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Investor's Corner

Rivian leads EV startups into worrying earnings week

Credit: Rivian

Rivian, Lucid, Fisker, and Nikola, will be reporting earnings this upcoming week, and they aren’t expected to deliver great news.

If it isn’t eminently obvious by now, entering the automotive industry is not an easy task. The incredibly high production cost and the typically slim margins associated with the industry mean that it is one of the most Darwinian market segments on the planet. Now, as Rivian and many other EV startups prepare to deliver Q1 earnings reports this week, the difficulty of market entrance will be on full display.

Rivian has become a clear leader in the EV startup segment thanks to its production capabilities and massive cash reserves that have allowed the business to progress despite its negative cash flow. According to Reuters, Rivian is expected to report a relatively modest 6.8% drop in cash reserves during Q1, down from roughly $12 billion in Q4 last year to $10.78 billion by the end of Q1. Rivian’s CFO maintains that the business is on track to achieve profitability by the second half of 2024.

Luckily for Rivian enthusiasts, the automaker’s dedication to cost-cutting and its continued production growth puts it on the right financial track, but it isn’t all good news. Rivian has recently stopped reporting reservation numbers, which hasn’t helped the company’s stock which has fallen by more than 90% since its IPO. Moreover, with the electric truck and SUV segment getting more competitive by the quarter, Rivian’s market moat has shrunk dramatically.

Following Rivian, Nikola and Fisker are expected to report similar percentage drops in cash reserves, approximately down 5%, and 15%, respectively. Taking a far more substantial blow to its wallet, Lucid is expected to report a massive 36% drop in cash reserves, which could put the company on track for financial trouble in the near future.

While none of the most well-known EV startups are performing exceptionally, some are performing far worse than others. This includes Lordstown Motors, which could be forced to file for bankruptcy shortly after reporting a production halt late this week. Similarly, electric van maker Arrival and Faraday Future have issued recent financial health warnings.

William does not own stock in any of the companies mentioned above.

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Rivian leads EV startups into worrying earnings week
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