Rivian is entering the second half of 2025 under mounting financial strain, as softening demand, a record industry-wide cumulative loss of $22.4 billion, and rising trade costs cloud its path to sustained profitability.
The electric vehicle manufacturer’s outlook hinges increasingly on the successful execution and timely ramp of its forthcoming R2 model, which is planned to begin deliveries in the first half of 2026.
In the first quarter, Rivian posted its second consecutive positive gross profit of $206 million and a gross margin of 17%, a notable improvement from prior quarters.
However, a deeper look at the company’s financials reveals an unprofitable underlying operation. Rivian’s adjusted EBITDA loss for the quarter reached $329 million, and its free cash flow remained firmly negative at $526 million.
The company’s positive gross profit in the January–March quarter was largely enabled by the sale of the majority of regulatory credits allocated for the year.
When asked during the Q1 earnings call whether the full-year guidance of $300 million in regulatory credit revenue would be raised — given the substantial amount already recognized in the first quarter — CFO Claire McDonough said it would not.
“We still expect to be roughly in and around the $300 million area for the year as a whole as we look at the broader outlook for rent credits,” she stated.
Capital expenditures also rose to $338 million—up from $327 million in Q4—as the company accelerated investment in its Illinois facility and supplier park to prepare for the R2 launch.
Total revenue declined to $1.24 billion in Q1 2025 from $1.73 billion in Q4 2024 as vehicle deliveries fell both year over year and sequentially.
Figures plunged 40% sequentially from 14,183 to 8,640 and 14,183 and by 36% when compared to the first quarter of 2024.
The result prompted Rivian to lower its full-year delivery outlook to 40,000–46,000 units. Previously, the carmaker founded and led by RJ Scaringe had estimated to deliver between 46,000 and 51,000 units in 2025.
The prior outlook already implied a decline from the 50,122 vehicles delivered in 2024.
On the company’s May earnings call, Scaringe cited increased consumer price sensitivity in the premium EV segment, where Rivian’s average selling price remains above $88,000.
To expand its addressable market, Rivian is betting heavily on the upcoming R2 midsize SUV, set to start at $45,000.
Pilot builds started earlier this year, and a one-month shutdown of the Normal, Illinois factory is planned later this year to retool production lines.
The company is expected to open orders for the mid-size SUV early next year, according to Mizuho’s analyst Vijay Rakesh.
The detailed timeline of the shutdown is expected to be announced at the upcoming earnings call on August 5.
Management expects the new platform to improve unit economics by leveraging lower-cost components, scalable electrical architecture, and a more efficient plant footprint.
However, the macroeconomic backdrop continues to weigh on sentiment.
In a note to clients earlier this week, Guggenheim analyst Ronald Jewsikow downgraded Rivian from Buy to Neutral and lowered his price target to $13 from $16.
“We no longer have confidence in the required volumes and/or required ASPs to support our prior price target,” Jewsikow wrote, citing weaker-than-expected R1 sales and “negative U.S. Electric Vehicle and Emissions policy changes.”
Rivian sold 10,599 vehicles in the U.S. during the second quarter of 2025, including 7,898 R1 vehicles and 2,701 commercial electric vans, according to Cox Automotive.
Combined sales of the R1T and R1S fell 31% year-on-year in the company’s home market, with both models posting double-digit declines.
Guggenheim now forecasts 150,000 deliveries in 2028, down from 185,000 previously, and said the removal of EV incentives and regulatory credits reduces its EPS, free cash flow, and discounted cash flow valuation by nearly $2 per share.
One week before the end of the quarter, Rivian sharply reduced lease pricing for its R1T electric pickup and R1S SUV models amid the typical end of quarter sales push and the launch of the 2026 model year vehicles.
In the same week it adjusted pricing, the company laid off roughly 140 employees, or about 1% of its workforce. The layoff was the third one in the last 18 months.
Rivian, like other U.S. automakers, is facing rising cost pressures from tariffs.
CFO Claire McDonough said in May Rivian anticipates “a couple thousand dollars” in tariff-related cost increases per vehicle in 2025, even after factoring in reimbursement measures.
The company raised its 2025 capital expenditure forecast in May to $1.8–$1.9 billion, up from $1.6–$1.7 billion previously.
Management said the changes reflect new import duties on battery components and raw materials, which are expected to add “a couple thousand dollars” per vehicle this year.
While the company has short-term cell supply from Korea, it plans to shift production to LG’s Arizona facility by 2027.
Broader uncertainty in US EV policy is beginning to ripple through the industry. Earlier this month, both Ford and General Motors pulled their 2025 financial guidance, citing trade risks.
Ford said tariffs could add $2.5 billion in costs, while GM warned of a $5 billion impact.
Rivian, which sources most of its materials from the U.S. or USMCA-qualified suppliers, remains partially insulated but vulnerable to rare earth supply chains and policy reversals affecting consumer incentives.
Amid the tightening capital environment, Rivian secured a $1 billion equity investment from Volkswagen Group earlier this month, following the achievement of a gross profit milestone in the first quarter of the year.
The payment — structured as a share purchase at a 33% premium to the 30-day average stock price — brings total committed funding from Volkswagen to $2 billion as part of a broader $5.8 billion technology joint venture announced last year.
The German giant plans to adopt Rivian’s zonal architecture and software stack in its future EV products.
As of March 31, Rivian reported $7.2 billion in cash and equivalents.
In addition to the Volkswagen funding, the company expects to access a $6.6 billion U.S. Department of Energy loan and $1.3 billion in available liquidity under its extended credit facility.
Rivian shares soared over 6% on Friday and closed at $12.90, giving the company a market capitalization of $15.7 billion.
However, the shares of the EV maker are still down more than 18% in the last 12 months.
Including dilution from the Volkswagen transaction, the company’s implied valuation nears $20 billion—far below its $150 billion peak in late 2021, when shares of the EV maker skyrocketed amid a global EV bubble.
Beyond the financials, Rivian is also grappling with operational and governance concerns.
The company ranked last in J.D. Power’s 2025 U.S. Initial Quality Study, reporting 274 problems per 100 vehicles — more than 40% above the industry average.
Warranty provisions climbed to 4.1% of cost of goods sold in the first quarter of the year, indicating quality challenges tied to the second-generation platform.
In a regulatory filing earlier this month, Rivian disclosed that Scaringe transferred roughly 4 million shares and 6 million stock options to his ex-wife as part of a divorce settlement.
The assets are worth an estimated $130 million and marginally reduce his ownership and voting power at a time of heightened investor scrutiny.
Rivian is scheduled to report second-quarter earnings on August 5.
The company announced this week plans to open two new locations: a new hub focused on AI and autonomous driving in London and an East Coast headquarters in Atlanta with the target of employing 500 workers when fully operational.
