Rivian’s Profit Struggles: What’s Next

Summary:

• Rivian’s Q3-24 gross loss of ~$39,100 per vehicle highlights inefficiencies, despite a projected 20% material cost reduction by Q4-24.
• Rivian’s gross profit relies on $300M in 2024 regulatory credit sales, exposing vulnerability to volatile external factors.
• 42% of Q3-24 sales were leased, exposing Rivian to residual value risks and limiting scalability in wider markets.
• R2 platform aims for a 45% production cost reduction versus R1, targeting broader market adoption starting in 2026.
• Supply chain disruptions and Enduro motor shortages hindered Q3-24 production, reflecting Rivian’s ongoing operational fragility and cash burn risks.

Investment Thesis

Rivian Automotive’s (NASDAQ:RIVN) cost-cutting efforts in Q4-24 and operational advancements may narrow the per-vehicle-losses issue. While material cost reductions and streamlined designs may boost scalability, production inefficiencies, and supply chain vulnerabilities are standing to limit green-bottom-line

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