Thread by @alojoh

WARNING: Rivian CFO gave an interview full with giant red flags!

Rivian reports deliveries in 2.5 weeks, brace for impact!

On Tuesday (11June), Rivian’s CFO was interviewed at DB’s auto conference. The way she avoided and not answered questions represents giant red flags!

This thread goes through each question in a summarized fashion since several questions/answer are quite verbose.

Question 1. “Can you talk to us about the main changes … were (you) able to liquidate inventories of the old model?”
Rivian CFO completely avoids the question. CFO only talks about the vehicle’s performance specs.

Question 2. The analyst tries a second time “can you quantify for us the cost of margin benefits from these new R1s?”
CFO again avoids the question.

Question 3. Analyst gives up and moves to a different topic.
CFO provides weak answers. Mostly repeats stuff mentioned already.

Question 4. Analyst asks about R1 demand (first time) “Rivian products being impacted … how do you address the current environment?”
CFO starts with some cherry-picked data points neither of which address the question and she immediately moves to the R2 (which only launches earliest in H1 2026). Again, question is not remotely answered.

Question 5. Analyst tries again a demand question (second time) mixed with pricing “what have you assumed about demand trajectory for your product in order to absorb this production? And are you worried at all about the pricing environment for EVs?”
CFO mentions that “deliveries will increase from …in the low-single digit areas” for all 3 vehicles on offer right now (R1T, R1S, and EDV). However, she immediately switches to R2 and R3 and talks about brand building etc. The ‘low-single digit’ was known since Q4 2023 results announcement. However, CFO completely avoided the pricing question.

Question 6: Analyst, to his credit, tries yet again a question targeting demand (third time) “how's demand for the standard pack, R1, which you started producing even before, I think, the -- what is offering before the shutdown and now sort of like started producing maybe with the LFP battery. Can you talk about the trim mix within R1 in terms of your production or demand?”
CFO avoids the question (aside from mentioning a brief mix uptick)

Question 7: DB analyst tries yet again to get some demand info (fourth time) but moves on to 2025. "Looking ahead you've said that after this recent factory upgrade available capacity for R1 will be 56,000 units on two ships before, obviously, any shutdowns, et cetera. If I add a stable number of EDVs, it doesn't necessarily suggest much volume growth in 2025 until R2 is launched the following year. First of all, is this the right understanding that in the 2025 is sort of like stableish type of volume rather than real growth? And if so, is it a function of demand for the R1?”
CFO 100% avoided the question.

Question 8: DB analyst tries yet again a demand question (fifth time) but moves to EDV only. “In terms of the EDV program, can you elaborate on the current capacity for it? And do you expect to accelerate the volume in the out years or will Amazon take steady deliveries until all orders are satisfied?”
See my other post on this question specifically. Bottom line: Rivian is significantly oversupplied in terms of R1/EDV capacity and will be cutting about 50% of capacity.

Question 9: Analyst tries a cost question “so based on what you've seen post retooling and rerate, the input cost now from your new supplier relationship, the rate of the factory, some of the cheaper components that’s not you, this is what gives you confidence in getting to that profitability by the end of the year?”
CFO just says “that’s right” rather than using the opportunity to reassure investors about the cost savings.

Question 10: Analyst tries a profitability question. “How should we think about the trajectory of profitability (for) next year?
CFO repeats the already announced Q4 GROSS (not operating!) profitability target.
Repeats the long term 25% gross profit target. Note: for the 25% target, there is no guidance as to when, ie no in 2024, not in 2025, not in 2026! CFO’s optimism is based on “ongoing commodity cost tailwinds” (which can change any day), and better mix as the quad motor starts selling in 2025.

Question 11: Analyst asks about capex spending.
CFO says Rivian will be spending $1.2B in 2024 and $1.5B in 2025.
Note: this is all a cash out on top of negative operating cash flows which are predominately driven by operating losses. This causes Rivian to generate significant negative cash flows for >2years (minimum!)

Question 12: Analyst asks about potential acceleration of the R2 early 2026 timeline?
CFO basically says we should stick to the “first half 2026” time frame and not assume an accelerated launch.

Question 13: Analyst asks about capital. The key question!
'opportunistic' is the key word in the CFO's repsonds. This means the moment they can raise they will. I've talked about all the ins/outs in great length. They will raise end of 2024/early 2025. This is 90% likely.