Rivian Targets Positive Auto Gross Margin by End of 2027

Rivian Automotive's incoming CFO says the company's automotive unit will exit this year with a positive gross margin, putting the division on pace to enter 2027 in the black on a gross-profit basis. Interim CFO Derek Mulvey, who takes over from Claire McDonough on Jan. 1, made the claim on Rivian's third-quarter earnings call Oct. 29. He did not quantify the margin, and the projection rests on a supplier ramp the company does not fully control.

The R2 mid-sized vehicle, which customers began receiving nearly six months ago, is the engine of the turnaround. It has become Rivian's top seller and drove a 46% year-over-year increase in third-quarter deliveries to 19,248 units, according to the California-based automaker.

What did the CFO actually say?

Mulvey told analysts and investors that production efficiencies at the Normal, Illinois, plant are offsetting some of the costs of the R2 launch.

"We're already seeing the benefit of introducing R2 into our Normal production facility," Mulvey said. "While new vehicle launch complexities in addition to rising costs of core components have — and we anticipate will continue to — impact our profitability, we expect that R2 will help us achieve a positive automotive gross margin exit rate for the year. This would establish a strong foundation for continued margin expansion as R2 ramps through 2027."

Note the caveats inside that promise. Launch complexity and component cost inflation remain headwinds. Mulvey said cost per car is falling significantly, but offered no per-unit figure.

Rivian as a whole has already posted positive gross profit for more than a year. That comes from a software-and-services segment with margins around 40%, supported by a growing joint venture with Volkswagen — not from building trucks.

How deep are the losses?

Through the first nine months of the year, adjusted EBITDA losses totaled nearly $1.29 billion, an improvement from $1.60 billion in the same period last year. Chairman and CEO R.J. Scaringe, McDonough and Mulvey expect full-year EBITDA losses between $1.85 billion and $1.75 billion, at the favorable end of the forecast McDonough outlined in February.

Executives also raised the floor of their 2026 delivery guidance to 67,000 vehicles, from 65,000. They have not published 2027 numbers.

Scaringe flagged the supply chain as the binding constraint on the ramp. "We can only ramp as fast as our slowest-ramping supplier," he said, describing an aggressive consolidation strategy.

• Rivian cut its supply base to a smaller set of Tier 1 suppliers for R2
• The CEO said each supplier must ramp in a "highly coordinated" way
• He denied any acute problem with a single supplier

Are investors buying it?

Jefferies and UBS upgraded Rivian shares after the earnings report, citing the company's momentum. The stock closed Nov. 3 at $13.29, up 12% week over week. The longer view is less flattering: shares remain down about 10% over six months, trimming market capitalization to $19.4 billion.

What is happening at LiveWire?

The same earnings day produced a far bleaker report from LiveWire Group, the electric motorcycle venture Harley-Davidson spun off four years ago. The company posted a net loss of more than $18 million on sales of just $7.2 million and warned that "conditions and events raise substantial doubt about the company's ability to continue as a going concern."

The warning landed days after CEO Karim Donnez resigned. Directors have formed a special committee to study restructuring options, including new financing, a sale or another major transaction. Harley-Davidson, still the majority owner, has stopped funding the venture.

LiveWire's volumes are growing but from a small base. It sold 241 motorcycles last quarter, up 31% year over year, and electric balance bike sales rose 20% to nearly 7,000 units. Those numbers cannot cover more than $75 million of debt coming due late next year.

LiveWire shares (LVWR) have fallen by two-thirds since the going-concern disclosure. The equity still carries a value above $120 million, implying some investors expect a rescuer to emerge. No buyer has surfaced.

What to watch next

For Rivian: the 2027 delivery outlook, expected with future guidance, and whether the automotive gross margin holds through the full R2 ramp. For LiveWire: the restructuring committee's decision, and whether Harley or an outside party steps in before the debt matures.