Challenges are mounting for EV manufacturers Rivian Automotive and Lucid Group as they prepare to report Q3 results this week. Both companies are expected to show growth in revenue and narrowed earnings losses, but face challenges such as tariffs, slowing EV sales, and policy changes impacting profits. Analysts are cautious about near-term upside for investors due to underlying profitability concerns.
The Trump administration’s elimination of federal EV incentives and fines for not meeting fuel efficiency rules has impacted EV manufacturers like Rivian, which cut its expected earnings from credit sales and lowered profit guidance. Changes to EV tax credits, regulatory credits, trade regulations, and tariffs are expected to impact business results and cash flow.
Rivian has conducted layoffs this year to cut costs and is facing tariffs that are impacting profit margins. Analysts predict a headwind for the market due to the loss of federal incentives, affecting industry volumes. Tesla also reported a drop in revenue from automotive regulatory credits in Q3.
Q3 is expected to be the peak of EV sales due to customers rushing to purchase new models before federal credits ended in September. Rivian and Lucid are likely to focus on touting future products and technology opportunities during their earnings calls to investors. Both companies are expected to report notable losses, albeit narrower than previous quarters.
Rivian is projected to report an adjusted EPS loss of 72 cents on revenue of $1.5 billion, while Lucid is expected to report a $2.27 adjusted EPS loss on revenue of $379.1 million for the third quarter. Analysts are closely watching improvements in gross profits as a key indicator of business profitability before operating expenses and taxes deductions. Lucid is expected to report a $255 million gross loss, while Rivian’s stock has dropped only 5% this year compared to Lucid’s 45% decrease, including a reverse stock split in September. Both companies are banking on new vehicles and technologies to turn things around in the face of continued losses. Rivian’s R2 vehicle is expected to revolutionize the market with a midsize vehicle priced at $45,000, cutting costs and increasing demand. Lucid is placing emphasis on its Gravity SUV and future midsize platform to expand its market reach, along with future ADAS technologies and autonomous capabilities. Lucid also signed a $300 million deal with Uber to deploy 20,000 Gravity SUVs with autonomous vehicle technology. Investors are keeping an eye on production timelines, cash flows, and profitability outlooks for both companies.
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