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Rivian, Lucid tumble as analysts grow wary of 'lackluster' growth, new product timelines

Shares of Rivian (RIVN) and Lucid (LCID) hit new all-time lows on Thursday after reporting quarterly results that disappointed the Street and raised concerns that the pure-play EV makers are not evolving quickly enough, particularly with EV demand waning.

Rivian said it sees vehicle production for 2024 hitting 57,000 units, well below the 80,000 units expected. In terms of full-year profitability, Rivian said it sees an adjusted EBITDA loss of $2.70 billion vs. $2.59 billion expected, and the company said it would cut 10% of salaried staff, citing economic uncertainty.

"Perhaps more worrisome [than Q4 results], the company’s 2024 guidance appears aggressive, as it assumes an improvement in order rate, and seemingly incorporates no price cuts; Rivian also reiterated its goal of reaching positive gross margin in 4Q23 which seems optimistic amid demand concerns," Deutsche Bank analyst Emmanuel Rosner wrote in a note to clients on Thursday morning.

NEW YORK, NEW YORK - NOVEMBER 10: Rivian electric trucks are seen parked near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.  Rivian, an electric truck maker backed by Amazon and Ford, made its debut at Nasdaq going public with an IPO valued at close to $70 billion with 153,000,000 shares of Class A common stock at a public offering price of $78.00 per share. (Photo by Michael M. Santiago/Getty Images)
Rivian electric trucks are seen parked near the Nasdaq MarketSite building in Times Square on Nov. 10, 2021, in New York City. (Michael M. Santiago/Getty Images) (Michael M. Santiago via Getty Images)

Lucid reported a revenue miss, though a narrower-than-expected adjusted EBITDA loss, but its production outlook of 9,000 vehicles for 2024 disappointed Wall Street. Stifel analyst Stephen Gengaro called the production guidance “lackluster” in a note to clients this morning.

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“We continue to believe in LCID’s technology, but see 2024 as a difficult year with high interest rates and a high price point for LCID’s vehicles,” Baird analyst Ben Kallo wrote.

Kallo’s commentary could be applied to Rivian as well. Pure-play EV makers’ profitability plans are paramount to the investor thesis for the companies. Rivian, Lucid, and Fisker (FSR) have seen their shares hammered over the past year as a string of loss-producing quarters and a tough EV demand environment have left investors with little patience for underperformance.

On the flip side, legacy automakers like Ford, GM, Stellantis, and Volkswagen can pivot back to gas and hybrid engine offerings, while minimizing commitments to their EV game plans, and still be profitable.

Barclays analyst Dan Levy was positive on Ford’s change in EV spending. “While the EV transition remains central for Ford, commentary on the call indicated some pivot on EV strategy for Ford — reflecting the broader market challenges in EV demand. Overall, Ford is pushing to be more mindful of capital requirements and vehicle economics,” Levy wrote.

Ford rival Stellantis’s CEO Carlos Tavares said at a media roundtable this week that the automaker can plan its EV spending in stages. For instance, it can wait until 2027 to set up spending for its 2032 plans, instead of having to spend billions right now without any insight.

Pure-play EV makers don’t have that luxury. They have to spend money now and hope for the eventual EV transformation to happen.

New products coming ... but not fast enough

Workers marry the body structure with the battery pack and the front and rear sub frames as they assemble electric vehicles at the Lucid Motors plant in Casa Grande, Arizona, U.S. September 28, 2021.  REUTERS/Caitlin O'Hara/File Photo
Workers marry the body structure with the battery pack and the front and rear sub frames as they assemble electric vehicles at the Lucid Motors plant in Casa Grande, Ariz., Sept. 28, 2021. (Caitlin O'Hara/REUTERS/File Photo) (Reuters / Reuters)

Lucid’s latest round of EV price cuts last week will likely hurt the company’s margin going forward, and the company said on its conference call that tooling for its new Gravity SUV will impact those margins as well.

Lucid said it produced only 2,391 vehicles in the fourth quarter and delivered 1,734. With the company claiming scale will help bring down the costs, investors are questioning how much of a scale effect exists for a vehicle that starts around $69,000, going all the way up to $250,000 for the Lucid Air Sapphire.

Part of the big growth story for Rivan and Lucid will be their upcoming, less costly EV offerings, which both companies say will be cheaper to make. Rivian is set to debut its R2 vehicle on March 7, with Lucid also claiming it has a “high-volume midsize platform” in the works. The issue for both Rivian and Lucid is both of these vehicles are coming out mid-decade — early 2026 for Rivian and late 2026 for Lucid.

Analysts on both Rivian's and Lucid’s quarterly conference calls asked each company what they could do to pull forward those production start dates to no avail.

It seems investors and analysts may be more concerned about how crucial “time to market” is for these cheaper EVs in an evolving EV landscape than the companies are able to achieve themselves.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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