Electric vehicle makers Rivian and Lucid are facing challenges amid third-quarter results

DETROIT – The challenges facing all-electric vehicle manufacturers are growing Rivian Cars and Lucid Collection As companies try to sell investors a brighter and more profitable future ahead.

But things may get worse before they get better, as both automakers are scheduled to report third-quarter results this week, starting with Rivian after the bell on Tuesday, followed by Lucid on Wednesday.

The two “pure electric vehicle” companies are expected to report significant revenue growth and a narrowing of adjusted profit losses amid record sales of electric vehicles in the United States in the third quarter. But investors also expect manufacturers to provide updates on future growth opportunities as well as impacts from more challenging market conditions.

“Both of those things are really challenging,” RBC Capital Markets analyst Tom Narayan told CNBC during an interview, saying he was cautious about too much upside for investors in the near term. “For me, it’s all about fundamental profitability.”

Both automakers have already lowered vehicle production guidance due to more challenging market conditions, while Rivian also changed its adjusted earnings and gross profit forecast for 2025 to negative.

Electric vehicle manufacturers face industry-wide issues such as increased costs due to tariffs and slower expected sales of electric vehicles, as well as company-specific issues including new product challenges and regulatory changes that negatively impact sales and profits, including the end of federal incentives for consumers.

This fall, the Trump administration eliminated federal incentives of up to $7,500 to purchase an electric car. In addition, the law also ended the practice of imposing fines on automakers for failing to meet fuel efficiency rules. This hurts electric vehicle manufacturers, who have been relying on selling credits to legacy automakers that can offset some of the penalties.

This summer, Rivian cut its expected earnings from credit sales from $300 million to $160 million. In terms of change, Rivian also lowered its gross profit guidance for the year to roughly break-even from modest profit. It also laid off workers this year to cut costs.

“While we believe strongly in the long-term value drivers of our business, the policy environment remains complex and rapidly evolving,” RJ Scaring, CEO of Rivian, said during the company’s last quarterly results call in August. “Changes in electric vehicle tax credits, regulatory credits, trade regulation and tariffs are expected to have an impact on the results and cash flow of our business.”

Rivian confirmed that it has sufficient funds to obtain it by launching its new product, “R2,” during the first half of next year, but the ongoing changes do not help the company in any way.

Rivian said the tariffs hit the automaker by as much as “a few thousand dollars per unit” this year. Lucid also said tariff costs are hurting its margins this year, including $54 million during the second quarter.

“We expect the credit loss to be a market headwind in the coming quarters. Our previous demand elasticity analysis suggests that the IRA loss [Inflation Reduction Act] Credits could equate to a 10% headwind to industry volumes, all else equal, Goldman Sachs analyst Mark Delaney said in an Oct. 3 investment note on Rivian and Tesla.

Teslawhich also sold automotive regulatory credits, announced that its revenue from those credits in the third quarter fell 44% to $417 million from $739 million.

The third quarter is expected to be the peak for electric vehicle sales for the foreseeable future, as customers rushed to purchase new models before federal credits expire in September.

As a result, companies are expected to spend more time promoting future products and technology opportunities to investors during third-quarter calls this week rather than their near-term core business of producing and selling electric vehicles.

“It remains to be seen how long the effects of EVs will last in the US, although we suspect that EV penetration in the third quarter of the year will likely be the highest mark for some time,” Barclays analyst Dan Levy said in an Oct. 13 investment note.

Rivian announced last month that 13,201 vehicles were delivered during the third quarter, an increase of 32% from the previous year. Lucid announced deliveries of 4,078 units, up 47% from 2,781 units in the third quarter of 2024.

Even with higher sales, both companies are expected to report notable losses, albeit smaller than last year and lower than in the second quarter.

Rivian is expected to report an adjusted loss per share of 72 cents on revenue of $1.5 billion, based on average analyst estimates compiled by LSEG. This compares to an adjusted EPS loss of 99 cents on revenue of $874 million in the prior year.

In announcing its second-quarter results, Rivian said it expects its adjusted underlying losses to be between $2 billion and $2.25 billion this year, compared with $1.7 billion to $1.9 billion previously forecast. Analysts also expressed concerns about Rivian’s previous goal of being profitable on an EBITDA basis by 2027.

Lucid is expected to report an adjusted EPS loss of $2.27 for the third quarter, down from $2.80 a year earlier (based on recalculated results after a reverse stock split), on a nearly 90% increase in revenue to $379.1 million, according to LSEG.

Narayan and other analysts have largely focused on improvements in overall corporate earnings as evidence of progress. These results are a leading indicator of a company’s profitability before operating expenses, interest and taxes.

“[Investors] “They’ll want to see that gross profit number in the third quarter, but they also have a high bar to exceed the consensus that’s already in place,” Narayan said.

Rivian is expected to report a total loss of $39 million during the third quarter, according to the average of estimates compiled by FactSet. Meanwhile, Lucid is expected to report a total loss of $255 million, according to estimates.

Rivian shares are down less than 5% this year, while Lucid stock is down nearly 45%, including a 1-for-10 reverse stock split in September.

Both Rivian and Lucid have tried to convince investors of the success of their future cars as well as the technologies needed to save the companies from continued losses.

Rivian’s future depends heavily on its new “R2” vehicles, which are expected to begin production for customers in the first half of next year. Priced at approximately $45,000 per Rivian, the mid-size vehicle is expected to cut construction material costs in half, reduce production complexity and dramatically increase demand and sales.

“I’m more bullish on this vehicle than any product we’ve developed,” Scaringe said in August. “I think the product is an incredibly good market fit. The packaging, technology and overall value proposition have positioned R2 to gain meaningful share.”

However, the R2 will be launched in a challenging market with a lot of car competition – many of which are expected to have longer EV ranges at a similar, if not lower, price.

Barclays Levy earlier this year conducted an analysis of the overall potential addressable market for the R2, questioning the company’s optimism about the product amid “risks” of weaker expected demand for electric vehicles in the US, additional costs and a more competitive market.

Narayan and other analysts also questioned the company’s sales goals for the car: “It’s a very competitive market, and you have this slowdown in electric cars in full effect. What volumes will they get from the R2 in the face of all this competition? … [General Motors] “It can hardly be in the hundreds of thousands,” Narayan said in the interview.

Rivian has also touted its capabilities to generate revenue through new technologies, such as the $5.8 billion deal it struck with Volkswagen for its software and electrical engineering.

Rivian said the next generation of technology is also expected to help it become a leader in advanced driver assistance systems, or ADAS, although the automaker lags behind many other systems.

The story is similar in Lucid. The company has attached great importance to the launch of its Gravity SUV, which Lucid described as challenging, in addition to a future platform for mid-sized cars to expand its reach in the market.

“We’re not just building electric vehicles,” Lucid interim CEO Mark Winterhoff said during the company’s second-quarter call in August. “We’re pushing the boundaries of what electric vehicles can be.” “From the record-breaking performance and efficiency of the Lucid Air to the game-changing Lucid Gravity, to our upcoming midsize platform, our technology continues to redefine what is possible.”

More recently, Lucid has also touted future driver assistance technology and the potential for autonomous personal vehicle capabilities as part of its future, despite a history of disappointing capabilities in its current luxury models.

Lucid signed a $300 million deal with… Uber In July, this included the ride-hailing platform acquiring and deploying more than 20,000 Lucid Gravity SUVs that will be equipped with autonomous vehicle technology from startup Nuro over the next six years.

Other topics investors will be watching include any updates on Rivian’s timeline for R2 production or Lucid’s production of the Gravity SUV as well as cash flow and profitability outlooks for both companies.

“We are not where we want to be with Lucid Gravity production compared to our goal at this point in the year,” Winterhoff said in August. “We believe we will increase production significantly [in] The second half of the year.”