How Much Should One Number Worry Rivian Stock Holders?
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Rivian Automotive (RIVN) continues to lose money manufacturing the cars that account for the bulk of its sales. During fiscal Q3 2026, the automotive business recorded an $80 million gross loss on $1.55 billion of automotive revenue. This revenue represented about 72% of total sales, and the loss came in the quarter the R2 became Rivian’s best-selling vehicle. So why is Rivian still losing money on the cars it sells?
Why Is Rivian Still Losing Money On Its Cars?
Management attributed the loss to production ramp-up costs for the R2, its new entry-level SUV, at the Normal, Illinois facility. With R2 output still running below normal levels, Rivian absorbed about $120 million in additional costs for the quarter, management said on the October 29, 2026 call. Rising costs for core components, memory among them, have also hampered profitability and will continue to do so, management said.
The gross loss narrowed from a year earlier, when the car business lost $130 million at the gross level. Management credited a portion of that $50 million improvement to higher deliveries at a better margin per vehicle, while another part came from regulatory credits and a tariff refund the company expects to receive. Because credits and a refund do not result from building cars more cheaply, not all of that gain may repeat.
Rivian’s Gross Profit Comes From Software And Services
Rivian’s other segment, Software and Services, generated a $256 million gross profit in fiscal Q3 2026, compared with $176 million for the entire company. Management said that about 60% of revenue in that segment originated from a joint venture with Volkswagen Group. Ultimately, Rivian earns its gross profit on software and services and loses part of it on the cars that bring in most of its sales.
Rivian stock has lost 29.0% over the past twelve months, while the S&P 500 returned 12.2%. The shares sell at 2.9 times sales, against 3.2 times for the S&P 500. That is below the index multiple, even though revenue rose 38.3% from a year earlier in fiscal Q3 2026. But Rivian still runs at an operating loss, while the S&P 500 as a whole earns an operating profit.
What Could Ease The Worry About Rivian’s Cars?
Management expects the R2 to help the car business reach a positive gross margin by the end of 2026. They qualified this target, noting the goal is to finish the fourth quarter at a gross profit rather than earning one across the whole quarter. Management also said that the automotive unit already achieved a gross profit in fiscal Q3 2026 based on its own cash-basis measure, which excludes regulatory credits.
Demand for the R2 also appears firm. The model outsold both the R1 and the EDV van during the quarter, and Rivian raised the low end of its 2026 delivery guidance, which now stands at 67,000 to 70,000 units.
Holders have reason for measured concern rather than alarm. The car loss is shrinking, but part of the latest gain came from credits and a refund, and management expects component costs to keep weighing. The worry would fade once the car business shows a gross profit in its reported results as well as on management’s own cash measure. Rivian’s automotive gross profit for the fourth quarter of 2026, due in a report expected in February 2027, is the figure to watch.
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