Shares of Rivian (RIVN) and Lucid (LCID) hit new all-time lows on Thursday after reporting quarterly outcomes that disillusioned the Avenue and raised considerations that the pure-play EV makers will not be evolving rapidly sufficient, significantly with EV demand waning.
Rivian stated it sees automobile manufacturing for 2024 hitting 57,000 models, effectively under the 80,000 models anticipated. By way of full-year profitability, Rivian stated it sees an adjusted EBITDA lack of $2.70 billion vs. $2.59 billion anticipated, and the corporate stated it will reduce 10% of salaried employees, citing financial uncertainty.
“Maybe extra worrisome [than Q4 results], the corporate’s 2024 steerage seems aggressive, because it assumes an enchancment so as charge, and seemingly incorporates no value cuts; Rivian additionally reiterated its objective of reaching constructive gross margin in 4Q23 which appears optimistic amid demand considerations,” Deutsche Financial institution analyst Emmanuel Rosner wrote in a observe to shoppers on Thursday morning.
Lucid reported a income miss, although a narrower-than-expected adjusted EBITDA loss, however its manufacturing outlook of 9,000 automobiles for 2024 disillusioned Wall Avenue. Stifel analyst Stephen Gengaro known as the manufacturing steerage “lackluster” in a observe to shoppers this morning.
“We proceed to consider in LCID’s know-how, however see 2024 as a tough 12 months with excessive rates of interest and a excessive value level for LCID’s automobiles,” Baird analyst Ben Kallo wrote.
Kallo’s commentary may very well be utilized to Rivian as effectively. Pure-play EV makers’ profitability plans are paramount to the investor thesis for the businesses. Rivian, Lucid, and Fisker (FSR) have seen their shares hammered over the previous 12 months as a string of loss-producing quarters and a troublesome EV demand atmosphere have left traders with little persistence for underperformance.
On the flip aspect, legacy automakers like Ford, GM, Stellantis, and Volkswagen can pivot again to gasoline and hybrid engine choices, whereas minimizing commitments to their EV recreation plans, and nonetheless be worthwhile.
Barclays analyst Dan Levy was constructive on Ford’s change in EV spending. “Whereas the EV transition stays central for Ford, commentary on the decision indicated some pivot on EV technique for Ford — reflecting the broader market challenges in EV demand. General, Ford is pushing to be extra conscious of capital necessities and automobile economics,” Levy wrote.
Ford rival Stellantis’s CEO Carlos Tavares stated at a media roundtable this week that the automaker can plan its EV spending in levels. As an example, it could actually wait till 2027 to arrange spending for its 2032 plans, as an alternative of getting to spend billions proper now with none perception.
Pure-play EV makers don’t have that luxurious. They need to spend cash now and hope for the eventual EV transformation to occur.
New merchandise coming … however not quick sufficient
Lucid’s newest spherical of EV value cuts final week will doubtless harm the corporate’s margin going ahead, and the corporate stated on its convention name that tooling for its new Gravity SUV will affect these margins as effectively.
Lucid stated it produced solely 2,391 automobiles within the fourth quarter and delivered 1,734. With the corporate claiming scale will assist deliver down the prices, traders are questioning how a lot of a scale impact exists for a automobile that begins round $69,000, going all the way in which as much as $250,000 for the Lucid Air Sapphire.
A part of the large development story for Rivan and Lucid shall be their upcoming, more cost effective EV choices, which each corporations say shall be cheaper to make. Rivian is ready to debut its R2 automobile on March 7, with Lucid additionally claiming it has a “high-volume midsize platform” within the works. The problem for each Rivian and Lucid is each of those automobiles are popping out mid-decade — early 2026 for Rivian and late 2026 for Lucid.
Analysts on each Rivian’s and Lucid’s quarterly convention calls requested every firm what they may do to drag ahead these manufacturing begin dates to no avail.
It appears traders and analysts could also be extra involved about how essential “time to market” is for these cheaper EVs in an evolving EV panorama than the businesses are in a position to obtain themselves.
Pras Subramanian is a reporter for Yahoo Finance. You possibly can comply with him on Twitter and on Instagram.
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