Rivian Automotive Inc. CEO RJ Scaringe said the automaker is not joining the electric vehicle price battle started by Tesla Inc. this year because of Rivian’s robust order backlog and the overall value of its vehicles at current price levels.
“We feel confident in the value proposition of what we’re delivering at our pricing levels today,” Scaringe said on the company’s fourth-quarter earnings call Tuesday.
While the current climate of higher interest rates generally reduces consumer demand, Rivian has an order backlog that will take until 2024 to fulfill.
“The demand backlog we have is very robust,” Scaringe said. “It gives us a clear line of sight well into 2024.”
He also noted that Tesla’s price cuts came after increases last year. The cuts were also targeted in lower-priced segments where Rivian doesn’t yet compete.
Rivian no longer provides a number for its order backlog, but in November it reported 114,000 preorders in the U.S. and Canada. That number was for its consumer vehicles, the R1T pickup and R1S crossover. Rivian also has a long-term order for 100,000 EDV delivery vans.
In its fourth-quarter earnings report, the EV maker said it continued to burn through cash but expected cost reductions and rising production levels will improve vehicle gross margins over time.
The automaker’s stock price fell about 10 percent in after-hours trading following the earnings report.
Rivian posted a $1.7 billion net loss in the fourth quarter and forecast full-year 2023 production of just 50,000 vehicles. That would be double its 2022 output but below analyst expectations.
The automaker said that supply chain issues will limit production from its Normal, Ill., factory and that it had scheduled downtime to implement new technologies, including its in-house Enduro motor.
“Our Enduro motor is expected to provide cost and range efficiencies while expanding our addressable market,” Rivian said in its fourth-quarter shareholder letter.
The base trim of the R1T will use the Enduro to bring down costs.
The R1T starts at $74,800, with shipping, using the Enduro dual-motor configuration. The base version is available for preorder but is not in production yet. The pickup that’s currently available starts at $88,800, with shipping, using a quad-motor configuration from an outside supplier and a larger battery pack.
The Enduro also will be used in the EDV vans Rivian will produce for Amazon, along with a new lithium iron phosphate battery pack to save costs.
Rivian’s production target of 50,000 vehicles includes the R1T, R1S and EDV. It does not break out production — or its forecast — by nameplate. The 2023 forecast is below analyst expectations of 67,170, according to Visible Alpha data cited by Reuters.
The Illinois plant has capacity of 150,000 per year. Scaringe has expressed frustration at having to run the plant at a fraction of its capacity because of supply chain issues and teething pains during the production ramp-up.
Last year, Rivian produced 24,337 vehicles and delivered 20,332, including fourth-quarter production of 10,020 and deliveries of 8,054.
Rivian originally had forecast production of 50,000 vehicles in 2022 before downgrading that to 25,000 because of supply chain problems.
Rivian, with headquarters in Irvine, Calif., reported fourth-quarter revenue at $663 million, compared with analysts’ estimate of $742 million, according to Refinitiv data cited by Reuters. The fourth-quarter net loss of $1.7 billion compared with a $2.5 billion loss a year earlier.
Rivian also reported cash and cash equivalents of $11.6 billion, down from $13.3 billion at the end of the preceding quarter.
Rivian announced a recall Tuesday of more than 12,700 vehicles related to an issue with a sensor in the front passenger seat belt system. The company estimates that fewer than 100 vehicles will require the part to be replaced.
Analysts say the EV maker is now facing headwinds from a challenging economic climate as the Federal Reserve raises interest rates, increasing the likelihood of a U.S. recession.
Rivian, which was first to launch an electric pickup, in late 2021, has fresh competition from the Ford F-150 Lightning and the coming Chevrolet Silverado EV and Tesla Cybertruck.
Along with Tesla, fellow EV startup Lucid Group has resorted to price cuts to incentivize demand. Those moves suggest a more difficult sales climate for luxury EVs.
Reuters contributed to this report.