Start-up electric vehicle (EV) makers have been having a tough go of it lately. While Tesla operates profitably and at scale, the early-stage EV manufacturers are struggling with costs as they try to ramp up production.

Lucid Group, Fisker, and Polestar all just lowered expectations for 2023 production volumes. Even an experienced manufacturer like Ford was forced to suspend production of its popular F-150 Lightning and limit shipments of the Mustang Mach-E SUV for safety and production reasons in the first quarter as it absorbed losses on its EV sales.

But Rivian Automotive's (RIVN 2.24%) recently released first-quarter report struck a different tone. And one data point stands out from that report. 

Graph showing Rivian financial results for Q1 2023.

Rivian's average selling price (ASP) rose in the first quarter compared to 2022.

Prices up, not down

The revenue figure was the key takeaway from the earnings report, but not just for its almost 600% year-over-year increase. Based on the nearly 7,950 vehicles delivered, the average selling price (ASP) for Rivian's EVs was over $83,000 per vehicle. That compares to about $81,500 per vehicle, on average, for 2022.

While many other EV makers are lowering prices, Rivian realized an ASP increase. As new reservations are logged, that selling price is also likely to keep rising on its current product lineup. New reservation holders will likely pay more than customers with existing orders. The company started holding pricing from when reservations are made after it received backlash for aiming to cover rising raw material costs even on existing reservation holders.

Demand is solid

Investors knew demand was there for Rivian's consumer trucks and SUVs as its backlog of reservations grew from about 70,000 at the end of 2021 to 114,000 in late 2022. The company has since stopped reporting that figure. 

But seeing Rivian's ASP grow even as Tesla, Ford, and others cut prices to stimulate demand also indicates that demand remains strong. That's important as Rivian continues to develop new technologies that will be implemented in coming months and also used for its next-generation R2 models.

The company plans to launch the R2 platform in 2024 as its first high-volume, mass-market vehicle. Rivian CEO R.J. Scaringe said in a recent interview that the R2 models "will come at a much lower price point."

Capital position versus competition

The R2 models will be manufactured at Rivian's second manufacturing plant, which will be built in Georgia. That facility will be a $5 billion investment and represents some of the $2 billion in capital expenditures Rivian plans for 2023.

Bar chart showing Rivian cash and cash equivalents.

Data source: Rivian Automotive. Chart by author.

Rivian has a solid liquidity position compared to many of its upstart competitors. In the first quarter, it raised another $1.5 billion by issuing green convertible senior notes. It also recently increased the level of funds available through its asset-based revolving credit facility. That is in addition to the cash position on the balance sheet. 

Rivian also plans to cut costs as it develops and utilizes new technologies like lithium iron phosphate (LFP) battery packs and its in-house Enduro motor.

The company's shares have dropped nearly 25% this year, even after a recent move higher. While it remains a risky investment, Rivian has an enviable balance sheet, strong product adoption, and plans to improve efficiency. It is aiming to generate positive gross profit next year. Investors with the right risk appetite might want to take the positives from its first-quarter report as a reason to add some shares to their portfolios.