Shares of the U.S. electric carmaker Rivian (NASDAQ:RIVN) are surging on Tuesday after the company reported it produced more than 7,000 vehicles in Q3, the highest it managed so far in a single quarter.
The Irvine, California-based company said it assembled 7,363 electric vehicles (EV) units at its Illinois plant in the three-month period, 6,584 of which were delivered to its clients during the quarter. The automaker currently produces the R1T pickup, the R1S SUV, and delivery vans for Amazon (NASDAQ:AMZN) at the Illinois factory.
Rivian said it expects to reach its annual target of 25,000 vehicles in 2022. The company’s initial production target for 2022 was 50,000 vehicles, but Rivian was forced to halve that outlook due to supply-chain constraints which weighed on its production. The EV maker has produced 14,317 vehicles so far this year.
Tesla Misses, Shares Resilient
Rivian’s disclosure comes just a day after Tesla (NASDAQ:TSLA) reported its Q3 production and delivery numbers, though the world’s largest electric vehicle maker missed analysts’ expectations. Tesla shares closed sharply lower in response to Sunday’s numbers before staging a rebound on Tuesday.
Elon Musk’s EV company reported total deliveries for the third quarter of 343,000, missing the consensus estimates of 364,660, according to Street Account. Still, the total number of produced EVs of 365,000 in Q3 marks a new record for Tesla.
Tesla disclosed that it made 19,935 of its more expensive Model S and Model X vehicles, and 345,988 of its Model 3 and Y cars in Q3. The production grew compared to Q2 when the company reported it produced 258,580 EV units.
Production and delivery numbers were also up when compared to the same quarter last year, when it delivered and produced 254,695 and 237,823 vehicles, respectively. Tesla made just 8,941 Model S and X vehicles in Q3 2021. The company missed expectations for Q3 2022 due to higher commodity costs and headwinds at its new factories in Texas and Germany, Tesla said in a press release.
Tesla was forced to almost completely halt production at its Shanghai plant in July, though the company’s figures recovered sharply by August in China, according to data by the China Passenger Car Association (CPCA).
At the end of Q2, the EV giant announced significant layoffs at its artificial intelligence (AI) office and reduced workforce in other departments. Tesla’s founder and billionaire Elon Musk faced criticism earlier this year after ordering all Tesla employees to work at the office at least 40 hours per week, even though they were allowed to work remotely since the pandemic.
IRA Could Help US EV Makers to Rebound
Both Tesla and Rivian, as well as General Motors (NYSE:GM) and Ford (NYSE:F), hope they will be able to capture more of the domestic market share after the passage of the Inflation Reduction Act (IRA). The act allows EV buyers in the U.S. to apply for a $7,500 tax credit for vehicles bought after August 16. The IRA represents an extension of an existing plan that provided a $7,500 tax credit for EV purchases regardless of where they were produced.
Wolfe Research analysts believe that the passage of the IRA is “the most consequential development for the U.S. Auto Industry that we’ve seen in a very long time.”
“We believe that it has potential to affect the entire value chain—Significantly changing the trajectory of EV adoption, as well as the competitive landscape and earnings prospects for OEMs and Suppliers. We believe that this development is still far from fully appreciated,” analysts said in a client note.
These comments come after their analysts upgraded Tesla’s stock to Outperform from Market Perform in September, with a price target of $360 per share. Among other things, the upgrade move is a result of the new projection that sees EV penetration rising to 20% by 2025 in the U.S. Electric vehicles are boosting in popularity in the U.S. and elsewhere, as 71% of Canadians recently said they’d consider an EV for the purchase of their next vehicle.
Summary
U.S. EV makers will hope that the IRA introduction can help them stage a meaningful recovery after a difficult 12 months, during which many of them saw their shares plunge by over 50%. Despite logistical and supply chain challenges that prevented Tesla from delivering more EVs in Q3, the company has managed to deliver record production and delivery numbers that could set the stage for robust fourth-quarter performance. Similar activity was noted in quarter four of 2021, when Tesla delivered a then quarterly record of 308,000 vehicles.