Rivian (NASDAQ: RIVN) did something big in the fourth quarter of 2024. The goal is to keep that good news going in 2025. And a key part of the story is going to be hitting smaller milestones as the year progresses. So far, Rivian has started out strong, scoring a big success in the first quarter before it even announces earnings. Is there more good news to come?
Rivian is trying to build an auto business from the ground up. That’s a huge goal, given the capital-intensive nature of building cars. To make matters even more complex, the types of cars Rivian is making are all-electric trucks. On the one hand, the electric vehicle (EV) transition that is taking place opened up the opportunity that Rivian is trying to exploit. On the other hand, the company has pretty much had to design its cars from scratch because there’s really no preexisting and time-tested blueprint for EVs.
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Getting up and running was a slow process, with the company producing just 1,000 or so vehicles in 2021. In 2022, that number jumped to 24,000 vehicles, but the run rate in the fourth quarter of 2022 was around 10,000 vehicles. The next year, 2023, was the big ramp-up, with full-year production hitting 57,000 vehicles. That’s when management hit the pause button on production growth so it could shift to improving profitability.
This was an important shift to make because the company was losing money on every truck it sold. Some numbers will put the problem into perspective. In 2023, Rivian generated $4.4 billion in revenue from selling its trucks but paid nearly $6.5 billion to build them. Its gross profit was negative $2 billion. That’s before taking into account other mandatory expenses, like research and development and selling, general, and administrative expenses.
In 2024, the company produced just under 50,000 vehicles. However, the goal for the year was to improve the gross profit line, not make more EVs. This involved shutting down the company’s production facility and upgrading both its production processes and the trucks themselves. Although Rivian’s gross profit in 2024 was still negative, it managed to achieve the real goal for the year, a modest gross profit in the fourth quarter.
The success the company achieved in the fourth quarter of 2024 was indeed modest. The gross profit in the quarter totaled just $170 million. For the full year, the gross profit was still deeply negative, at a loss of $1.2 billion. However, a company has to start somewhere, and a single quarter with a gross profit could be the first step on the way to a sustainably profitable business.
