Rivian, Lucid's 2024 production targets disappoint as EV demand wanes

Electric vehicle start-ups Rivian and Lucid forecast 2024 production well below analyst estimates on Wednesday as persistently high borrowing costs keep consumers from buying relatively pricier battery-powered cars.

Amazon.com-backed Rivian also said it would cut its workforce by 10%.

Shares in Rivian and Lucid plummeted 15% and 8% respectively after the announcements — the latest signs of a slowdown in EV demand flagged by carmakers including Ford, General Motors and market leader Tesla. The plateauing demand sparked a price war last year as companies drained margins to woo customers.

Rivian, the maker of R1T pickup trucks and R1S SUVs, is planning a weeks-long production shut down this year to upgrade its production line to improve efficiency and cut costs.

As a result, Rivian said it expects to produce 57,000 vehicles in 2024, well below estimates of 81,700 units, according to eight analysts polled by Visible Alpha. It produced 57,232 vehicles last year.

“There is a host of macro level challenges,” Rivian CEO RJ Scaringe told Reuters, adding that high interest rates and geopolitical risks were making consumers more conscious and price sensitive.

After shying away from cutting the price of its vehicles last year, Rivian this month introduced lower-range options for its existing cars that are $3,100 (R58,635) cheaper.

Still, Rivian said it expects deliveries in the current quarter to be 10-15% lower than the already weak fourth quarter and that its order book had reduced due to factors including cancellations.

Rivian has been focusing on reducing its cash burn by renegotiating supply contracts and building some components in house. Along with the cost benefits from the production line upgrade, the company said it expects margins to improve by the end of the year.

“A lot is riding on” the company's smaller and cheaper R2 SUV that is set to be unveiled next month, Vitaly Golomb, a Rivian investor and an investment banker, told Reuters. Production is scheduled to start in 2026.

Like Rivian, Lucid is planning to start producing a mid-size car late in 2026 to attract a broader customer base, after its Gravity SUV goes into production later this year.

“With that we're going to target a $50,000 (R945,722) price point,” Lucid CEO Peter Rawlinson said in an interview.

“Right now, we're competing with Mercedes and Porsche. When that comes out, we're going after Tesla Model Y and Model 3,” he said, adding that he expects Lucid's total addressable market to increase 20 times.

Lucid, which has been slashing prices of its Air luxury electric sedans, also forecast production for 2024 that was much lower than Wall Street's expectations.

It expects to make 9,000 units this year, up from 8,428 vehicles in 2023. Wall Street estimated 22,594 units, according to five analysts polled by Visible Alpha.