electrical-vehicle maker Rivian Automotive will report its first-quarter earnings after market shut on Wednesday. Wall Avenue analysts polled by Refinitiv anticipate a lack of $1.44 per share on income of about $130.5 million – however these numbers are more likely to be only a small a part of the story.

The larger story is Rivian’s outlook for the subsequent few quarters. Like most automakers, Rivian has been combating international provide chain disruptions that started throughout preliminary Covid-19 lockdowns and have been exacerbated since Russia invaded Ukraine in February. CEO RJ Scaringe warned investors in March that Rivian would not be capable to produce as many automobiles in 2022 because it had initially deliberate, regardless of a swelling order guide.

The electrical truck maker may additionally face questions on whether or not its largest traders – Amazon and Ford Motor – are shedding confidence. Rivian’s shares slid over 15% on Monday following a CNBC report that Ford sold 8 million of its complete 102 million shares of the start-up.

Listed below are three themes which will come up in Rivian’s outcomes, if studies final week from high-profile firms within the EV house — Fisker, Nikola, and Lucid Group — supply any steering.

Demand for every kind of EVs could be very sturdy

Fisker, Nikola and Lucid all reported sturdy order books once they launched quarterly outcomes final week.

Lucid stated it now has over 30,000 orders for its expensive Air sedan, up from 25,000 last quarter – and that does not embrace a current order for as much as 100,000 Lucids over the subsequent 10 years from the federal government of Saudi Arabia, CEO Peter Rawlinson stated.

Nikola stated that it has acquired “buy orders, letters of intent, and memoranda of understanding” for more than 500 of its battery-electric heavy trucks. That will not sound like a lot, however Nikola has lots to show after allegations that founder Trevor Milton misled investors. (Milton denies these allegations, however they nonetheless caused his abrupt departure.) That quantity can be more likely to develop as extra fleets have an opportunity to judge Nikola’s battery-powered Tre semitruck, which has acquired strongly optimistic critiques from early clients, the corporate stated.

As for Fisker, it now has over 40,000 reservations for its trendy Ocean SUV, set to launch late this 12 months. The truth is, demand is so sturdy that CEO Henrik Fisker stated he’s working with the corporate’s manufacturing accomplice, Magna Worldwide, to extend manufacturing capability from a deliberate 50,000 per 12 months to as many as 150,000 per 12 months by the top of 2023.

Again in March, Rivian stated it had about 83,000 reservations for its R1T pickup and R1S SUV. Buyers will probably be desperate to see the place that quantity stands on Wednesday.

Provide chain points are nonetheless an enormous problem

Automakers of all sizes have been combating a worldwide scarcity of semiconductor chips since final 12 months, a consequence of surging demand for private computer systems and gaming units throughout Covid lockdowns. Extra not too long ago, the Russian invasion of Ukraine has led to shortages of sure elements and a surge in costs for key commodities.

Fisker will not start manufacturing till mid-November, however each Lucid and Nikola have already needed to reset expectations for this 12 months’s manufacturing totals. In February, Lucid lower its full-year manufacturing steering from 20,000 automobiles to between 12,000 and 14,000. The chip scarcity was a think about that call, Rawlinson stated, however so have been shortages of extra mundane supplies like glass and carpet. Lucid reiterated that steering in final week’s earnings report.

Nikola might in all probability promote fairly just a few greater than 500 vehicles this 12 months based mostly on demand, however it expects to construct solely 300 to 500 as a consequence of components shortages. Though additional expansions are underway, Nikola’s Arizona manufacturing unit already has the capability to construct 2,500 vehicles per 12 months. The difficulty is that the corporate is not assured that it might safe sufficient chips – particularly, management items for its battery modules – CEO Mark Russell advised traders on Thursday.

Rivian has likewise already slashed its manufacturing forecasts for 2022. It stated in March that it expects to construct 25,000 automobiles this 12 months, down from the 50,000 it predicted in its IPO roadshow presentation final 12 months. Wall Avenue will probably be on the lookout for an replace on manufacturing capability when the corporate studies this week.

Elevating more money will probably be sophisticated

As Tesla traders know, elevating money is not troublesome when an organization’s inventory worth is excessive. However when the inventory is beneath strain, fundraising might be difficult.

With Rivian’s inventory down roughly 90% from its excessive in 2020, the corporate has needed to lower offers with personal funds to boost money on less-than-favorable phrases. In its most up-to-date deal, introduced final week, a non-public investor agreed to purchase $200 million price of convertible notes – notes that can pay 8% curiosity if Nikola repays in money, and 11% if it repays in inventory.

Lucid nonetheless has loads of money from the deal that took it public, practically $5.4 billion, Chief Monetary Officer Sherry Home stated Thursday. However with large plans to broaden its personal Arizona manufacturing unit, and a deliberate second manufacturing unit in Saudi Arabia – a complete of $2 billion in deliberate capital expenditures in 2022 – even comparatively cash-rich Lucid might discover itself in want of extra funds earlier than it might get to sustainable profitability. Except its inventory worth surges, it might be laborious to tug off a multibillion-dollar increase with out diluting current shareholders considerably.

Fisker stated that it nonetheless has about $1 billion in money, however a lot of that’s earmarked for prices associated to beginning up manufacturing of its Ocean SUV. Its chief monetary officer, Geeta Gupta-Fisker, stated she expects Fisker’s working bills and capital expenditures to complete between $715 million and $790 million this 12 months.

At that charge, Fisker would possibly want to boost $1 billion or extra of further capital as quickly because the second quarter of subsequent 12 months – and like Lucid, its inventory is effectively off its highs, which is able to make an enormous secondary providing a problem.

Not like its rivals, Rivian might not want to fret about money any time quickly. It had a hefty $18.4 billion available as of the top of 2021, and it stated in March that it expects to burn about $8 billion by the top of 2023 as it really works to ramp up manufacturing of the R1S, R1T and an electrical supply van for Amazon.

That money benefit could be the edge Rivian must revive its inventory worth in an EV panorama going through manufacturing challenges.

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