Rivian signals breakeven gross profit for 2025 and maintains 40,000–46,000 vehicle delivery guidance amid policy headwinds

Earnings Call Insights: Rivian Automotive, Inc. (RIVN) Q2 2025

Management View

• CEO Robert Joseph Scaringe highlighted “tremendous progress in R2 and our technology, including our autonomy platform,” expressing strong confidence in R2 as a “core focus” and a “critical step to achieving our objective of delivering millions of vehicles per year.” He noted the completion of R2’s general assembly and body shop in Normal, Illinois, and emphasized early investments in development and supplier validation for R2, with build quality and software stability described as “incredibly high.”
• Scaringe addressed changes in the external operating environment, stating, “Changes to EV tax credits, regulatory credits, trade regulation and tariffs are expected to have an impact on the results and the cash flow of our business.” He added, “We remain focused on developing world-class technology and efficiently scaling our manufacturing capacity in the United States in light of these policy changes.”
• Significant advancements in Rivian’s autonomy platform were discussed, with Scaringe stating, “We launched enhanced highway assist earlier this year and are seeing meaningful uptake in the usage of our autonomy platform.”
• CFO Claire Rauh McDonough reported, “During the second quarter, we produced 5,979 and delivered 10,661 vehicles from our manufacturing facility which was the primary driver of the $927 million of automotive revenue.” She explained, “We saw a significant decrease in production volume compared to the first quarter as a result of a variety of supply chain-related complexities partially driven by shifts in trade policy.”
• McDonough added, “Automotive gross profit in the second quarter was negatively impacted by lower production volumes, which resulted in approximately $137 million of fixed cost included in cost of revenues as compared to more normalized volumes. Automotive gross profit losses were $335 million.”
• She noted, “Our software and services segment reported another strong quarter with $376 million of revenue and $129 million of gross profit. About half of the revenue within software and services was a result of the software and electrical hardware joint venture we created with Volkswagen Group.”
• The company strengthened its balance sheet, receiving a $1 billion equity investment from Volkswagen Group and refinancing senior secured notes by issuing $1.25 billion of green secured notes at a 10% rate.

Outlook

• McDonough stated, “We are maintaining our delivery guidance of 40,000 to 46,000 vehicles and our CapEx guidance of $1.8 billion to $1.9 billion.”
• She added, “We anticipate the third quarter to be our peak delivery quarter of the year across both consumer and commercial vehicles.”
• Regarding policy impacts, McDonough said, “Increased tariffs… are expected to have a net impact of a couple of thousand dollars per unit for the remainder of 2025.”
• The company revised its regulatory credit sales guidance: “We expect total 2025 regulatory credit sales to be approximately $160 million as compared to our prior outlook of $300 million.”
• McDonough stated, “We expect our gross profit for the full-year 2025 to be roughly breakeven. We are also increasing our guidance for our adjusted EBITDA loss to $2 billion to $2.25 billion as a result of the modifications to our gross profit outlook.”

Financial Results

• Consolidated revenue for the quarter was $1.3 billion, with gross profit losses of $206 million. Included in this was $185 million of depreciation and $37 million of stock-based compensation expense.
• Adjusted EBITDA losses for the quarter were $667 million.
• McDonough noted, “We saw a slight increase in overall operating expenses in the second quarter as compared to the first quarter driven by the ongoing investments we’re making to develop R2 and our key technologies.”
• The company reported $7.5 billion of cash and cash equivalents and short-term investments on its balance sheet and expects to receive up to an additional $2.5 billion of incremental capital from the Volkswagen Group joint venture transaction, as well as up to $6.6 billion loan from the Department of Energy.

Q&A

• Dan Meir Levy, Barclays: Questioned the cost reduction strategy for R2. Scaringe responded, “The biomaterial cost on R2 is about half that of R1. That’s not a hope, that’s not a wish. That’s actually contractually negotiated with suppliers.”
• Levy also asked about the path to EBITDA breakeven in 2027 amid headwinds. McDonough replied, “Our objective is to drive to positive EBITDA as a result of the full-year R2 production and strong software and services performance that are anticipated as we look ahead to 2027.”
• Adam Jonas, Morgan Stanley: Inquired about the $6.6 billion Department of Energy loan. McDonough clarified, “We have not yet started construction of the site. And so that precludes us from having the opportunity to draw on that loan as we sit here today.”
• Mark Trevor Delaney, Goldman Sachs: Asked about cost of goods sold per vehicle increases and future ASPs. McDonough cited, “The largest driver… was driven by the lower production volume and therefore, the lack of fixed cost leverage,” and added, “We do anticipate there being higher levels of commercial van deliveries in the second half of the year relative to the first half of the year.”
• Daniel Roeska, Bernstein: Queried on EBITDA breakeven in 2027 given incentive losses. Scaringe responded, “The R2 cost structure… provides us with a platform… that’s just materially different than where we’ve been on R1.”
• Joseph Robert Spak, UBS: Asked for clarification on tariffs and regulatory credits. McDonough confirmed, “The couple of thousand dollars a unit on tariffs is consistent with the commentary that we provided last quarter, so there’s no change overall in terms of the outlook from a tariff impact on the business as we look at the ’25 impact.”
• Andres Juan Sheppard-Slinger, Cantor Fitzgerald: Sought details on R2 ASPs. Scaringe explained, “R2 has a range of different variants. And so we often talk about the entry price, the starting price being at $45,000, but there’s a middle spec variant, there’s a top spec variant.”

Sentiment Analysis

• Analysts expressed concerns about cost structure, the impact of tariffs and regulatory credit reductions, and the path to profitability, with questions focused on R2 economics, capital needs, and timing of cash flow breakeven; overall, their tone was neutral to slightly negative, pressing for specifics on cost reduction and strategic adjustments.
• Management remained confident in prepared remarks, frequently reiterating R2’s product-market fit and cost advantages, but their tone in Q&A was more cautious, acknowledging policy headwinds and a raised bar for EBITDA targets; Scaringe’s statements such as “we still believe achieving the 2027 positive EBITDA is the target we need to be driving towards” reflected determination but also awareness of greater challenges.
• Compared to last quarter, analysts’ tone shifted from curiosity about execution to increased skepticism about the company’s ability to offset policy impacts, while management shifted from celebrating gross profit milestones to defending guidance stability and explaining headwinds.

Quarter-over-Quarter Comparison

• The Q2 call reflected a more defensive tone from management, with explanations for lower production and revised regulatory credit guidance, compared to the prior quarter’s emphasis on consecutive gross profit gains.
• Guidance for vehicle deliveries remained at 40,000–46,000 units, but the regulatory credit outlook was cut nearly in half and gross profit guidance moved from positive to breakeven.
• The cost and production headwinds from trade policy and supply chain issues became more pronounced in management’s commentary, as opposed to the previous quarter’s focus on operational progress.
• Analysts in Q2 showed greater concern with headwinds and sustainability of cost reductions, whereas last quarter’s questions centered more on execution and capital allocation.

Risks and Concerns

• Management identified increased tariffs and changes to regulatory credits as major challenges, with McDonough warning, “recent policy actions will have an impact on our results and cash flow of our business.”
• The company is actively studying tariff mitigation strategies and expects regulatory credit sales to decline significantly, impacting gross profit.
• Analysts repeatedly questioned the sustainability of cost reductions, the implications of policy changes, and the ability to hit profitability targets, highlighting market uncertainty and the need for strategic pivots.

Final Takeaway

Rivian’s management emphasized confidence in the upcoming R2 launch and autonomy advancements while acknowledging that increased tariffs, reduced regulatory credit sales, and supply chain disruptions are affecting financial outcomes. The company maintained its full-year delivery and CapEx guidance but shifted its gross profit outlook to breakeven and raised its adjusted EBITDA loss target. Leadership stressed that structural cost reductions and new revenue streams from software and services are critical to achieving future profitability, especially as policy headwinds intensify.

Read the full Earnings Call Transcript