Rivian Automotive(NASDAQ: RIVN) shares popped this morning after the electric vehicle (EV) maker's chief financial officer (CFO) presented some exciting news for shareholders at a recent conference.
Rivian stock jumped as much as 11.5% before paring some of that gain. As of 11:15 a.m. ET, the EV start-up's shares were still higher by 9.7%.
New, cheaper battery platform
Rivian CFO Claire McDonough made comments in an interview at the recent Global Automotive and Mobility Tech Conference hosted by Barclays. Investors are reacting positively as they get wind of what McDonough had to say. Specifically, she said the company expects to become gross-margin-positive in 2024 and described how Rivian plans to lower production costs.
McDonough said Rivian will introduce a new simplified battery pack structure that she stated "takes thousands of dollars of costs out [and] is much easier to manufacturer and build as well." That could open up Rivian's products to more consumers given that its consumer offerings -- the R1T pickup and R1S SUV -- both start at selling prices of between $70,000 and $80,000.
Steps toward profitability
Rivian shares had already been moving higher since it reported its third-quarter results one month ago. Buyers jumped into the stock after Rivian boosted its 2023 production estimates at that time. It now expects to make about 54,000 units this year.
The company will also break ground on a second manufacturing facility to be located in Georgia early next year. That plant is expected to launch lower-cost vehicles with Rivian's next generation R2 platform.
Now the CFO is saying the company's existing R1 platform could already be lowering costs -- and presumably selling prices -- to potentially bring in a new wave of consumer interest in its products. That's good news and gives investors confidence that demand could be strong with higher volume from the new factory bringing it closer to profitability.
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Howard Smith has positions in Rivian Automotive. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
