Rivian's loss bigger than expected as rare earth curbs raise costs, credits fade

Reuters

4 hours ago

Aug 5 (Reuters) - Rivian Automotive (RIVN.O), opens new tab reported a higher-than-expected quarterly loss on Tuesday as disruption in supply of rare earth metals used to make parts of its electric vehicles raised costs and income from credits sold to traditional automakers dwindled.
Shares of the automaker fell nearly 5% in trading after the bell.
China's curbs on the export of heavy rare earth metals —essential components for motors — sharply increased material costs and disrupted supply chains, driving up the cost of EV production in the U.S.
Rivian's cost of revenue for each vehicle produced rose about 8% to $118,375 per unit sold from a year earlier, according to Reuters calculations.
"That's really reflecting a much lower production volume, which was largely driven because of challenges we had within our supply base as a result of a lot of the changes in policy," CEO RJ Scaringe told Reuters.
"Therefore, our costs look higher, but it's not as if our bill of materials grew or as if we became operationally less efficient."
Rivian will shut down production for three weeks in September, after a one-week pause in the second quarter, to integrate key components and prepare for the launch of the R2 SUV next year.
The company reported an adjusted loss per share of 80 cents for the second quarter, compared with analysts' average estimate of 65 cents, according to data compiled by LSEG.
Rivian also flagged a bigger adjusted core loss this year, expecting it to be between $2 billion and $2.25 billion, compared with $1.7 billion to $1.9 billion previously forecast.
The company largely blamed a tapering in the value of U.S. regulatory credits for the higher loss estimate.
The elimination of penalties for automakers not meeting fuel economy standards by President Donald Trump's administration has drastically reduced demand for regulatory credits, which companies like Rivian previously sold to traditional automakers to help them avoid emissions fines.
Meanwhile, Lucid (LCID.O), opens new tab cut its annual production forecast and missed Wall Street estimates for quarterly revenue as trade tensions took a toll on demand.
The luxury EV maker's shares slid more than 7% in extended trading after the company also said it had issues with the supply of magnets, but had resolved it by using substitutes.
The $7,500 federal EV tax credit expires at the end of September, eliminating a key competitive advantage that has driven demand, but analysts anticipate a surge in third-quarter sales as customers rush to make purchases before losing access to the incentive.
Rivian said on Tuesday it expected record deliveries in the third quarter across its consumer and commercial segments.
The Amazon-backed company's revenue for the second quarter stood at $1.3 billion, surpassing analysts' average estimate of $1.28 billion, according to data compiled by LSEG.
Rivian delivered 10,661 vehicles in the second quarter, marking a 22% decline from the same period a year earlier, as the company limited production to prepare for its 2026 model year launch.