2 Key Things From Rivian's Earnings Call Investors Should Know

Last month, premium electric vehicle (EV) maker Rivian Automotive (RIVN -2.07%) turned in a third-quarter report that pleased investors, who drove shares up more than 17% on the day following the earnings release.

Revenue was $536 million, up from $1 million in the year-ago period and 47% higher than in the prior quarter. Adjusted loss was $1.44 billion, or $1.57 per share, compared with $7.69 per share in the year-ago period. The top line fell short of the analyst consensus estimate, which was $552 million, while the bottom line exceeded expectation, which was for an adjusted loss per share of $1.82.

Investors were likely at least satisfied with the quarter's results. But we can attribute the main catalyst for shares jumping after the release to management reaffirming its full-year 2022 production target of 25,000 vehicles. 

Earnings releases tell only part of the story. Here are two key pieces of news management shared on Rivian's Q3 earnings call that investors should know.

The all-electric R1S SUV. Image source: Rivian.

The R2 platform launch has been pushed back to 2026 from 2025

From CFO Claire McDonough's remarks:

We continue to work with the state of Georgia and the Joint Development Authority on our second domestic production facility. We are adjusting the timeline for launching the R2 platform and expect it will launch in 2026. We expect the R2 platform will unlock a massive global market expansion opportunity for Rivian and are excited about the development work that's underway.

As background, the R2 platform will include smaller vehicles than the company's R1 platform, which includes a pickup truck (R1T) and an SUV (R1S). Rivian hasn't disclosed specifics, but it's widely speculated that the new platform will include at least one smaller pickup and one smaller SUV.

Many investors were probably disappointed that Rivian pushed back the launch of its R2 platform to 2026. But from a liquidity and cash flow standpoint, it makes good sense for the company to focus on ramping up production at its Illinois factory (currently its sole production facility) for a while before launching the R2 platform. Rivian only recently added a second production shift in Illinois, so it's not even close to producing at full capacity. As it moves closer to doing so, its cost per vehicle produced should notably decline. 

It makes sense from another standpoint, too. As CEO RJ Scaringe said, Rivian wants to "have as close to a flawless ramp as possible with R2," and pushing back the launch enables the company to leverage "a lot of lessons learned as we've gone through the ramp" of our other vehicles.

Investors should expect a big gap between Q4 production and delivery numbers 

From McDonough's remarks:

In the fourth quarter of 2022, we expect the in-transit time from rail shipments [which typically exceed in-transit time for trucks, Rivian's original delivery vehicles] coupled with an increase in volumes from the ramp of our second shift toward the end of the quarter will cause a significant discrepancy between production and deliveries. 

The vehicle delivery number will probably be considerably less than the production number, primarily because of the two reasons the company's CFO mentioned. There's also a third reason, as she discussed on the call: A fair number of customers will likely not be available to take delivery during the last week of December. That's surely because some folks travel over the holidays.

Investors should just focus on the Q4 production number. The gap between production and delivery numbers should begin to narrow after the fourth quarter. 

Rivian's year-to-date (YTD) production and delivery numbers:

Data source: Rivian. 

Rivian needs to produce 10,683 vehicles in the fourth quarter to hit its 2022 production target of 25,000 vehicles. Rivian stock will likely be under pressure if the company's Q4 production number falls short.