There have been more than a few delays in Rivian's (RIVN 5.35%) production, and that's one reason the stock has fallen over 80% from its high last fall. But operationally there are some bright signs at Rivian ahead of next week's earnings report. 

Investors willing to take a long-term view of Rivian could be rewarded with great performance if the company is able to get over some short-term hurdles and build a lasting electric vehicle manufacturer. 

Rivian R1T driving through water.

Image source: Rivian.

Rivian's production ramp

During the fourth-quarter 2021 earnings call, management said they expect to produce 25,000 vehicles in 2022, about half of what was previously expected. There was also the company's increased pricing, which caused an uproar among customers

Since then, Rivian backtracked on increasing prices for reservation holders, although it did raise prices for new customers. But reservation holders also got an update recently that said Rivian is focusing on a limited number of interior options, which they said will help get more vehicles out the door. 

In a complex supply chain like the auto industry, it can be a seemingly simple component that holds up production overall. Apparently, Rivian's interior suppliers could produce more of one interior than if they increased complexity and produced more varieties, which is the reason for the shift. Does this mean we will see better-than-expected production? That may be too much to ask, but I do think we will see more clarity on what the bottlenecks are to ramping production. 

Beyond Normal

Rivian is currently working on ramping its Normal, Illinois plant, but long-term it has a much bigger vision. This week, that vision tookk a step forward with an agreement with Georgia state officials to build a plant there. Rivian's plant will cost about $5 billion, and the state will provide $1.5 billion in incentives like tax benefits.

The Georgia plant is expected to produce about 400,000 vehicles when fully operational, and construction is expected to start this year. 

Between Illinois and Georgia, Rivian has a line of sight to a 750,000-vehicle production rate within about five years. Given that vehicle costs are trending toward $100,000 apiece for the current models, this could be a huge revenue generator. 

What will Rivian's financials look like? 

It's tough to gauge Rivian's potential value as a company without projecting what operations look like, but we do have some examples to learn from and now a clear idea of what production will look like.

If we assume that Rivian will be able to produce 750,000 vehicles per year by late in the decade and has an average sale price of $80,000 (which would be lower than today's pricing), it would generate $60 billion in sales. 

If Rivian generated an operating margin of 10%, which would be lower than Tesla (TSLA 5.34%) at 15% and higher than Ford (F 0.67%) at 6%, that would mean $6 billion in annual operating profit. I think this is a reasonable assumption given the fact that Rivian is following Tesla's no-dealer model and should have high margins given its truck and SUV market. 

Based on these assumptions, I think Rivian's stock could be a good value at a market cap of $29 billion. A lot has to go right for Rivian to reach this level of profitability, but with momentum behind EVs and the company already planning more capacity, I think this could be a great electric vehicle growth stock