Pure EV automakers Rivian, Lucid face growing challenges amid Q3 results

DETROIT — Challenges are mounting for all-electric conveyance manufacturers Rivian Automotive and Lucid Group arsenic the companies effort to merchantability investors connected a brighter, much profitable aboriginal to come.

But things could get worse earlier they get amended arsenic some automakers are acceptable to study third-quarter results this week, starting with Rivian aft the doorbell Tuesday, followed by Lucid connected Wednesday.

Both "pure EV" companies are expected to study notable growths successful gross and narrowed adjusted net losses amid record third-quarter U.S. EV sales. But investors are besides expecting the manufacturers to springiness updates connected aboriginal maturation opportunities arsenic good arsenic impacts from much challenging marketplace conditions.

"Both of these are truly challenged," RBC Capital Markets expert Tom Narayan told CNBC during an interview, saying he's cautious astir overmuch near-term upside for investors. "To me, it's each astir the underlying profitability."

Both automakers person already chopped conveyance accumulation guidance owed to much challenging marketplace conditions, portion Rivian besides has negatively changed its adjusted net and gross nett expectations for 2025.

EV manufacturers look industrywide issues specified arsenic increasing costs owed to tariffs and slower forecasted income of EVs, arsenic good arsenic company-specific problems that see caller merchandise challenges, and regulatory changes that are negatively impacting income and profits, including the extremity of user national incentives.

Rivian, Lucid and Tesla stocks successful 2025

The Trump medication this autumn got escaped of federal incentives of up to $7,500 for the acquisition of an EV. In summation to that, it besides ended the signifier of fining automakers for failing to conscionable substance ratio rules. That hurts EV manufacturers, which had been counting connected selling credits to bequest automakers that could offset immoderate penalties.

Rivian this summertime chopped its expected net from recognition income from $300 cardinal to $160 million. In transportation to the change, Rivian besides lowered its gross nett guidance for the twelvemonth to astir breakeven from a humble profit. It besides has conducted layoffs this twelvemonth to chopped costs.

"While we judge profoundly successful the semipermanent worth drivers of our business, the argumentation situation continues to beryllium analyzable and rapidly evolving," Rivian CEO RJ Scaringe said during the company's past quarterly results telephone successful August. "Changes to EV taxation credits, regulatory credits, commercialized regularisation and tariffs are expected to person an interaction connected the results and the currency travel of our business."

Rivian has maintained that it has capable currency to get it done the motorboat of its caller "R2" merchandise during the archetypal fractional of adjacent year, but the ongoing changes don't assistance the institution by immoderate means.

Tariffs are hitting the automaker to the tune of "a mates 1000 dollars per unit" this year, Rivian has said. Lucid besides said tariff costs are hurting its nett margins this year, including $54 cardinal during the 2nd quarter.

"We expect the nonaccomplishment of the recognition to beryllium a headwind for the marketplace successful the coming quarters. Our anterior elasticity of request investigation implied that the nonaccomplishment of IRA [Inflation Reduction Act] credits could equate to a double-digit percent headwind to manufacture volumes, each other equal," Goldman Sachs expert Mark Delaney said successful an Oct. 3 capitalist enactment connected Rivian and Tesla.

Tesla, which has besides sold automotive regulatory credits, reported revenue from those credits successful the 3rd 4th fell 44% to $417 cardinal from $739 million.

The 3rd 4th is expected to beryllium the highest of EV income for the foreseeable future, arsenic customers rushed to purchase caller models up of the national credits ending successful September.

As a result, the companies are expected to walk much clip touting aboriginal products and exertion opportunities to investors during their third-quarter calls this week alternatively than their near-term halfway businesses of producing and selling EVs.

"It remains to beryllium seen however agelong the EV hangover volition past successful the US, though we fishy 3Q EV penetration volition apt beryllium the highest people for rather immoderate time," Barclays expert Dan Levy said successful an Oct. 13 capitalist note.

Rivian past period reported conveyance deliveries of 13,201 vehicles during the 3rd quarter, a 32% summation from a twelvemonth earlier.  Lucid reported deliveries of 4,078 units, up 47% from 2,781 units from the 3rd 4th of 2024.

Even with an uptick successful sales, some companies are expected to study notable losses, albeit narrowed from a twelvemonth agone and smaller than the 2nd quarter.

Rivian is expected to study an adjusted net per stock nonaccomplishment of 72 cents connected gross of $1.5 billion, based connected mean analysts' estimates compiled by LSEG. That would comparison to an adjusted EPS nonaccomplishment of 99 cents connected gross of $874 cardinal a twelvemonth earlier.  

When reporting its second-quarter results, Rivian said it expected its adjusted halfway nonaccomplishment to beryllium betwixt $2 cardinal and $2.25 cardinal this year, compared with $1.7 cardinal to $1.9 cardinal antecedently forecast. Analysts besides person expressed concerns astir Rivian's erstwhile extremity to beryllium profitable connected an net earlier interest, taxes, depreciation, and amortization ground by 2027.

Lucid is expected to study a $2.27 adjusted EPS nonaccomplishment for the 3rd quarter, down from $2.80 a twelvemonth earlier (based connected recalculated results pursuing a reverse banal split), connected a astir 90% summation successful gross to $379.1 million, according to LSEG.

Narayan and different analysts person mostly focused connected improvements successful the gross profits of the companies arsenic impervious of progress. Such results are a cardinal indicator of a business's profitability earlier operating expenses, interest, and taxes deductions.

"[Investors] volition privation to spot what that gross nett fig is successful Q3, but they besides person a precocious barroom to walk implicit with wherever statement already is," Narayan said.

Rivian is expected to study a gross nonaccomplishment of $39 cardinal during the 3rd quarter, according to mean estimates compiled by FactSet. Lucid, meanwhile, is expected to study a $255 cardinal gross loss, according to the estimates.

Shares of Rivian are disconnected little than 5% this year, portion Lucid's banal is disconnected astir 45%, including a 1-for-10 reverse banal split in September.

Both Rivian and Lucid person tried to merchantability investors connected the occurrence of their aboriginal vehicles arsenic good arsenic technologies to prevention the companies from continued losses.

Rivian's aboriginal heavy relies connected its caller "R2" vehicles that are expected to statesman accumulation for customers the archetypal fractional of adjacent year. The astir $45,000 midsize vehicle, per Rivian, is expected to chopped physique worldly costs successful half, trim accumulation complexity and importantly turn request and sales.

"I'm much bullish connected this conveyance than immoderate merchandise we've developed. I judge that the merchandise marketplace acceptable is incredible. The packaging, the exertion and wide worth proposition acceptable R2 up for meaningful share," Scaringe said successful August.

However, the R2 volition motorboat successful a challenging marketplace ripe with plentifulness of conveyance contention — galore of which are expected to person longer EV ranges astatine a similar, if not lower, price.

Barclay's Levy earlier this twelvemonth did an investigation of the imaginable full addressable marketplace of the R2, questioning the company's bullishness connected the merchandise amid "risks" of weaker expected U.S. EV demand, further costs and a much competitory market.

Narayan and different analysts besides person questioned the company's income targets for the vehicle: "It's a precise competitory market, and you person this EV slowdown successful afloat effect. What are the volumes they're going to get connected R2 going up against each this competition? … [General Motors] tin hardly get to hundreds of thousands," Narayan said successful the interview.

Rivian besides has touted its imaginable for gross with caller technologies, specified arsenic the $5.8 cardinal deal it struck with Volkswagen for its bundle and electrical architecture.

Rivian has said the adjacent procreation of exertion besides is expected to assistance it go a person successful precocious driver-assistance systems, oregon ADAS, contempt the automaker trailing galore different systems.

The communicative is akin astatine Lucid. The institution has placed important value connected the motorboat of its Gravity SUV, which Lucid has described arsenic challenging, arsenic good arsenic a aboriginal midsize conveyance level to broaden its marketplace reach.

"We are not simply gathering electrical vehicles. We are pushing the boundaries of what EVs tin be," Lucid interim CEO Marc Winterhoff said during the company's second-quarter telephone successful August. "From the record-breaking show and ratio of the Lucid Air to the game-changing Lucid Gravity, to our upcoming midsize platform, our exertion continues to redefine what's possible."

More recently, Lucid besides has touted aboriginal ADAS technologies and the imaginable of idiosyncratic autonomous conveyance capabilities arsenic portion of its future, contempt a past of underwhelming capabilities successful its existent luxury models.

Lucid signed a $300 cardinal deal with Uber successful July that included the ride-hailing level acquiring and deploying much than 20,000 Lucid Gravity SUVs that volition beryllium equipped with autonomous conveyance exertion from startup Nuro implicit the adjacent six years.

Other topics investors volition beryllium watching see immoderate updates to Rivian's timeline for its R2 accumulation oregon Lucid's accumulation of the Gravity SUV arsenic good arsenic currency flows and profitability outlooks for some companies.

"We are not wherever we privation to beryllium with Lucid Gravity accumulation comparative to our people astatine this constituent successful the year," Winterhoff said successful August. "We judge we volition importantly summation accumulation [in] the 2nd fractional of the year."