Shares of US EV start-up Rivian hit an all-time low after its Q4 earnings report, following underwhelming predictions for growth.
The company's cash burn has also caught the attention of analysts, as the firm reported $9.4bn remaining in liquidity and $1.4bn in fourth quarter cash usage.
However the firm has reiterated its commitment to break even before 2025, announcing plans to lay off 10pc of its factory staff.
"We remain confident that our cash, cash equivalents and short-term investments can fund our operations through 2025. We aim to maintain a strong balance sheet position by continuing to drive cost efficiencies and improve our vehicle unit economics, while opportunistically evaluating a variety of capital markets available to Rivian ranging across the capital structure," says CFO Claire McDonough.
Rivian has been propping up its balance sheet with debt offerings and equity, distorting the picture of the company's liquidity situation, according to some analysts.
"While the cash balance did increase sequentially, that was due to the debt offering seen during Q4. Total debt now stands at $4.4 bn, with a lot of convertible notes that would not convert at current equity prices," says journalist and financial analyst Bill Maurer.
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Musk's two cents
Rivian's liquidity situation even drew attention from Tesla CEO Elon Musk. "Rivian's current trajectory has them bankrupt in 6 quarters. Maybe that trajectory will change, but so far it has not," he wrote on social media platform X.
However Musk was also conciliatory towards the rival US EV, saying that "their product design is not bad, but the actual hard part of making a car company work is achieving volume production with positive cash flow".
The plans contributed to a 75pc year-on-year increase in capex for 2024 and drew fire from Morgan Stanley automotive analyst Adam Jonas.
"Has the board considered any alternative to the greenfield option in Georgia or at least some adjustments in terms of the size or whether you go in with a partner?" Jonas asked Rivian executives.
The good news for Rivian is that revenue beat analyst expectations in the fourth quarter. But with further upcoming funding rounds, the automaker may be set to take a hit in analysts' models due to its cash situation.
"Losses and cash burn have not improved as much to this point as some had hoped, so management does have to prove itself a bit here as we head into 2025," says Maurer.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
