Rivian Automotive, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a filing limited to the fourth quarter. Dollar amounts below are in U.S. dollars.
Business context
Rivian designs and manufactures electric vehicles and related services. Its consumer lineup includes the R1T pickup and R1S SUV; its commercial lineup includes electric delivery vans developed with Amazon. In 2022, the company produced 24,337 vehicles and delivered 20,332. Manufacturing was centered at its Normal, Illinois facility, with stated installed capacity of up to 150,000 vehicles annually.
Financial and operating metrics
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $1.658 billion | $55 million |
| Cost of revenue | $4.781 billion | $520 million |
| Gross loss | $3.123 billion | $465 million |
| Gross margin | Approximately -188% | Approximately -845% |
| Operating expenses | $3.733 billion | $3.755 billion |
| Operating loss | $6.856 billion | $4.220 billion |
| Net loss | $6.752 billion | $4.688 billion |
| Net loss per share, basic and diluted | $7.40 | $22.98 |
| Net cash used in operating activities | $5.052 billion | $2.622 billion |
| Capital expenditures | $1.369 billion | $1.794 billion |
| Cash and cash equivalents at year-end | $11.568 billion | $18.133 billion |
Year-end liquidity was reported as $11.9 billion, including approximately $0.3 billion available under the asset-based revolving credit facility (ABL). Outstanding debt principal was $1.25 billion under senior secured floating-rate notes due 2026. There were no ABL borrowings and $400 million of letters of credit outstanding; reported ABL availability after the borrowing base and letters of credit was $343 million. Rivian said it was compliant with debt covenants and expected existing cash and ABL availability to fund needs for at least 12 months.
Material changes versus the prior comparable period
- Revenue rose by $1.603 billion, primarily as deliveries scaled from the early launch period; management cited 19,412 more deliveries than in 2021.
- Gross loss widened to $3.123 billion. Cost of revenue included $475 million of depreciation and amortization and $920 million of inventory valuation charges and losses on firm purchase commitments, versus $95 million for those charges in 2021.
- Operating loss and net loss increased despite slightly lower total operating expenses. R&D increased 5% to $1.944 billion, while selling, general and administrative expense increased 44% to $1.789 billion.
- Operating cash use increased by $2.430 billion, which the company attributed mainly to growth-related spending and inventory build. Investing cash use declined from $1.794 billion to $1.369 billion; 2021 financing inflows included the IPO, while 2022 financing cash flow was $99 million.
- Interest income rose to $193 million, while interest expense rose to $103 million. The $441 million loss on convertible notes recorded in 2021 did not recur in 2022.
Outlook, commentary, and risks
- Management said it did not expect profitability for the foreseeable future and expected continued operating losses and significant investment. It anticipated that production at Normal would remain constrained by supply-chain factors in the near term.
- Rivian expects near-term inventory valuation and firm-purchase-commitment charges to continue, but anticipates the total Normal Factory charge will decline over 2023 and 2024 as costs fall and production rises. It expects negative gross profit at low volumes, with per-vehicle improvement dependent on cost reductions and higher production.
- Key execution risks include manufacturing scale-up, supplier concentration and semiconductor availability, volatile battery-material costs, customer demand and pricing pressure, and the ability to build service and charging infrastructure.
- Amazon accounted for $343 million of 2022 revenue. Its initial order is for 100,000 delivery vans, subject to modification; the agreement has no minimum purchase requirement and Amazon can change purchase quantities or timing.
- The company recorded $920 million of inventory and firm-commitment charges in 2022. It also disclosed a voluntary recall initiated in October 2022 affecting approximately 12,000 vehicles over a steering-related fastener issue.
- The planned Georgia manufacturing plant faces financing, permitting, and legal uncertainties. An appeal concerning validation of financing-related revenue bonds was pending, and lawsuits brought in 2023 could affect the project’s timing or construction.
- Rivian’s financial statements received an unqualified audit opinion, but management and KPMG reported material weaknesses in internal control over financial reporting, including IT general controls and user-access/segregation-of-duties controls. KPMG issued an adverse opinion on internal controls; remediation remained ongoing.
Important facts for investors to verify
- Progress in vehicle production and deliveries, unit economics, and reduction of the $3.123 billion gross loss.
- Cash burn, inventory levels, and whether available liquidity remains sufficient as the company funds operations and planned investment.
- Amazon order volumes, delivery timing, and the commercial relationship’s terms and concentration risk.
- Whether supply constraints and inventory-related charges ease as management expects, and whether cost reductions offset pricing and material-cost pressure.
- Resolution of Georgia plant financing and legal matters, and the status of internal-control remediation and any subsequent audit findings.