Electric vehicle (EV) startups Rivian and Lucid have adjusted their production forecasts for 2024, citing challenges in the market landscape and persistent borrowing costs hindering consumer adoption of battery-powered cars.
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Rivian, backed by Amazon, announced a 10 per cent reduction in its workforce and revealed plans for a production shutdown to upgrade efficiency and cut costs.
As a result, Rivian anticipates producing 57,000 vehicles in 2024, falling significantly below analysts’ estimates of 81,700 units. The company’s CEO, RJ Scaringe, highlighted macro-level challenges such as high interest rates and geopolitical risks affecting consumer behavior.
Despite recent efforts to introduce lower-range options at reduced prices, Rivian faces dwindling order books and expects deliveries for the current quarter to be lower than the previous quarter.
Rivian’s strategy also involves mitigating cash burn by renegotiating supply contracts and internal component production.
The company anticipates margin improvement by the end of the year, emphasising the importance of its upcoming R2 SUV unveiling to sustain momentum. Investor Vitaly Golomb noted the significance of Rivian’s smaller and cheaper SUV in expanding its market appeal.
Production for the R2 SUV is slated to commence in 2026. Meanwhile, Lucid, another EV player, aims to broaden its customer base with the introduction of a mid-size car targeting a $50,000 price point by late 2026.
CEO Peter Rawlinson indicated a strategic shift towards competing with Tesla’s Model Y and Model 3, foreseeing a substantial increase in Lucid’s total addressable market.
Lucid, known for its Air luxury electric sedans, has also adjusted its production forecast for 2024, signaling a divergence from Wall Street’s expectations.
The company plans to produce 9,000 units this year, up from 8,428 vehicles in 2023, a figure significantly lower than analysts’ estimates. Lucid has been slashing prices of its Air sedans as it readies for the launch of its Gravity SUV later this year.
The company’s future focus lies in expanding its product lineup to cater to a wider range of consumers and enhance competitiveness in the EV market.
(With inputs from Reuters)
