EVs -- March 8, 2023

Before we get started: quick -- what is the list price of a new Rivian pick-up truck?

From a year ago, this certainly did not age well, with regard to EVs:

I suspect that six months from now the "dam will break" and there will be such a huge supply of automobiles and trucks there will be no problem finding the truck one wants. I'm not convinced prices will come down all that much but the supply will be incredible. Folks doubt me, but I know I'm correct. The tea leaves have told me that. And that also means a lot of used cars will also end up on the market.

And late 2022, and going into 2023, we're going to see the same thing with EVs. No less than thirty-seven auto manufacturers will be bringing EVs to market and they've all said they will start to bring those cars to market NLT 2023. So, "NLT 2023" begins in 2022. Perhaps late 2022.

How fast things change: 

The Fed's "higher, sooner, longer" policy will kill EVs. With free money -- zero percent interest -- a lot of folks could afford to dabble in hobbies and science experiments but with a fed rate of seven percent on the horizon, all of a sudden, things get serious. 

We start with this headline and this story. Pay attention to what is buried at the very end of the article.

The fear of many investors regarding Rivian is becoming a reality.

For many months now, the automaker's struggles to ramp up production due to disruptions in its supply chain have raised concerns that the Irvine, California-based company may need to raise capital.

These fears were confirmed when Rivian announced on February 28, 2023, a drop in its cash position. Rivian had cash and cash equivalents of $12.1 billion on hand at the end of December, down from $13.8 billion at the end of the third quarter and $15.5 billion as of June 30.

Net cash used to fund its operations for the fourth quarter of 2022 was $1.45 billion, up compared to $1.1 billion million for the same period in 2021. For the year 2022, the company burned $5.05 billion, almost the double of the $2,62 billion it used during the previous year.

At the rate at which Rivian was burning cash, the question arises whether the firm will have to raise additional capital to finance its operations and expansion by the end of the year as the automaker is building a second plant in Eastern Georgia and plans to start production of a smaller, more affordable vehicle, the R2 series, in 2026.

CEO RJ Scaringe was not reassuring when he admitted that the company, which manufactures the R1S SUV, the R1T pickup truck and the EDV van at its Normal, Illinois, plant, may have a demand problem.

That story wwas only sixteen hours old, meaning it was posted March 7, 2023. But just one hour later this story was posted: 

From the linked story: 

According to the company’s Q4 earnings release on February 28, 2023, Rivian ended the quarter with over $12 billion in cash and equivalents after burning through $1.4 billion during the period. The company said on its earnings call that followed:

We remain confident that our cash and cash equivalents can fund our operations through 2025.

Although the EV start-up isn’t in desperate need of cash (right now), Rivian does have a full plate this year as it ramps production of the R1 and RCV platforms while developing the next-generation R2 architecture slated to arrive in 2026.

Meanwhile, CEO RJ Scaringe says “equally important to ramping production” is Rivian’s drive toward profitability.

Rivian is losing money on each vehicle it produces (about three times as much), but this is to be expected as the EV maker works toward full production capabilities at its Normal, Illinois, factory.

Is anyone paying attention?  

Rivian is losing money on each vehicle it produces (about three times as much), but this is to be expected as the EV maker works toward full production capabilities at its Normal, Illinois, factory.

Isn't that factory already operational? Link here to a July, 2022, story. 

And, here, 2021:

My hunch: Congress is not going to be happy with the Fed's new policy. Greta and John Kerry are going to be furious. 

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Market

So, with the new Fed policy, "much higher sooner, much longer," how did the EV manufacturers do yesterday? (For 52 weeks):

• F: down 1%. (A high of $17.80; now trading for $12.98).
• RIVN: down 15%. (A high of $56.76; now trading for $14.64). All-time high: $172.01.
• RIDE: down 4%. (A high of $3.79; now trading for $0.98). All-time high: $29.01.
• LCID: down 6%. (A high of $28.14; now trading for $8.31). All-time high: %55.21.
• ARVL: down 4%. (A high of $4.13; now trading for $0.24). All-time high: $31.54.
• GOEV: down 7%. (A high of $6.25; now trading for $0.65). All-time high: $20.28.
• TSLA: down 3%. (A high of $384; now trading for $188).
• NKLA: down 5%. (A high of $11.87; now trading for $1.95). All-time high: $65.
• FSR: down 4%.  (A high of $14.74; now trading for $7.40); All-time high: $28.50.