Rivian Is Still Losing More Than $32,000 On Every EV Sold
Good morning! It’s Wednesday, August 7, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
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1st Gear: Rivian Lost $1.46 Billion This Quarter
It’s a tough time to be an electric vehicle maker with competition across the board, uptake not matching predictions and price wars across the sector hitting profits. Now, the extent of that hit has become clear for American EV maker Rivian, which just posted its latest losses.
The electric truck and SUV builder posted losses of more than $1.4 billion for the last three months, reports Automotive News. The deficit follows similarly eye-watering losses for the first three months of this year, and means that through 2024 it has been losing money hand over fist on every car it sells. In fact, the automaker loses more than $32,000 on every car that rolls off the production line in Normal, Illinois, as Automotive News reports:
For the first quarter, Rivian reported a net loss of $1.4 billion. It reported a net loss of $5.4 billion for the 2023 calendar year.
Rivian said it lost $32,705 per vehicle delivered in the second quarter, compared with a $32,595 loss per vehicle in the same period last year.
The losses have hit the automaker’s cash reserves, with Rivian reporting that it’s sitting on $5.8 billion in cash compared with the $7.9 billion that it held at the end of 2023. The hit came as a result of increased losses for the automaker despite a nine percent increase in sales compared with the same period last year.
Despite shifting 13,790 vehicles between April and June 2024, Rivian’s profits were hit by costs required to retool its factory and a production shutdown in April. As Automotive News adds:
Despite the cash burn, Rivian is on a path to profitability, executives said at a June investor event, bolstered by a $5 billion investment from Volkswagen Group. Part of the money will be used for a joint venture to incorporate Rivian’s electrical architecture into future VW Group vehicles.
Rivian is also using the new architecture, which it developed for the freshened R1 models, on lower-cost vehicles of its own beginning in 2026.
While Rivian’s current R1 vehicles start at more than $70,000 with shipping, the EV maker is preparing its Normal, Ill., factory for the launch of a smaller crossover, the R2, that will start around $45,000. It plans an even lower-cost R3 model but hasn’t given a timeline or price target for it.
Rivian reaffirmed its commitment to expanding production and deliveries through the remainder of 2024. After announcing its latest financial results, the automaker confirmed that it remained on track to build 57,000 vehicles in 2024, however deliveries are predicted to dip slightly in Q3 as a result of production slowdowns.
2nd Gear: Tesla Rolls Out Fix For 1.6 Million Cars
While Rivian is rushing to sell more of its cars, American EV rival Tesla is rushing to fix its cars. After more than a million EVs sold in China by Tesla were found to have faulty door latches, the American automaker is scrambling to roll out a fix to every car impacted.
A software issue uncovered in Tesla cars sold across China meant that the EVs weren’t able to detect whether the cars’ hoods were locked or not, reports Bloomberg. Now, the automaker is rolling out a software patch that should address the issue in Model X, S and Y cars. As Bloomberg reports:
A latch assembly issue may at times prevent the driver from being alerted about an unlocked front hood, which could allow the hood to fully open with the vehicle in motion, increasing the risk of a collision, according to a recall notice by the State Administration for Market Regulation on Tuesday.
The carmaker will deploy an over-the-air software fix to more than 1.6 million imported Model S and Model X vehicles as well as Model 3 and Model Ys produced locally between October 2020 and July 2024. Tesla will also contact users with cars that can’t be repaired with a software update for alternative ways to fix the issue, the notice said.
Tesla first began investigating the issue with its faulty hood latches in March. Since then, the issue has been identified in 1.8 million cars here in the U.S. as well as on the 1.6 million cars in China. A software update was rolled out to impacted cars in the U.S. earlier this year and now China will follow suit. The update will be essential for any 2021-2024 Model 3 and Model S cars, as well as 2021-2024 Model X and 2020-2024 Model Y vehicles.
The recall is the second such enormous fix that Tesla has been forced to issue in China this year, and follows a recall of 1.6 million vehicles with issues with their Autopilot systems. Back then, the fix was also rolled out in over-the-air-updates.
3rd Gear: Price Rises Boost Honda Profits
While losses are mounting at Rivian and profits are falling for Tesla, Japan’s automakers are having far better fortunes these days. Last week, Toyota posted a 20 percent profit boost and now Honda has shared its own earnings growth in its latest financial filings.
Honda reported a rise in quarterly profits, reports the Wall Street Journal. The boost in earnings for the company came as a result of price increases across its range of motorbikes and cars. As the WSJ reports:
The Japanese automaker said Wednesday that net profit increased 8.7% from a year earlier to 394.66 billion yen, equivalent to $2.73 billion, for the three months ended June. That beat the estimate of ¥338.90 billion in a poll of analysts by data provider Quick.
Honda said product-price increases and a weaker yen contributed to its earnings growth. First-quarter revenue climbed 17% to ¥5.405 trillion.
Operating profit for its car business rose 26% to ¥222.84 billion and that of its motorcycle business increased 24% to ¥177.65 billion.
The increased profits for Honda came despite a warning from the automaker earlier this year that sales for its financial year could be down. Sales for Honda in China were down a massive 32 percent compared with a year previously, leading the company to lower its full-year sales predictions to around 3.90 million cars.
Honda’s lowered projections for 2024 follow similar moves from Nissan.
4th Gear: Volvo Caught Up In Lawsuit Over Pulled Twitter Ads
Twitter has been a hot mess since Tesla boss Elon Musk was forced to buy it around this time last year. Now, the social media platform, which has been renamed X, is biting back after a whole host of advertisers left the site following Musk’s takeover.
Automakers including Volvo and Renault have now been named in a suit that’s suing an industry group that ran an advertising boycott of the social media platform, reports Automotive News. The Global Alliance for Responsible Media (GARM) has been accused by X of costing the social media company billions of dollars as a result of an advertising boycott that it says violated antitrust laws. As Automotive News reports:
The lawsuit, filed Tuesday in federal court in Texas by the Tesla Inc. CEO’s company, claims the industry group coordinated the boycott of the platform by advertisers under the guise of concern about whether X would adhere to certain brand safety standards.
“To put it simply, people are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott,” X CEO Linda Yaccarino said in a post on the platform. “This behavior is a stain on a great industry, and cannot be allowed to continue.”
Volvo and Renault are just two of the companies that are part of the GARM collective. In the industry group, they are joined by multinational giants such as Procter & Gamble Co. and Unilever Plc. Automotive News notes that other automakers are part of GARM’s parent group, the World Federation of Advertisers.
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