(Reuters) - Rivian said on Thursday it was on track to turn a gross profit in the fourth quarter, helped by cost cuts, even as a part shortage and slow demand led to its first drop in quarterly revenue since going public three years ago.

Shares in Rivian, which also reiterated its full-year delivery target, were up 3% after hours. The California-based maker of electric SUVs and pickup trucks has been slashing costs by renegotiating supplier contracts and revamping its manufacturing processes.

Reducing costs is critical for Rivian and its peers as consumers facing high borrowing costs are choosing less expensive gasoline-electric hybrid vehicles over battery powered ones.

Similar measures helped rival Lucid cut its losses even as it slashed prices to woo customers for its luxury Air sedans.

Shares in Lucid, which started taking orders for its new Gravity three-row SUV, jumped 7% after hours.

To draw masses, both startups are planning to roll out more affordable models in 2026 and are trying to ensure they have enough money to survive until then.

Lucid, backed by Saudi Arabia's Public Investment Fund, has been raising money, including $1.75 billion last month through a public offering and private placement. Rivian, backed by Amazon, entered a technology joint venture with German automaker Volkswagen Group that will provide a $5 billion lifeline.

EV makers as well as the broader auto industry are bracing for President-elect Donald Trump to impose new tariffs on vehicles from Mexico and potentially from other countries and to reverse many existing pro-electric vehicle policies.

"We're closely analyzing a variety of outcomes that could play out with the change in administration," Rivian CEO RJ Scaringe told Reuters in an interview.

The company has been focusing on sourcing from suppliers that are not subject to large tariffs, he told analysts on a post-earnings call.

PART SHORTAGE

A significant shortage of a metal part used in the drive unit of Rivian vehicles disrupted production in the third quarter, forcing the company to reduce its full-year production forecast to between 47,000 and 49,000 vehicles, from 57,000 units. But the company maintained its annual guidance of delivering between 50,500 and 52,000 vehicles.

"We weren't able to build all the products and the mix of products that we planned and so that affected us on the demand side and on the revenue side," Scaringe told Reuters.

Rivian's third-quarter revenue slumped more than a third to $874 million, well below the $989.6 million that analysts on average estimated, according to data compiled by LSEG.

Scaringe said the part shortage would not disrupt production next year. Production in 2024 was already affected by a three-week shutdown of its only manufacturing facility, in Normal, Illinois, for a major retooling.

Rivian also announced a five-year supply deal for batteries with LG Energy Solution's Arizona subsidiary for its smaller, cheaper R2 SUV.

The agreement will help the company adhere to domestic manufacturing requirements as part of the Biden's Inflation Reduction Act, which provides incentives for EV buyers.