Investor expectations from Rivian Automotive (RIVN -7.03%) had dampened in recent months. Execution has been the biggest concern for the electric vehicle (EV) maker so far, with its underwhelming production, slow deliveries, mounting losses, cash burn, and outlook for 2023 leaving much to be desired.

The market, though, sees a silver lining in Rivian's latest quarterly report. Some things from its report, indeed, suggest this was one of the rare quarters when execution wasn't entirely lacking.

Is this the turning point for Rivian stock?

Moving in the right direction

Rivian's first-quarter report sprung several surprises.

To begin, Rivian beat estimates on both its top and bottom lines. The maker of R1T pickup trucks, R1S SUVs, and last-mile electric delivery vans (EDVs) generated $661 million in revenue and reported a net loss of $1.35 billion, or $1.45 per share, in Q1.

While those losses are still huge, Rivian suffered an even bigger loss of $1.77 per share in the same quarter last year. That's a substantial improvement, and two cost components made the biggest difference to Rivian's bottom line in the quarter: selling, general, and administrative expenses, and research and development (R&D) expenses, both of which fell year over year.

I get it, low R&D spending can look dubious for an EV start-up. But that's part of Rivian's strategy to conserve cash. Rivian has cut back on capital spending in recent quarters as it continues to prioritize core projects. In Q1, for example, the company spent only $283 million in capital expenditures versus $418 million in the year-ago quarter.

Rivian's strategy could already be working in its favor, as the company ended the first quarter with a cash balance of $11.8 billion, only a marginal drop from its balance of $12 billion as of the end of the fourth quarter.

In other words, Rivian's losses narrowed and its cash burn slowed last quarter. That's exactly what investors have waited to see for a long time now.

Rivian's plan for the rest of 2023

Rivian's Q1 production was down about 6% sequentially, and it managed to produce only 9,395 units.

Rivian R1T pickup truck.

Image source: Rivian.

Now Rivian had already announced this number in April, and it didn't sit well with the markets as they questioned the company's ability to meet its 2023 target production of 50,000 units given the low Q1 production. Some, perhaps, even expected the company to revise its production outlook this week.

That, fortunately, hasn't happened, and Rivian has reiterated its production goal of 50,000 units for the year as it aims to prioritize ramping of production. We may have already gotten a glimpse of this in the first quarter when the company's production fell only marginally from Q4 despite its EDV production line being down for the most part. Rivian started using its in-house motor (Enduro) and lithium-iron-phosphate battery packs in EDVs in Q1 and will launch them in its 400-mile R1S and R1T variants later this year.

Rivian's guidance of 50,000 units implies doubling its capacity utilization, which if achieved, should reduce its fixed cost per vehicle significantly. Selling each vehicle profitably is the primary goal for any EV maker, and scaling up production is the first step in that direction. Rivian is apparently trying to do just that.

Watch Rivian stock

Rivian gave investors what they wanted: lower losses, slower cash burn, and a crisp focus on production. Rivian is also confident of earning positive gross profit in 2024, driven primarily by higher volumes. It also sees its average selling price ticking higher in the quarters ahead as it fulfills its low-priced, pre-March 2022 orders and moves to newer orders.

There's one point of concern though: Rivian stopped reporting backlog since the fourth quarter, so it's hard to predict the demand for its EVs. Rivian last reported net preorders of 114,000 units of R1T and R1S combined as of Nov. 7, 2022, aside from 100,000 EDV orders from e-commerce giant Amazon. At its latest earnings conference call though, Rivian's CEO RJ Scaringe said its backlog "still extends well into 2024", but the company needs a lot more to succeed. 

At this point, Rivian's story is all about execution, so it's too early to call this an inflection point based on one quarter alone. I'd wait at least another quarter to see whether Rivian continues to deliver before betting my money on it, though I'll now also watch the EV stock closer.