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Rivian reported mixed Q2 earnings results; the stock fell about 5% after trading hours.
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The company says it expects headwinds due to changing policies around EVs in the US.
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Tariffs will impact the cost of production by a “couple thousand dollars,” Rivian’s CFO said.
Rivian is expected to experience some headwinds in the near future due to the rapidly evolving policies that impact EV production in the US.
Rivian’s CEO, RJ Scaringe, said during the company’s second-quarter earnings call on Tuesday that the “changes to EV tax credits, regulatory credits, trade regulation, and tariffs are expected to have an impact on the results and the cash flow of our business.”
The company increased its anticipated EBITDA losses — or earnings before interest, taxes, depreciation, and amortization — to a range of $2 billion to $2.5 billion for the 2025 fiscal year. That’s up from the previous guidance of $1.7 billion to $1.9 billion reported last quarter.
Claire McDonough, Rivian’s chief financial officer, provided a sobering picture of how the policy environment will have an impact on Rivian’s business.
The CFO said the company expects to “roughly break even” for total gross profit by the end of 2025. Total sales in regulatory credits — or credits that automakers receive in the US to incentivize EV production — are expected to be around $160 million, nearly half of its prior outlook of $300 million in regulatory credit sales, according to McDonough.
Production costs will also increase for the remainder of the year, McDonough said.
Recent policy changes will impact Rivian’s cash flow, she said, and “this includes increased tariffs, which had a minimal impact during the second quarter but are expected to have a net impact of a couple thousand dollars per unit for the remainder of 2025.”
Guidance and results for Rivian’s second quarter provide a snapshot of how the Trump Administration’s move to eliminate federal incentives for EVs, such as a $7,500 clean vehicle credit, will impact automakers.
Tesla, the leading EV company in the US, and other automakers have been urging consumers to buy their electric cars before the tax credits expire later this year.
Scaringe previously told BI that the end of the EV credits will have minimal impact on his company, but it will ultimately slow down US automakers’ momentum to transition from gas-powered cars to electric vehicles.
“I think that the move away from some of the tailwinds that were previously in place for electric vehicles is actually good for Rivian, it’s good for Tesla, it’s bad for the US auto industry, and it’s bad for my kids,” he said at the time.
Despite the near-term challenges, Rivian appears to be on track to deliver its much-anticipated R2 model, a $45,000 to $50,000 midsize SUV expected to come next year.
Scaringe said during the call that Rivian has secured contracts with suppliers that ensure the cost of making R2 will be about “half that of R1.”
“We’ve spent the last two years in development and time negotiating with suppliers — to put in place contracts that we both selected —suppliers that can scale with us and ramp appropriately, but also can deliver a much lower cost structure,” he said.
The company reported a mixed second-quarter earnings result, slightly beating Wall Street estimates on revenue — $1.3 billion vs. $1.28 billion estimate — while reporting higher operating losses than anticipated. Total operating expenses were $908 million, Rivian reported, slightly missing the Street’s estimate of $876.2 million.
Rivian’s stock fell about 5% after trading hours.
Read the original article on Business Insider
