Meghana KandraRivian’s first-quarter results are out and it shows a negative gross profit of $502 million. As the manufacturer made 2,553 vehicles, around 1,227 units were delivered. It states that it expects to improve its production volumes, but the negative gross profit is expected to continue which is related to labor and overhead.
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“Additionally, we recorded a lower cost [sic] or net realizable value (“LCNRV”) adjustment to reflect the amount we anticipate receiving upon vehicle sale (after considering future costs necessary to ready the inventory for sale) and losses on firm purchase commitments. These expenses negatively impacted gross profit in the first quarter of 2022 by $188 million,” noted Rivian in its Q1 2022 Shareholders Letter.
The EV maker has been facing supply chain challenges as well. It experienced increased logistics costs, leading to limiting factors in production. Despite the constraints, the automaker reaffirmed that its 2022 annual production target would be 25,000 vehicles. It believes that the production can increase two times than the current expectations if the supply chain issues were to be resolved. Till May 9, 2022, Rivian is known to have produced around 5,000 vehicles since the start of production last year. According to its planned total annual capacity, both the facilities – Normal and Georgia should be able to produce 600,000 units.
Vehicle prices and pre-orders
According to the report, till May 9th, 2022 there are more than 90,000 R1 pre-orders in the US and Canada. This growth has been without any paid marketing or media. The orders continued despite the increase produced in both the US and Canada. Currently, the average price of the vehicle R1 is $93,000.
As stated in the report, “This change ensures that when a build is configured, the customer is choosing from the latest features, packages, and pricing. This new reservation system equips us to better navigate managing a large demand backlog with inflation uncertainties, planned content changes, and enhancements to ensure customers are offered the latest product offerings,”
Rivian updated its reservation system due to supply constraints and the rising prices for raw materials and other production costs. The new preorder process will separate reservation and configuration steps. New customers can reserve their vehicle but can only browse through configuration options. Preorder holders can save specific configurations when their build slot’s date is closer. Despite its slow start and that whole price hike catastrophe, Rivian remains optimistic it will hit its revised production targets by the end of the year. “These figures are in line with the company’s expectations, and it believes it is well-positioned to deliver on the 25,000 annual production guidance provided during its fourth-quarter earnings call on March 10, 2022.”