In the past trading week (7 August – 11 August), a lot has happened in the electric vehicle (EV) space. Investors who are quite enthusiast about this EV space should know where their favourite industry is heading. This might be helpful in making sound investment decisions. Let’s have a quick look.
1. Tesla, Inc.
The company is a vertically integrated sustainable energy company, aiming to transition the world to electric mobility by manufacturing EVs. It sells solar panels and solar roofs for generation of energy plus batteries for stationary storage. On Monday, Tesla revealed shocking announcement about its CFO Zachary Kirkhorn leaving the company after serving the Elon Musk-led company for 13 years. Out of 13 years, he served as the company’s financial leader for the last four and a half years. This announcement was made through the regulatory filing.
Despite of the fact that he stepped down on 4th August, he will continue to be with the company until the end of the year, as the company focuses on supporting the seamless transition. As a result of this, the company’s Chief Accounting Officer, Vaibhav Taneja, has been appointed as its CFO and he will continue to work in his current role.
Why is this news important? This news can be critical for the Tesla fans as it is never positive when a well-reputed CFO leaves the company. We all know how the company’s financials improved because of his growth strategies. Because the investors don’t know what is the true story about his departure, this can be neutral or negative. Only time will tell this!
The 2Q of the company was a record one on many levels as Tesla saw its best-ever production and deliveries and revenue approaching $25 billion in the single quarter. These results were healthy given the current macroeconomic environment.
2. Rivian Automotive, Inc.
The company designs, develops and manufactures category-defining EVs and accessories. The company has released its results for 2Q. These results exhibit strong financial and operational progress as the company continued to ramp up production, improved cost efficiency and introduced new technologies.
On the quarter-over-quarter basis, the company’s production and deliveries saw a growth of ~50% and ~60%, respectively, with gross profit per vehicle delivered improving by ~$35,000. For the first time since it began its production, R1S production surpassed R1T, and R1S represented ~70% of the total R1 production. The company introduced its in-house Enduro motor into the R1 platform.
In 2Q23, the company saw production of 13,992 and delivered 12,640 vehicles. This demonstrates ~50% rise in production in comparison to the previous quarter. Total revenues of the company came in at $1,121 million, mainly supported by the delivery of 12,640 vehicles. Total revenues consisted $34 million from the sale of regulatory credits.
Net cash used in operating activities for 2Q came in at $(1,361) million in comparison to $(1,204) million for the same period of the last year. Higher net cash used for operating activities against 2Q22 was principally because of rise in the inventory balance. Inventory balance for 2Q was impacted by higher inventory in raw materials and finished goods because the company continued to ramp-up production.
Rivian Automotive, Inc. ended 2Q23 with $10,202 million in cash, cash equivalents, and short-term investments. If we include the capacity under its asset-based revolving-credit facility, the company closed 2Q with $11,317 million of total liquidity.
For FY23, the company is focused on ramping production and implementing core technologies which can help in reducing cost and improve offerings. On the basis of the progress of its production ramp, including the ramp of its in-house motor, and with its latest understanding of the supply chain, the company has increased its production guidance to 52,000. Apart from this, the company saw strong progress in its cost reduction efforts. Because of this, it has improved its adjusted EBITDA guidance to $(4,200) million. The company has reduced its expected capex for the year as a result of shift in expense timing. It has lowered its capital expenditures guidance to $1,700 million.
3. EV initiatives getting delayed for Ford and GM
Ford Motor Co. is in the business of manufacturing automobiles under its Ford and Lincoln brands. General Motors Co. continues to operate under 8 brands and under 4 segments: GM North America, GM International, Cruise, and GM Financial. Ford has just surprised its investors by delaying European market launch of the Explorer by ~6 months. This was supposed to be the company’s first all-electric volume model(EV) in the region.
The company’s Explorer was planned to arrive in showrooms at the beginning of 2024. However, now the compact SUV is scheduled to roll out in the summer of 2024. The company said new European standards for batteries are the main reasons for such delay.
On the related note, General Motors Co.’s CFO Paul Jacobson informed at the investor conference that the company continues to face issues regarding the production of its new Ultium battery packs. This has been slowing its output of EV. Such batteries are being manufactured by the Ultium Cells JV between GM and South Korea-based LG Energy Solution.
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