EV makers Rivian and Lucid face challenges in third-quarter results

DETROIT — Challenges are growing for all-electric vehicle manufacturers Rivian Automotive and lucid group That’s because companies are trying to sell investors on a brighter, more profitable future ahead.

But with both automakers scheduled to report third-quarter results this week, starting with Rivian after the bell on Tuesday and followed by Lucid on Wednesday, things could get worse before they get better.

Amid record U.S. EV sales in the third quarter, both “pure EV” companies are expected to see significant sales growth and narrow adjusted profit losses. But investors also expect manufacturers to provide updates on future growth opportunities and the impact of more challenging market conditions.

“Both of these are very difficult,” Tom Narayan, an analyst at RBC Capital Markets, told CNBC in an interview, adding that he is cautious about short-term upside for investors. “For me, what’s important is the underlying profitability.”

Both automakers have already lowered their vehicle production forecasts, citing tougher market conditions, and Rivian also revised its 2025 adjusted profit and gross profit forecasts to negative.

In addition to industry-wide issues such as increased costs due to tariffs and slowing EV sales forecasts, EV manufacturers also face company-specific issues such as new product challenges and regulatory changes that negatively impact sales and profits, such as the end of federal consumer incentives.

This fall, the Trump administration eliminated federal incentives of up to $7,500 for EV purchases. It also abolished the practice of fining automakers for failing to meet fuel efficiency regulations. This is a blow to EV makers, which had hoped to sell credits to traditional automakers that could offset some fines.

This summer, Rivian lowered its expected profit from credit sales to $160 million from $300 million. In connection with the change, Rivian also lowered its gross profit outlook for this year from modest to near break-even. This year, the company also cut staff to cut costs.

“While we believe deeply in the long-term value drivers of our business, the policy environment remains complex and rapidly evolving,” Rivian CEO RJ Scaringe said during the company’s last quarterly earnings call in August. “Changes in the EV tax credit, regulatory credits, trade regulations and tariffs are expected to impact the results of operations and cash flows of our business.”

Although Rivian claims it has enough cash to launch its new product, R2, in the first half of next year, the ongoing changes are in no way helping the company.

Rivian said this year’s tariffs cost automakers “several thousand dollars per vehicle.” Lucid also said tariff costs have negatively impacted its profit margins this year, including $54 million in the second quarter.

“We expect the loss of confidence to be a headwind for the market in the coming quarters,” Goldman Sachs analyst Mark Delaney said in an Oct. 3 note to investors on Rivian and Tesla. “Previous demand elasticity analysis suggested that the loss of IRA credit could represent a double-digit percentage headwind to industry volume, all else being equal.”

teslaThe company, which also sells auto regulatory credits, reported a 44% decline in revenue from those credits in the third quarter, from $739 million to $417 million.

The third quarter is expected to be the peak for EV sales for the time being, as customers rush to buy new models before federal loans end in September.

As a result, the companies are expected to spend more time on their third-quarter conference calls this week promoting future product and technology opportunities to investors than on their near-term core business of producing and selling electric vehicles.

“While it remains to be seen how long the EV hangover will last in the U.S., we believe Q3 could be the highest EV penetration rate for some time,” Barclays analyst Dan Levy said in an Oct. 13 note to investors.

Last month, Rivian reported third-quarter deliveries of 13,201 vehicles, an increase of 32% from a year earlier. Lucid reported deliveries of 4,078 units, up 47% from 2,781 units in Q3 2024.

Even if sales increase, both companies are expected to report significant losses, albeit smaller than the same period last year and smaller than the second quarter.

Rivian is expected to report an adjusted loss of 72 cents a share on revenue of $1.5 billion, based on average analyst estimates compiled by LSEG. This compares to year-ago sales of $874 million and adjusted EPS loss of 99 cents.

Rivian said in its second-quarter earnings report that it expects adjusted core losses for this year to be between $2 billion and $2.25 billion, compared with previous expectations of $1.7 billion to $1.9 billion. Analysts also expressed concern about Rivian’s previous goal of becoming profitable on an earnings before interest, tax, depreciation and amortization basis by 2027.

According to LSEG, Lucid is expected to report an adjusted EPS loss of $2.27 in the third quarter, down from $2.80 in the year-ago period (based on the recalculated results after the reverse stock split), but revenue will increase approximately 90% to $379.1 million.

Narayan and other analysts have primarily focused on improving the company’s gross margins as evidence of progress. Such results are an important indicator of a company’s profitability, excluding operating expenses, interest, and taxes.

“(Investors) will want to know what the gross margin will be in the third quarter, but there is already a consensus, so there is a high hurdle to overcome,” Narayan said.

Rivian is expected to report a total loss of $39 million in the third quarter, according to average estimates compiled by FactSet. Lucid, meanwhile, is expected to report a total loss of $255 million, according to estimates.

Rivian stock is down less than 5% this year, while Lucid stock is down about 45%, including a 10-to-1 reverse stock split in September.

Both Rivian and Lucid are trying to sell investors on future vehicle successes and technology that will save companies from continued losses.

Rivian’s future depends largely on its new R2 vehicle, which is expected to go into production for customers in the first half of next year. Rivian says the approximately $45,000 midsize vehicle is expected to cut construction material costs in half, reduce production complexity, and significantly increase demand and sales.

“I’m more bullish on this vehicle than any other product we’ve developed to date. I believe the product market fit is incredible. The packaging, technology and overall value proposition position R2 to capture meaningful market share,” Scaringe said in August.

However, the R2 will be launched in a tough market with a lot of car competition. Many are expected to offer longer EV range at similar, if not lower, prices.

Earlier this year, Berkeley’s Levy analyzed the overall potential addressable market for R2 and questioned the company’s bullishness on the product amid “risks” of expected weaker U.S. EV demand, additional costs and increased competition in the market.

Narayan and other analysts also questioned the company’s car sales targets, saying, “It’s a very competitive market and the slowdown in EVs is in full swing. How many units will the R2 sell against all this competition?”general motors) barely reach a few hundred thousand,” Narayan said in an interview.

Rivian is also touting the revenue potential of new technologies, including a $5.8 billion deal with Volkswagen for software and electrical architecture.

Rivian said next-generation technology is also expected to help automakers become leaders in advanced driver assistance systems (ADAS), even though they lag behind in many other systems.

It’s a similar story with Lucid. The company has placed great emphasis on the launch of the Gravity SUV, which Lucid describes as challenging, and the launch of future mid-size car platforms to expand its market reach.

“We’re not just building electric cars. We’re pushing the boundaries of what’s possible in EVs,” Lucid interim CEO Mark Winterhoff said during the company’s second-quarter earnings call in August. “From the record-breaking performance and efficiency of Lucid Air, to the game-changing Lucid Gravity, to our upcoming midsize platform, our technology continues to redefine what’s possible.”

More recently, Lucid has been touting the potential for future ADAS technology and personal self-driving vehicle capabilities as part of its future, even though the current luxury model’s features have been underwhelming.

Lucid signs $300 million deal Uber In July, the deal included the ride-hailing platform acquiring and deploying more than 20,000 Lucid Gravity SUVs equipped with self-driving technology from startup Nuro over the next six years.

Other topics investors are watching include timeline updates for Rivian’s R2 production and Lucid’s Gravity SUV production, as well as cash flow and profitability outlook for both companies.

“At this point in the year, Lucid Gravity’s production has not reached its target,” Winterhoff said in August. “We believe that production will increase significantly in the second half of this year.”