Rivian Automotive (RIVN.O), a company that manufactures electric vehicles, would gain from a large deflation in battery material costs later this year and in 2024, according to remarks made by finance director Claire McDonough at a technology conference on Thursday.
In recent years, the prices of raw materials that are used in batteries have skyrocketed to all-time highs on the back of a growing demand for electric vehicles (EVs), combined with limited supply due to the epidemic, which were made tighter as a result of Russia’s invasion of Ukraine.
According to a statement by the market research company TrendForce earlier on Thursday, falling demand for electric vehicles has contributed to a decrease in the price of batteries this year, and a further decline in pricing is anticipated throughout the year.
At a conference held by Goldman Sachs, McDonough predicted that the effects of decreasing commodity prices would likely begin to be noticed in the fourth quarter of this year and continue into the next year. Lower prices for the raw materials used in battery production might increase profit margins for Rivian and its competitors, all struggling with high expenses and diminishing cash balances.
Rivian, whose shares have increased by almost 27% this year, is also scaling up production of its in-house drive unit, which is anticipated to help minimize dependency on third-party suppliers, lower costs, and enhance output.
Rivian’s contemporaries have suffered with difficult competition, output obstacles, and the consequences of Tesla’s (TSLA.O) pricing war; nevertheless, Rivian has been able to separate away from its competitors thanks to robust demand, a production ramp-up and a clear path to profitability in the next year.