Nikola, Rivian and Lucid: What Happened in Q2?
In a busy week where EV start-ups Rivian Automotive, Lucid Motors and Nikola Corporation all reported earnings and big announcements, here’s what you may have missed.
Rivian Surpasses Estimates
Rivian executives raised the company’s production guidance by 2,000 to 52,000 after beating estimated production and delivery estimates. Last quarter it did the same, delivering 7,946 vehicles on a consensus of 7,752 and producing 9,395 vehicles vs. 8,752 consensus.
“During the second quarter, we produced 13,992 vehicles, which represents a 50% increase compared to the first quarter. Importantly, approximately 70% of the R1 units produced during the second quarter were R1S vehicles,” said Rivian CEO RJ Scaringe.
He added that it was the first time the R1S quarterly production was higher than R1T, Rivian’s flagship truck. The R1S is also more profitable, starting at $78,000 compared to R1T’s $73,000.
The company has struggled with justifying the costs of its vehicles, with competitors such as the Ford F-150 Lightning starting nearly $10K below the R1T. Earlier this year, CFO Claire McDonough said that “material cost reductions” would play a large part in bringing down the price, something the company focused on with the launch of the in-house Enduro Motor and the coming smaller, theoretically cheaper R2 to be unveiled in early 2024 and officially launched in 2026.
The reductions were seemingly successful, as gross profit per vehicle increased by approximately $35,000 compared to Q1.
“We achieved meaningful reductions in both R1 and EDV vehicle unit costs across the key components […] Maintaining our cost reduction efforts through consistent focus and collaboration across all levels of the company is a core part of the culture we're building,” said Scaringe.
Scaringe also highlighted Rivian’s partnership with Amazon. So far, the company has over 5,000 electric delivery vans in 800 cities in the United States, with deliveries initiated in Europe.
For the full year, executives estimate an adjusted EBITDA loss of $ -4.2 billion (a reduction from the previous $ -4.3 billion) and lowered the capital expenditure guidance to $1.7 billion from $2 billion.
Lucid's Bumpy Road
On the other hand, fellow EV start-up Lucid Motors had a rougher, but still optimistic quarter.
Before reporting earnings, the company announced it was reducing the price of its Air Pure by $5K to $82.4K, Air Grand Touring by $28.4K to $125.6K, and Air Touring by $12.4K to $95K as part of a summer promotional event, along with exclusive leasing and financing options. Both offers are only valid through Aug. 31.
When asked about the reductions, CEO Peter Rawlinson said that while he couldn’t disclose how they decided on the cuts, he “would say is that we're already seeing a very positive feedback from our recent adjustments. We've also seen the value of just growing the awareness of the brand.”
In Q2 the company produced 2,173 vehicles and delivered 1,404, falling short of the expected 2,000 deliveries. This makes for 4,487 EVs produced so far in 2023 and could mean the company misses its already downgraded production guidance of 10,000 cars.
Financially, Lucid missed the estimated revenue mark for the third consecutive quarter, bringing in $150 million in revenue versus the expected $205 million. Operating expenses grew by $238 million year-over-year to $838 million.
CFO Sherry House reiterated that cost improvements were still at the forefront of the company’s goals.
“[…] In 2023, we've experienced significant improvements in our logistics costs through more efficient routing combined with declining rates globally […] We believe that some of the largest opportunities exist in bill of material costs, manufacturing overhead, scrap reduction and professional services spend. While some of these cost reductions can be realized this year, we expect much more will be realized in 2024,” she said.
Going forward, executives are still optimistic about Lucid’s second half, particularly the production and first deliveries of the Air Sapphire. Production is scheduled to begin in September and customers will begin receiving it in October. It is marketed as having a 0 to 60 time of 1.89 seconds, a standing-quarter mile time of 8.95 seconds, and a range of 427 miles.
“But whilst I think the power and the performance is impressive, I can only begin to tell you how immensely delightful and responsive Sapphire is just to drive normally, even when you choose to exploit a mere fraction of the performance,” Rawlinson said.
Lucid’s deal with Aston-Martin is expected to close later this year, and its first SUV, the Lucid Gravity, will be unveiled in November, with production still on track for an early 2024 start.
The Rise of Nikola
Some of the biggest news came from Nikola, which seemingly delivered on its promises and announced the resignation of its CEO, Michael Lohscheller, effective immediately on Aug. 4.
The executive said he is dealing with a family health matter and will return to Europe, although he will remain at Nikola through the end of September in an advisory capacity. Lohscheller has only led the company for eight months, taking the reins after Mark Russell retired at the end of 2022. He will be succeeded by Steven Girsky, the current chairman of the board of directors.
“Steve was an early believer and investor in Nikola and has been pivotal to the company's success […] His intimate knowledge of Nikola business and products will enable him to hit the ground running with the speed required to capitalize on the exciting opportunities in front of us,” Lohscheller said. “I look forward to seeing the impact he will have in his new role as CEO.”
The news comes at the end of a successful second quarter. The company announced deals with brands such as J.B. Hunt and Bayotech while winning multimillion-dollar grants in California for hydrogen fuel infrastructure. It makes for a sharp 180 from the beginning of the year, when executives announced layoffs would occur as the company reprioritized the business to focus on the North American market and its hydrogen fuel trucks as it tried to cut costs.
While in Q1, Nikola lost $126 million on $11.12 million in revenue, Q2 was marginally better with $125 million in loss and $15 million in revenue. On the sales side, there were 66 retail sales and 45 wholesale deliveries during the quarter, which went toward reducing Nikola’s inventory to 139 BEVs on site and 92 at dealers. The company paused production of the trucks earlier this year, with plans to resume on a build-to-order basis in early 2024.
On the hydrogen fuel cell side, Lohscheller said Nikola has taken 18 orders for more than 200 of the trucks going into Q3. Serial production of the vehicle began on July 31 at its Coolidge, Arizona, plant after a pause in late June to convert production lines to accommodate both battery electric and hydrogen vehicles. The first deliveries of the hydrogen trucks are expected in September.
Lohscheller also briefly addressed the fire at Nikola headquarters in June, where five battery electric trucks caught fire, emphasizing the safety measures the vehicles undergo.
“Only one truck started the fire and spread to the other four […] We want everyone to know Nikola's trucks are designed with safety as the first priority and are rigorously tested prior to release. These tests include front, side and rear crash testing, battery coolant leakage monitoring and battery thermal runaway detection,” he said.
Looking forward to Q3, the company expects to deliver 60 to 90 trucks for between $18 million and $28 million in net truck revenue, while reducing operating expenses by more than 30% compared to the first half of 2023, down to $90 million to $100 million. They also intend to further reduce cash burn to $120 million.
As for the full year, CFO Stasy Pasterick updated the production guidance.
“We expect to deliver 300 trucks to 400 trucks for total revenue of $100 million to $130 million […] Operating expenses for the full year are now expected in the range of $395 million to $415 million, including $85.1 million of stock-based compensation,” she said.
