Shares of electric vehicle companies Rivian and Lucid took a nosedive after disappointing earnings reports were released for the fourth quarter. Rivian’s stock plummeted by about 25% while Lucid’s stock sank almost 17%. The weak performance was attributed to stagnant production and lower-than-expected revenue.
Rivian, known for its electric trucks, announced that it expects to produce 57,000 vehicles in 2024, slightly less than the 57,232 vehicles it produced last year. Despite beating Wall Street estimates with a revenue of $1.32 billion for the quarter, Rivian reported a worse-than-expected net loss per share of $1.36. In response to the challenging economic and geopolitical environment, Rivian also announced a 10% reduction in its workforce.
Similarly, Lucid, a luxury electric vehicle manufacturer, reported lower-than-expected revenue of $157.2 million for the quarter. However, its net loss per share of 30 cents was in line with estimates. Lucid expects to make 9,000 vehicles in 2024, a modest increase of 7% compared to the previous year.
Both companies cited the macroeconomic environment and higher interest rates as factors affecting their performance. The impact of historically high interest rates has negatively impacted demand for electric vehicles. Additionally, the companies highlighted the challenges of operating in new locations with different market dynamics.
Despite significant investments in the electric vehicle industry, sales have been slower than anticipated. Electric vehicles only accounted for 6.9% of total sales heading into December, representing approximately 976,560 units. This is an increase of 1.7 percentage points compared to total sales in 2022. Rivian and Lucid make up a small fraction of electric vehicle sales compared to industry leader Tesla, which controls about 55% of the market.
The decline in share prices for Rivian and Lucid is part of a larger trend. Rivian’s shares have dropped by 40% in the past year and have fallen 85% from their initial public offering price in November 2021. Similarly, Lucid’s stock has declined by about 70% in the past year and has dropped more than 75% from its IPO price in October 2021.
It is worth noting that Nikola, an electric truck maker, also reported disappointing earnings, with worse-than-expected revenue and a slightly better-than-expected loss per share. However, the stock traded flat on Thursday.
The underperformance of these electric vehicle companies highlights the challenges they face in a competitive market. Despite the potential for growth in the electric vehicle industry, companies must navigate economic uncertainties, changing market dynamics, and evolving consumer demand. As the industry continues to develop, these companies will need to adapt their strategies to remain competitive and regain investor confidence.
Overall, the recent earnings reports for Rivian and Lucid demonstrate the volatility of the electric vehicle market. While both companies face challenges, they still have potential for future growth. Investors will be closely watching how these companies respond to the changing landscape of the industry and whether they can deliver on their production targets and financial performance in the coming years.
