Rivian Shares Sink on Cautious Outlook. Is This a Buying Opportunity or Should Investors Run for the Hills?

After two straight quarters of positive gross margins, Rivian Automotive (NASDAQ: RIVN) returned to producing negative gross margins in the second quarter. This largely appears to be due to higher material costs, as China's cutback on the export of heavy rare-earth metals in the quarter disrupted supply chains and drove up the cost of electric vehicle (EV) production. Meanwhile, a reduction of regulatory tax credits will be a headwind going forward, as the $7,500 U.S. federal EV tax credit will expire at the end of September. As a result, Rivian lowered its expectations for 2025 regulatory credit sales from a prior outlook of $300 million down to $160 million. Tax credits are pure gross margin, so that reduction hurts. Tariffs will also be a headwind, with Rivian estimating that tariffs will cost it a couple of thousand dollars per vehicle. The automaker said it is now looking for gross profits to be about breakeven for the full year. That is down from its prior outlook of it turning a modest gross profit in 2025. Gross margin and gross profit are key metrics for Rivian, as it must be able to make its vehicles for less than it sells them for to even think about becoming profitable and generating free cash flow down the road.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool