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EV demand, profitability path key items to watch

Electric adventure-vehicle maker Rivian (RIVN) is scheduled to report third quarter earnings after the bell on Tuesday, after rivals in the sector have reported demand issues and pull back on spending.

For the quarter, Wall Street is expecting Rivian to report revenue of $1.31 billion, with an adjusted EPS loss of $1.32, per Bloomberg estimates. That revenue figure would represent a 17% jump from Q2’s $1.12 billion and nearly 150% more than the $536 million reported a year ago. On an adjusted EBITDA basis, Rivian is expected to report a loss of $1.04 billion, narrower than last year’s $1.307 billion loss.

Last month, Rivian reported deliveries of 15,564 EV trucks, more than the 14,973 estimated per Bloomberg. Production Q3 also topped estimates at 16,304 vehicles. Rivian also said it is on track to hit its 52,000 unit production forecast for 2023.

In its Q2 report, Rivian narrowed its full-year adjusted EBITDA loss to $4.2 billion, compared with the $4.3 billion it saw previously. The $4.2 billion EBITDA loss projection Rivian sees for 2023 is $1 billion less than the EBITDA loss it reported in 2022.

Investors were hit with a piece of bad news in Q3, when Rivian revealed a $1.5 billion convertible debt offering in early October. Wedbush analyst Dan Ives called it a “gut punch” to investors at the time.

Rivian shares are down nearly 10% since then and 46% year-to-date, while the S&P 500 is up over 14% for the year. Shares of EV makers and legacy automakers like GM and Ford have also been hit hard, with the companies reporting waning or “evolving” EV demand.

Last month Ford (F) paused $12 billion worth of investments in its EV projects until “capacity” is needed. Ford said in its earnings report that US EV buyers were “unwilling to pay premiums for [EVs] over gas or hybrid vehicles, sharply compressing EV prices and profitability.” Fellow Big Three automaker GM (GM) pushed back its EV truck expansion in late October, noteing “evolving EV demand” as the main reason why it is slowing its EV truck volumes.

CEO RJ Scaringe stands outside the startup Rivian Automotive's electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. Picture taken April 11, 2022.  REUTERS/Kamil Krzaczynski

CEO RJ Scaringe stands outside the startup Rivian Automotive’s electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. Picture taken April 11, 2022. REUTERS/Kamil Krzaczynski (Kamil Krzaczynski / reuters)

Even Tesla (TSLA) isn’t immune to the EV demand story, with the automaker delaying construction of its upcoming Gigafactory in Mexico due to concerns about global economic conditions stemming from rising interest rates.

That being said, Rivian and its lifestyle-oriented trucks might be an outlier in the EV landscape.

Rivian’s aforementioned Q3 deliveries were up 23% sequentially compared to Q2, even as company raised prices after selling out its initial cheaper orders. Unlike Ford and GM, Rivian is targeting coastal and higher-income buyers who are more immune to rising prices and higher interest rates compared to the broader population.

Though Rivian is far from profitable, it has been cutting costs and predicts gross profits by 2024. Investors will be looking to hear more from the company and CEO RJ Scaringe about its profitability path going forward.

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

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