Rivian's Q2 Earnings Call Disappoints Investors, Guidance Lowered, Revenue Impacted by Loss of Regulatory Credits

Rivian's Q2 earnings call was disappointing, with lowered guidance and loss of revenue from regulatory credits. The loss of credits will significantly impact the struggling company, which is already struggling to make a profit. Investors are concerned about the financial implications of this change.

Rivian Automotive (RIVN) reported mixed second quarter earnings on Tuesday, with the electric vehicle manufacturer missing analysts' expectations and widening its full-year loss projection. The company's shares were lower in after-hours trading, reflecting the market's reaction to the weaker-than-expected earnings and lower profit guidance for FY25.

Rivian reported revenue of $1.303 billion for the quarter, surpassing the Bloomberg consensus estimate of $1.28 billion. However, the company posted an EPS loss of $0.97, compared to the expected loss of $0.77, and an adjusted EBITDA loss of $667 million, which was higher than the expected $493 million loss [1].

The company attributed its weaker-than-expected performance to policy changes, including the Trump administration's phasing out of the EV tax credit and sector tariffs of 25% on autos and auto parts. Rivian also cited the disruption in the supply of rare earth metals used in EV production, which raised costs and disrupted supply chains [2].

Rivian's CEO, RJ Scaringe, stated that the company expects to commission the new R2 midsize SUV line in the third quarter of this year and start validating the equipment and production processes. The R2 is slated for production in 2026 [1].

Despite the challenging quarter, Rivian reaffirmed its 2025 delivery guidance range of 40,000 to 46,000 vehicles. However, the company will shut down its factory for three weeks in September for R2 preparations and to increase manufacturing capacity to 215,000 units [1].

Rivian's shares were down in after-hours trading, reflecting the market's reaction to the company's weaker-than-expected earnings and lower profit guidance for FY25. The company's adjusted 2025 full-year EBITDA before interest loss range was increased to $2.0 billion to $2.25 billion, from $1.7 billion to $1.9 billion previously [1].

The loss of regulatory credits, particularly the EV tax credit, is expected to significantly impact Rivian's financial performance. The company has warned that recent policy actions will continue to have an impact on its results and cash flows. Investors are concerned about the financial implications of this change, especially as the company struggles to achieve profitability.

References:
[1] https://finance.yahoo.com/news/rivian-q2-earnings-preview-ev-tax-credit-impact-r2-suv-update-on-the-agenda-123112578.html
[2] https://ca.finance.yahoo.com/news/rivian-loss-bigger-expected-higher-200756827.html