Rivian Automotive Inc. (RIVN) and Lucid Group Inc. (LCID) are two electric vehicle (EV) startups sharing a common path. Both California-based companies have created compelling EV products and are looking to expand their market reach with more affordable offerings. However, neither has yet turned a profit. Despite their financial situations, both EV makers are heavily investing in research and development as they prepare to launch their next big offerings. Lucid is gearing up to begin production of the Lucid Gravity SUV, while Rivian is focused on releasing its R2 SUV.
In the second quarter of 2023, Lucid spent $287.17 million on research and development, representing 143% of its total revenue of $200.58 million. Rivian, on the other hand, spent $428 million on R&D, which amounted to 37% of its revenue for the same period. While Rivian spent more, it also generated higher revenue thanks to its larger sales volume. During the quarter, Rivian delivered 13,790 units of its R1 vehicles, which include the R1S SUV and R1T truck. In contrast, Lucid delivered only 2,394 units of its Lucid Air sedan. Despite its larger delivery volume, Rivian reported a net loss of $1,457 million for the quarter, over double the net loss of $643.39 million reported by Lucid.
Looking ahead, Rivian plans to begin production of the R2 in the first half of 2026. The R2 SUV is expected to be priced around $45,000, making it a more affordable and mass-market offering compared to the company’s R1 vehicles, which start at around $70,000. Lucid has already commenced pre-production of its Lucid Gravity SUV and expects to start production later this year. The Gravity SUV is anticipated to start under $80,000, positioning it at a higher price point than the Air sedan, whose cheapest version starts at $69,900. Rivian’s R2 will likely compete against Tesla’s best-selling Model Y SUV, while the Gravity will be up against Tesla’s more premium and low-volume Model X SUV.
In terms of profitability goals, Rivian is optimistic. During its second-quarter earnings call, the company stated its intention to achieve modest gross profit in the last quarter of 2024 and for the full year 2025. Lucid, however, has yet to provide a specific timeline. Earlier this month, Lucid CFO Gagan Dhingra mentioned that the company has already narrowed down its losses and will be in a “better position than competition” with scale.
Both Lucid and Rivian entered the public markets in the second half of 2021. As of the last close, Lucid’s stock is up 2.7% year-to-date, while Rivian is down 32%. Rivian shares closed at $14.36 on Monday, and Lucid shares at $4.26. If an investor had put $1,000 into Lucid stock at the beginning of 2024, their investment would now be worth marginally higher than $1,000. However, if they had invested the same amount in Rivian stock, they would have lost over $300.
Both Rivian and Lucid face challenges on their path to profitability. The EV market is becoming increasingly competitive, with established players like Tesla and new entrants constantly pushing boundaries. However, their commitment to research and development and their innovative products give them a fighting chance in this rapidly evolving industry. Their success will ultimately depend on their ability to overcome their financial hurdles and navigate the competitive landscape.
