Rivian Automotive (RIVN 7.81%) has had an interesting year, and it's featured two contrasting tales. On one hand, Rivian has been incredibly busy updating vehicle software and hardware for its R1 line, to pull out costs and improve profitability, while gearing up to launch its massively important R2 crossover early next year.
On the other hand, with no vehicle launches or massive developments, it's been more of a quiet year for investors. That's what made Rivian's 36% surge over the past month intriguing. Here's what drove the stock higher.
What's going on?
Like all electric vehicle (EV) automakers, Rivian is navigating choppy waters due to trade policy changes, tariffs, and new regulatory policy, which includes ending the federal $7,500 tax credit for EV purchases in September. But Rivian powered through the uncertainty to deliver a solid third quarter that managed to top estimates on both the top and bottom lines.
NASDAQ: RIVN
Key Data Points
Rivian's third-quarter adjusted loss per share checked in at $0.65, compared to Wall Street's estimates of a $0.72-per-share loss. Rivian also beat on the top line, with $1.56 billion in revenue compared to estimates of a flat $1.5 billion. But while these results were solid, they weren't the driving force behind investors' optimism.
Gross profit, which is a closely watched metric for investors and analysts alike, is a leading indicator of a company's ability to reach profitability. Rivian's third-quarter gross profit checked in at $24 million, a far better result than the $38.6 million loss expected by Wall Street, per FactSet.
While the gross profit result surprised many, maybe it shouldn't have. If we take a look at Rivian's gross profit over time, we can see consistent and mostly steady improvement quarter to quarter, with the exception of a production hiccup in the second quarter of 2025 that impacted results:
Data source: Rivian shareholder letters. Image source: Author.
Rivian's improvement in gross profit was driven in two ways. The first was that pulling costs out of its R1 platform helped improve automotive gross profit, which feeds into consolidated gross profit. Automotive gross profit led to a $130 million loss during the third quarter, and while that sounds bad, it was actually a $249 million improvement from the prior year. On the other side of the equation, software and services generated $154 million, thanks to Rivian's joint venture with Volkswagen.
Rivian's product pipeline. Image source: Rivian.
The road ahead
Rivian's improvement in gross profit is a big step for the company. It's essentially handing the baton to the R2, which will hit the roads in the first half of 2026, and is expected to drive company deliveries and financials significantly higher. The average price of a new vehicle in the U.S. market is now over $50,000, which makes the R2's addressable market extremely attractive, as the crossover is expected to be priced around $45,000.
In September Rivian held a groundbreaking ceremony at its next plant site in Georgia, which is expected to begin construction next year and will eventually add 400,000 annual units of production capacity across two phases. Initially, the R2 production will come from Rivian's original plant, which is being expanded for additional capacity.
Rivian exited the quarter with $7.7 billion in total liquidity, including almost $7.1 billion in cash and cash equivalents. That leaves the company well positioned financially for the R2 launch. Make no mistake, it's still fighting a long-term, uphill battle to break into the ultracompetitive and increasingly uncertain automotive industry. But right now gross profit shows things are moving in the right direction, and investors have been eating it up.
