Tesla VP shares critical update on long overdue EV
Also, Bank of America analysts have new insights into consumer spending.
It's been another week for the auto industry and the analysts who cover it. Rivian's Q4 2024 and full-year earnings garnered mixed reactions from analysts. A Tesla exec shared a critical update on a long-delayed project on a podcast, and Bank of America analysts see confidence in houses and babies but not cars.
Rivian's positive quarter draws skepticism from Analyst
On Thursday, February 20, California-based electric vehicle manufacturer Rivian (RIVN) posted its fourth-quarter and year-end 2024 earnings results.
In the last quarter of 2024, Rivian reported a gross profit of $170 million, which it credits as being driven by "improvements in variable costs, revenue per delivered unit, and fixed costs," as well as "record revenues" resulting from the sale of regulatory credits, software and services, in addition to increasing the average sale price of R1T and R1S vehicles with the introduction of its Tri-Motor setup.
These moves also helped it post a $729 million year-over-year improvement in its adjusted EBITDA. In Q4, Rivian produced 12,727 vehicles and delivered 14,183 to its customers. In 2024, it made 49,476 of its EVs, and customers took home 51,579 of them. Initially, the company targeted production numbers of 57,000 units in 2024, which it reduced to just 47,000 to 49,000 in October due to supply and production issues.
Related: Rivian's earnings growth is being thwarted by a major speed bump
But despite some speed bumps, including the Trump administration and Elon Musk’s Department of Government Efficiency's closer look at a $6.6 billion loan for a planned factory in Georgia approved in the final days of the Biden Administration, Rivian CEO RJ Scaringe remained optimistic about the future; particularly the lower-priced R2 model.
“This quarter, we achieved positive gross profit and removed $31,000 in automotive cost of goods sold per vehicle delivered in Q4 2024 relative to Q4 2023,” Scaringe said. “Our focus on cost efficiency across the business is critical for the launch of our mass-market product, R2. The R2 bill of materials is approximately 95% sourced and is expected to be approximately half that of the improved R1 bill of materials.
“I couldn’t be more excited about R2, and I believe the combination of capabilities and cost efficiencies, along with the amazing level of excitement from customers, will make R2 a truly transformational product for Rivian.”
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However, despite increasing gross profit, Rivian expects lower vehicle deliveries in 2025. As a result, Wall Street analysts had mixed reactions, revising price targets upwards and downwards for the EV maker's stock.
In a note published on Friday, February 21, Goldman Sachs analyst Mark Delaney maintained a Neutral rating with a $14 price target. He noted that while Rivian improved its cost of goods sold (COGS) per vehicle to approximately $100,000 per vehicle in Q4 and saw potential in its software and services, like its ADAS system, it operates in an EV environment that will only get tougher.
In addition, Cantor Fitzgerald analyst Andres Sheppard downgraded Rivian to Neutral from Overweight while increasing the price target to $15 from $13, citing lower delivery guidance and other risks, including new tariffs, the potential removal of valuable EV tax credits, supply-chain disruptions, and waning consumer adoption rates.
B&A: Growing confidence in spending on homes, babies, not cars.
Cars are expensive, houses are expensive, but babies are a mess. As someone who has dealt with and fixed "messy" automotive situations like broken head gaskets and has been doused in all kinds of viscous liquids like motor oil and gasoline, nothing made me feel more grossed out than the one time a friend's baby had all types of accidents while I was holding them.
Nonetheless, in its Monthly Consumer Survey Series, Bank of America analysts saw nominal year-over-year increases in consumer confidence in various areas.
In their monthly survey of about 1,000 people in the US, BofA found that more people are confident in buying a home. In January, 21% of respondents said they had plans to buy a new home, but that number increased to 23% in February. According to BofA, the 23% statistic is an improvement over 19% in the same month in 2024, the highest since July 2024, and the second consecutive month of straight increase.
