Rivian’s success boosts shares in a tough EV startup market.

Rivian Automotive Inc Shares Rise 7% Despite Stiff Competition

Shares of Rivian Automotive Inc rose 7% on Wednesday, standing out in a poor quarter for electric-vehicle startups. The company’s positive earnings reiterated its annual production forecast and beat quarterly revenue estimates, adding nearly $800 million to its market valuation.

Stemming Cash Burn

Rivian’s move to raise prices last year has helped the EV maker stem cash burn, while peers Lucid Group Inc and Nikola Corp are struggling with ballooning losses. The company’s expanded offerings, including a larger battery called the “Max Pack,” will aid demand, according to CEO RJ Scaringe.

Competition and Skepticism

However, some analysts remain skeptical about the prospects of a company caught in a price war started by market leader Tesla Inc and facing increasing competition from well-heeled legacy players such as Ford Motor Co. Michael Shlisky of D.A. Davidson, who was among the 10 analysts that lowered their price target, said, “We continue to like the truck, but not necessarily the stock and the headlines that may be ahead.”

Production Volume and Positive Gross Margins

Shlisky said Rivian has seen some success in reducing costs by switching to self-made Enduro motors and cheaper lithium iron phosphate batteries, but its efforts to renegotiate with suppliers for lower prices might not yield results as it lacks production volume. Nonetheless, the company is expected to benefit from a pullback in commodity prices and easing supply chain issues. Canaccord Genuity analysts said, “As sagging EV commodity prices, technology improvements, and supply chain loosening positively impact operations, we see a logical path to positive gross margins next year.”

Graphic Representations

• Graphic: Rivian quarterly loss drops to lowest in over a year – https://www.reuters.com/graphics/RIVIAN-RESULTS/gkvlwknaapb/chart.png
• Graphic: EV stocks throttled by supply chain constraints, demand woes – https://www.reuters.com/graphics/RIVIAN-STOCKS/byvrldooeve/Pasted%20image%201683711198286.png
• Graphic: Rivian and Lucid account for a fraction of Tesla’s sales – https://www.reuters.com/graphics/TESLA-ELECTRIC/STARTUPS/myvmowmnevr/chart.png

Despite the challenges, Rivian Automotive Inc remains a promising player in the EV market, and investors will be watching closely as the company navigates the road ahead.