Rivian raises production target amid broader EV demand fears

Rivian Automotive Inc facility in California

By Abhirup Roy and Akash Sriram

(Reuters) -Rivian Automotive raised its production forecast for the full year by 2,000 vehicles to 54,000 units on the back of sustained demand for its trucks and SUVs on Tuesday, sending its shares up 4% in volatile after-hours trading.

Rivian's upbeat forecast is a small positive for an industry reeling from the double whammy of high inflation that has dulled buyer appetite and price cuts at market leader Tesla to stimulate demand.

Last month, Tesla CEO Elon Musk said he was concerned about the impact of high interest rates on car buyers, echoing caution from General Motors and Ford amid fears of a slowdown in demand.

Smaller rival Lucid cut its production forecast on Tuesday "to prudently align with deliveries," sending its shares down 4%. It now expects to produce 8,000–8,500 vehicles this year, down from an earlier projection of more than 10,000.

"I'm actually surprised to be honest at how much we've seen others pull back," Rivian Chief Executive RJ Scaringe said in an interview with Reuters. "I think it's going to create, unfortunately, somewhat of a vacuum of products in the market."

He said that "shifts in buying behavior beyond the tail end of 2023" were not influencing Rivian's investment strategy for cheaper R2 vehicles that the company expects to launch in 2026.

After multiple quarters of supply chain problems, Rivian may be starting to turn a corner, some analysts have said. But the company shocked investors with an earlier-than-expected bond issuance last month that sent shares crashing.

On Tuesday, it trimmed its capital expenses and loss forecasts for the year. The company was cutting costs through negotiations with suppliers and updates to components and systems, Scaringe said.

Rivian will also stop production for a week this quarter to update its assembly line - which Scaringe said partly kept him from raising the annual production outlook even more - ahead of a bigger shutdown next year.

"Rivian showed resilience," said Alec Lucas, analyst at Global X. "Rivian appears to be benefiting from a more favorable commodity pricing environment, order book realization and progress toward scale."

He said Lucid's 2023 results "were reflective of efforts to scale production as well as an ongoing restructuring initiative."

Car prices at both Lucid, which is backed by Saudi Arabia's Public Investment Fund, and Amazon.com-backed Rivian start at more than $70,000. That is similar to Tesla's Model S luxury sedan, but much higher than the cheapest Tesla model at around $38,000.

Rivian has stayed away from cutting prices and has instead taken to making its Enduro powertrains in-house to reduce dependency on suppliers and slash costs.

The company previously said sales of its higher-priced SUVs have been strongly outpacing sales of its pickup truck R1T, improving the average selling price of its vehicles.

Last month, it reported third-quarter deliveries above market expectations.

Rivian also said on Tuesday it will end its exclusivity deal to largest shareholder Amazon for its electric delivery van, opening the door for more customers around the world, but reiterated its commitment to fulfilling the order of 100,000 vans to Amazon by 2030.

Rivian said was speaking with other customers that are interested in the Rivian Commercial Vehicle platform, which underpins its electric delivery vans, but declined to reveal any names.

Rivian's third-quarter revenue of $1.34 billion was largely in line with Wall Street estimates, while its quarterly loss narrowed from a year earlier.

Cash as of end-September was $7.94 billion, down from $9.26 billion three months prior.

Lucid's quarterly losses narrowed as well, but its revenue fell short of estimates. Production fell nearly 30% to 1,550 vehicles.

(Reporting by Akash Sriram and Zaheer Kachwala in Bengaluru and Abhirup Roy in San Francisco; Editing by Krishna Chandra Eluri, Sayantani Ghosh and Leslie Adler)