Published on November 8, 2023, 3:42 pm

Diverging Fortunes: Rivian Soars As Lucid Struggles To Meet Expectations

The story of two electric vehicle (EV) makers, Rivian and Lucid, has taken an interesting turn. While both companies went public with big aspirations, their recent performance has been quite different.

Lucid CEO Peter Rawlinson had to lower his forecast for the number of Lucid Air cars he would build in 2023 due to falling short of expectations. On the other hand, Rivian CEO RJ Scaringe surprised investors by exceeding expectations and raising his production target for the year. Rivian now expects to manufacture 54,000 vehicles this year, while Lucid anticipates six times fewer.

Scaringe also announced that Rivian is no longer limited by an exclusivity deal with Amazon, its largest shareholder. This news was well-received by investors as it paves the way for more growth opportunities for Rivian.

Despite challenges in the EV industry such as rising interest rates and geopolitical instability, Scaringe remains optimistic about Rivian’s outlook. He believes that some of the short and medium-term headwinds are being overreacted to and downplays these risks.

This positive development for Rivian gives hope to investors that the company can weather any potential shakeout in the EV industry as demand cools off. Even Elon Musk himself had expressed concerns about a possible bankruptcy for both companies last year. Musk knows firsthand the challenges faced by EV startups, as Tesla has had its own near-death experiences.

The diverging trajectories of Rivian and Lucid when it comes to production outlook are crucial in determining profitability in the auto industry. The utilization rate of a factory’s installed capacity is a critical factor in profitability, along with pricing trends and sales mix. Running production plants at full capacity is a priority for most carmakers.

As a result of this divergent performance, shares in Rivian are expected to increase by approximately 6% while Lucid’s shares are anticipated to drop by 4%. Lucid may find solace in the speculation that its majority owner, the Saudi sovereign wealth fund PIF, could potentially take the company private.

Overall, this news highlights the challenges and competition within the EV industry. While some companies like Rivian are thriving and exceeding expectations, others like Lucid are facing difficulties in meeting their production targets. The landscape for EV manufacturers is evolving rapidly, and it will be interesting to see how these two companies navigate the industry moving forward.

Disclaimer: This article is based on publicly available information and does not constitute investment advice.

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