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Rivian experiences earnings Wednesday – right here's what we realized after 3 rivals reported final week

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Rivian CEO RJ Scaringe inside the corporate’s buyer expertise middle outdoors of its plant on Aptil 11, 2022 in Normal, Ill.

Michael Wayland / CNBC

Electric-vehicle maker Rivian Automotive will report its first-quarter earnings after market shut on Wednesday. Wall Street analysts polled by Refinitiv anticipate a lack of $1.44 per share on income of about $130.5 million – however these numbers are more likely to be only a small a part of the story.

The larger story is Rivian’s outlook for the subsequent few quarters. Like most automakers, Rivian has been combating world provide chain disruptions that started throughout preliminary Covid-19 lockdowns and have been exacerbated since Russia invaded Ukraine in February. CEO RJ Scaringe warned buyers in March that Rivian would not be capable to produce as many autos in 2022 because it had initially deliberate, regardless of a swelling order e book.

The electrical truck maker may additionally face questions on whether or not its largest buyers – Amazon and Ford Motor – are shedding confidence. Rivian’s shares slid over 15% on Monday following a CNBC report that Ford bought 8 million of its complete 102 million shares of the start-up.

Here are three themes that will come up in Rivian’s outcomes, if experiences final week from high-profile corporations within the EV area — Fisker, Nikola, and Lucid Group — provide any steering.

Demand for every kind of EVs could be very robust

Fisker, Nikola and Lucid all reported robust order books once they launched quarterly outcomes final week.

Lucid mentioned it now has over 30,000 orders for its expensive Air sedan, up from 25,000 final quarter – and that does not embody a latest order for as much as 100,000 Lucids over the subsequent 10 years from the federal government of Saudi Arabia, CEO Peter Rawlinson mentioned.

Nikola mentioned that it has acquired “purchase orders, letters of intent, and memoranda of understanding” for greater than 500 of its battery-electric heavy vans. That could not sound like a lot, however Nikola has rather a lot to show after allegations that founder Trevor Milton misled buyers. (Milton denies these allegations, however they nonetheless led to his abrupt departure.) That quantity can also be more likely to develop as extra fleets have an opportunity to judge Nikola’s battery-powered Tre semitruck, which has acquired strongly constructive opinions from early prospects, the corporate mentioned.

As for Fisker, it now has over 40,000 reservations for its fashionable Ocean SUV, set to launch late this yr. In truth, demand is so robust that CEO Henrik Fisker mentioned he’s working with the corporate’s manufacturing associate, Magna International, to extend manufacturing capability from a deliberate 50,000 per yr to as many as 150,000 per yr by the top of 2023.

Back in March, Rivian mentioned it had about 83,000 reservations for its R1T pickup and R1S SUV. Investors will probably be desirous to see the place that quantity stands on Wednesday.

Supply chain points are nonetheless an enormous problem

Automakers of all sizes have been combating a world scarcity of semiconductor chips since final yr, a consequence of surging demand for private computer systems and gaming units throughout Covid lockdowns. More lately, the Russian invasion of Ukraine has led to shortages of sure elements and a surge in costs for key commodities.

Fisker will not start manufacturing till mid-November, however each Lucid and Nikola have already needed to reset expectations for this yr’s manufacturing totals. In February, Lucid minimize its full-year manufacturing steering from 20,000 autos to between 12,000 and 14,000. The chip scarcity was a consider that call, Rawlinson mentioned, however so have been shortages of extra mundane supplies like glass and carpet. Lucid reiterated that steering in final week’s earnings report.

Nikola may in all probability promote fairly a number of greater than 500 vans this yr based mostly on demand, but it surely expects to construct solely 300 to 500 as a consequence of elements shortages. Although additional expansions are underway, Nikola’s Arizona manufacturing facility already has the capability to construct 2,500 vans per yr. The situation is that the corporate is not assured that it could actually safe sufficient chips – particularly, management items for its battery modules – CEO Mark Russell instructed buyers on Thursday.

Rivian has likewise already slashed its manufacturing forecasts for 2022. It mentioned in March that it expects to construct 25,000 autos this yr, down from the 50,000 it predicted in its IPO roadshow presentation final yr. Wall Street will probably be in search of an replace on manufacturing capability when the corporate experiences this week.

Raising additional cash will probably be sophisticated

As Tesla buyers know, elevating money is not troublesome when an organization’s inventory worth is excessive. But when the inventory is below strain, fundraising could be difficult.

With Rivian’s inventory down roughly 90% from its excessive in 2020, the corporate has needed to minimize offers with non-public funds to lift money on less-than-favorable phrases. In its most up-to-date deal, introduced final week, a personal investor agreed to purchase $200 million price of convertible notes – notes that can pay 8% curiosity if Nikola repays in money, and 11% if it repays in inventory.

Lucid nonetheless has loads of money from the deal that took it public, practically $5.4 billion, Chief Financial Officer Sherry House mentioned Thursday. But with large plans to increase its personal Arizona manufacturing facility, and a deliberate second manufacturing facility in Saudi Arabia – a complete of $2 billion in deliberate capital expenditures in 2022 – even comparatively cash-rich Lucid could discover itself in want of extra funds earlier than it could actually get to sustainable profitability. Unless its inventory worth surges, it might be laborious to drag off a multibillion-dollar increase with out diluting present shareholders considerably.

Fisker mentioned that it nonetheless has about $1 billion in money, however a lot of that’s earmarked for prices associated to beginning up manufacturing of its Ocean SUV. Its chief monetary officer, Geeta Gupta-Fisker, mentioned she expects Fisker’s working bills and capital expenditures to complete between $715 million and $790 million this yr.

At that charge, Fisker may want to lift $1 billion or extra of extra capital as quickly because the second quarter of subsequent yr – and like Lucid, its inventory is effectively off its highs, which can make an enormous secondary providing a problem.

Unlike its rivals, Rivian could not want to fret about money any time quickly. It had a hefty $18.4 billion available as of the top of 2021, and it mentioned in March that it expects to burn about $8 billion by way of the top of 2023 as it really works to ramp up manufacturing of the R1S, R1T and an electrical supply van for Amazon.

That money benefit could be the edge Rivian must revive its inventory worth in an EV panorama going through manufacturing challenges.

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