RJ's confidence the past few days

[Meengr2]

Believe....R2

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[dhagn]

RJ and the company were not surprised by the worse GM this quarter. They guided for it on the Q3 earnings call. It was due to less EDV deliveries in the quarter. Their margins are roughly on track with expectations. Claire mentioned that R1 was "almost" contribution margin positive exiting Q4, which was their target.

I’m struggling to understand that statement. If R1 was almost contribution margin positive exiting Q4, why did gross loss widen compared to Q3, given that EDV only contributed 8% of Q4 revenue? Everything else was R1 sales and gross loss should have reduced if it was close to being contribution margin positive

 

[Rivian_Hugh_III]

Long time Rivian investor here. RJ in his recent earnings call and the CNBC interview the next morning, really spooked me.

1) Trust is important for investors; and listening to RJ's interviews and podcasts - I always felt he was a straight talking honest guy.
When stock took a dive beginning of 2024 due to 2023-Q4 deliveries, he gave an interview with Cramer, and explained it was due to Amazon not taking deliveries and that he was very confident of R1 orders. He spoke with so much confidence and fast forward to a month later, he starts the earnings call saying that Rivian is having R1 order issues. The confidence he showed in Cramer's interview just a month back, shows no where in his earnings call tone. What has changed in just a month's time? Or was he lying in Cramer's interview?

2) Like you, me and other Rivian-believers/optimists feel - the earnings report is not bad considering that 57K production goal and gross profit positive by end of 2024. BUT, had RJ been confident in the earnings call saying that "Look, we want to be gross margin positive by end of 2024, so we target 57K production only due to planned factory shutdowns to achieve this goal", things would have been different. But his tone appeared so low on confidence and kind of scared.

Now, this does not sound right. I find it hard to comprehend what could have gone wrong in a month's time that RJ suddenly appears to be so low in confidence.
It appears that something is brewing that really shook him. And that spooks me and i guess other investors too.

If any of Rivian bulls/optimists can address my above concerns, that would definitely give me some relief!

When you’re cutting 10% of your employees you can’t be too gleeful. I think he was seeking to be sober and directed. He’s probably also tired. But look, he’s a nice human. He’s built a company where thousands of people have bet their lives, moves, kids, careers in his company. He cares and feels the pressure.

 

[Meltdwn]

My post was not to say RJ has to follow what Musk did.

It meant to say that even Musk believes that Rivian has a good product and it will succeed if done right, which is a great acknowledgement and encouragement amid the gloom of the past few days.

I see that you created your new profile here on this forum yesterday. Most members sit back and read and learn for a bit. Then, the posts are related to the vehicle performance... how much they love it or what issues they have... or what concerns them about buying one.

This implies to me that you are likely a troll trying to bring down sentiment with negative opinions. How many other profiles do you have on this forum? What is your stock/option position? Are you an owner?

 

[RivianMatt]

I think we need to recognize that ALL car companies are feeling the headwinds of higher interest rates and inflation. Rivian is no exception. But, inflation is dropping and so will rates. When they do, people will start to buy. Combine that with the R2 release and I believe that sales and volume will increase. It will take a while but Rivian will get back on track.

Excellent point and a great reminder!

 

[RivianMatt]

To the point that all car manufacturers, not just Rivian, are experiencing headwinds, a closely-monitored industry metric is the seasonally-adjusted annual rate (SAAR) of new vehicle sales. Traditionally, a level of 17 million was considered a healthy market. That took a dive during the pandemic, and it has yet to fully recover. In December 2019, new vehicle sales posted their 5th consecutive year with the SAAR over 17 million. That declined to 14.5 million as of December 2020, before increasing slightly to 14.9 as of December 2021. However, as supply-chain issues became dominant, the SAAR declined to 13.7 million as of December 2022 before increasing to 15.5 million as of December 2023. However, it declined back down to 15.0 million as of January 2024. So the new vehicle sales market has yet to return to what is historically viewed as a healthy market, and as supply issues are largely behind manufacturers, it's pretty clearly a demand issue. To a large extent, it's a remarkable feat that Rivian is even where it is right now given the market headwinds it has faced the last 4 years.

 

[Twitter Fingers]

I’m struggling to understand that statement. If R1 was almost contribution margin positive exiting Q4, why did gross loss widen compared to Q3, given that EDV only contributed 8% of Q4 revenue? Everything else was R1 sales and gross loss should have reduced if it was close to being contribution margin positive

Contribution margin positive just means that the vehicle sells for the same price as the sum of its pieces. So the bill of materials is around 90k for an R1, and that's what they sell for. There is a wide gap between that, and being gross profitable which includes operating the factory, paying the workers, etc. they are also including their costs for servicing these vehicles that are leaving the factory with defects. That's all a part of gross margin.

The van is gross profitable, meaning Rivian makes money on the vans even after accounting for all of the expenses. That's the way the contract was written. Rivian bills Amazon for the total cost to produce the van plus an unknown profit margin. Part of the appeal to Amazon of letting Rivian out of the exclusivity contract is that if Rivian can sell more vans, it will lower the price that each van costs to produce and thus the cost+ structure will reduce the price of the vans for Amazon.

So with a quarter where very few of the gross profitable vans were sold, the margins will look much worse because what we basically saw in Q4 is the negative gross margin of R1 all by itself. The cost of the pieces plus the cost to operate the production line and the post-sale service center costs. It's ugly. But the vans have helped to hide some of that in quarters 1-3.

 

[Rivian Head]

EV industry is in tough spot.
#1 All except Tesla and BYD are hemorrhaging money.
#2 Both Tesla and BYD are willing to undercut its competitors’s price.
#3 Many Chinese EV makers are starting to declare bankruptcy.

I would not put my money in this cutthroat industry

 

[COdogman]

EV industry is in tough spot.
#1 All except Tesla and BYD are hemorrhaging money.
#2 Both Tesla and BYD are willing to undercut its competitors’s price.
#3 Many Chinese EV makers are starting to declare bankruptcy.

I would not put my money in this cutthroat industry

I'm not saying it's not cutthroat, but Kia and Hyundai saw EV sales growth even while others were bailing.

Despite GM and Ford pulling back recently, Hyundai has stuck by its EV initiatives. In November, Jose Munoz, Hyundai’s global president, told Reuters, “Based on what I see, I need more. If I had more capacity today, I could sell more cars.”

Munoz said Hyundai is “pulling ahead” with strong demand for its EVs. Kia also sold a record number of vehicles last year.
/QUOTE]

https://electrek.co/2024/01/03/hyun...801,195 vehicles total,and a new sales record.

 

[bdwalters]

The stock market and those obsessed with it are like a bunch of frightened squirrels running in all directions for no real reason at all.

The situation Rivian is in has not changed enough in the past week to even somewhat justify the overreaction we are seeing after 1 earnings call and an interview.

That might be true, but perception becomes reality. Perception is bad right now, which will make it really hard for Rivian to raise the cash they need for 2026 onward. They really need to nail the R2 reveal to start changing the narrative.

 

[COdogman]

That might be true, but perception becomes reality. Perception is bad right now, which will make it really hard for Rivian to raise the cash they need for 2026 onward. They really need to nail the R2 reveal to start changing the narrative.

I understand. Except too often with stock prices and lending, there are many who benefit from pushing a false narrative and seeing a stock tank or a company go under. It's honestly disgusting and makes it impossible for honest investors to ever get an accurate picture of what's happening.

Rivian's overall and long term position is essentially the same as it was before everyone started filling their pants with FUD a couple days ago. They should obviously always look for ways to save $ and be more efficient, but the macro view (5+ years) is no different today vs. last Saturday.

 

[bael]

I'll tell you something right now. I know RJ, and that wasn't RJ.
It's like something was wearing RJ. Like a ... like a suit. An RJ suit.

 

[Dark-Fx]

They should obviously always look for ways to save $ and be more efficient,

Didn't they bring Munro on board?

 

[rmalzo]

I think we need to recognize that ALL car companies are feeling the headwinds of higher interest rates and inflation. Rivian is no exception. But, inflation is dropping and so will rates. When they do, people will start to buy. Combine that with the R2 release and I believe that sales and volume will increase. It will take a while but Rivian will get back on track.

Rates are not dropping and people are not buying until after the election. Rivian is in serious trouble and I am a fan, a stockholder and an R1t owner. They are bleeding cash and if thiings don’t change they will not be able to build the R2 at all. Most likely they will be acquired if they are lucky enough to avoid bankruptcy

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