(Reuters) –Rivian projected a surprise drop in electric vehicle deliveries for the year but said it expected to post a modest gross profit, as it slashed raw material and supply chain costs in its drive for efficiency.
Rivian and other EV makers are facing tough demand as buyers opt for cheaper gas-powered cars in an uncertain economic and political climate. The Trump administration’s new policies and potential tariffs threaten to boost inflation just as it was dipping, and EV buyers may no longer get tax credits that were a key support for demand.
Rivian shares rose as much as 7% in extended trading before paring gains to trade up about 1%.
The company also expects higher costs from U.S. President Donald Trump’s plans to impose tariffs on Mexico and Canada.
“We have a supply chain that does have a footprint in both Mexico and Canada, and so large tariffs being applied will just translate to higher costs for us,” CEO RJ Scaringe told Reuters.
“There is such a high level of uncertainty that will ultimately impact consumer behavior and top-line revenue,” he added.
Rivian, however, posted a first-ever gross profit of $170 million in the fourth quarter, compared with a loss of $606 million a year earlier.
Annual deliveries are expected to be between 46,000 and 51,000 vehicles, lower than Wall Street expectations of 55,520, according to 15 analysts polled by Visible Alpha. Last year, it delivered 51,579 units.
“I think they’re appropriately being just cautious because it’s unclear and they have no control over what’s going to happen politically here,” said Vitaly Golomb, managing partner at Mavka Capital, a Rivian investor.
The EV maker is also planning a month-long halt in production in the second half of 2025, as it gears up to launch the Tesla Model Y-rivaling R2 vehicle and start its deliveries early next year.
EV makers are staring at a tough market, with Elon Musk-led market leader Tesla reporting its first drop in annual sales in 2024.
Electric big rig manufacturer Nikola recently filed for Chapter 11 bankruptcy protection after struggling with rapid cash burn and funding challenges amid weak demand.
Revenue for the last three months of the year stood at $1.73 billion, beating analysts’ average estimate of $1.4 billion, according to LSEG data.
Its software and services segment generated $214 million in fourth-quarter revenue, doubling from a year earlier.
Rivian said that over the next four years, it expects to recognize about $2 billion in revenue from its joint venture with Germany’s Volkswagen Group .
The EV maker and Volkswagen formalized a joint venture to develop software and electrical architecture last year. As part of the deal, the German automaker would invest $5.8 billion in Rivian.
(Reporting by Akash Sriram in Bengaluru; Editing by Anil D’Silva)
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