What Dented Rivian's Q4 Margins? CFO Reveals Huge Dip In Deliveries For Prime Customer

Rivian Automotive Inc. (NASDAQ:RIVN) CFO Claire McDonough revealed on Wednesday that decreased deliveries of its electric delivery vans (EDV) to online retail behemoth Amazon.com Inc. in the fourth quarter had a detrimental impact on the EV manufacturer’s gross margin.

What Happened: McDonough noted that deliveries to Amazon represented only 8% of the company’s total revenue in the fourth quarter, a significant drop from 30% in the previous quarter. This decline in deliveries was anticipated, as Amazon restricts the intake of new commercial vans during peak delivery periods.

“We expect a more significant gap between production and deliveries in Q4 relative to prior periods," the CFO had said in November. As predicted, the company ended the fourth quarter with a surplus of commercial vans in its inventory.

“Given our commercial vans have lower material costs due to the technology changes made in 2023, the lower deliveries during the quarter negatively impacted our gross margin,” she added. Rivian’s gross margin fell by 46% in the fourth quarter.

See Also: Is Rivian Stock (RIVN) a Good Buy Right Now?

In 2019, Amazon unveiled a partnership with Rivian aimed at deploying 100,000 electric delivery vehicles on the road by 2030. However, as of now, only over 10,000 Rivian EDVs are operational in Amazon’s U.S. fleet.

Other Fleet Operators: Rivian announced in November that it revised the terms of its initial agreement with Amazon to eliminate the exclusivity clause, thereby enabling it to sell vans to other parties. 

However, Rivian CEO R.J. Scaringe indicated during the company’s fourth-quarter earnings call that they anticipate demand from non-Amazon customers to increase only next year.

“We don’t anticipate a significant increase in demand from non-Amazon customers until next year, around the 2025 timeframe,” the CEO remarked. Scaringe explained that large fleet operators typically undergo pilot programs before committing to large-scale orders due to the complexities of transitioning to an EV fleet. Currently, new customers are engaged in pilot programs, he added.

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Photo courtesy: Rivian