Rivian Deepens Loss Forecast as Fuel Credit Market Shrinks
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Rivian Automotive Inc. forecast a larger adjusted loss this year than previously expected, citing recent changes to stringent U.S. fuel economy rules that threaten a key source of revenue for the electric-vehicle maker.
The adjusted loss before interest, taxes, depreciation and amortization this year will be $2 billion to $2.25 billion, the company said in the most recent quarter. It had previously forecast an annual loss of no more than $1.9 billion by that measure, while Wall Street analysts had expected about $1.8 billion on average.
The tax package that President Donald Trump signed into law last month included a rule change that attacked what’s been an important source of revenue for Rivian and Tesla Inc. for years.
The legislation eliminated civil penalties that automakers had been required to pay U.S. regulators who oversee stringent U.S. fuel economy requirements. That in turn reduces demand for the regulatory credits bought by automakers that needed help complying with those rules. Tesla last month warned the change would weigh on its revenue and earnings.
Rivian’s shares fell during after-hours trading in New York on Aug. 5. The stock had declined about 8.7% this year through the close Aug. 5, trailing the S&P 500 Index’s 7.1% gain.
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Sales of regulatory credits have been critical to offset the heavy investments Rivian has made to increase production and develop a new line of more affordable EVs due out next year.
They also helped the company post a gross profit of $206 million during the first three months of the year. Rivian swung to a loss of $206 million by that measure in the most recent period. If the figure doesn’t turn positive later this year, it will jeopardize its goal of achieving a full-year gross profit for the first time in 2025.
Rivian CEO RJ Scaringe said the carmaker’s second-quarter performance also factored into its gloomier earnings outlook. The company’s adjusted loss was 80 cents a share in the period, worse than the 63-cent deficit expected by analysts.
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