Rivian Automotive is looking to challenge Tesla, Ford and General Motors with its adventure-styled electric vehicles. RIVN shares surged 40% in December 2023 but have come back to earth to begin 2024, falling more than 50%.
Rivian stock was handed a price hike on March 15 after shares jumped nearly 13% on positive sentiment around the EV startup's R2 and R3 vehicle reveal event. However, questions remain whether the company can bring its new product line to market without help amid waning EV demand.
UBS raised its price target on Rivian stock to 9, up from its previous 8. However, UBS maintained a sell rating on the shares. The firm noted that after the company's March 7 product launch the "narrative around Rivian has changed."
UBS added that revealing new products diverts attention from weaker demand for the older R1 vehicle line and that Rivian's decision to pause construction on its new Georgia plant extends its cash runway. However, the firm still believes Rivian needs additional capital to bring these products to market.
Before its product launch, Jefferies Group initiated coverage of Rivian stock with a buy rating and 16 price target.
The Rivian Reveal
The EV startup unveiled the R2 — its smaller, cheaper, next-generation vehicle and platform — on March 7. The vehicle is priced at an estimated starting price of $45,000 with expectations it will also qualify for the $7,500 Inflation Reduction Act (IRA) tax credit.
The vehicle had been planned to be produced at Rivian's new factory in Georgia. However, the company announced Thursday it is pausing construction of its $5 billion factory and is opening a R2 production line at its Illinois plant. Production of the R2 platform is expected to begin in 2026 with deliveries beginning in the first half of 2026. Rivian announced Thursday the SUV can get more than 300 miles of range.
"I'm so excited about what it represents for us as a company in terms of achieving scale," Rivian Chief Executive RJ Scaringe said at the event.
Rivian also announced the R3, a more compact crossover style vehicle that uses the R2 platform, and a high-performance R3X offering. The company did not announce pricing or delivery estimates Thursday for the R3 or R3X. Rivian did say the R3 will be at a lower price point than the R2 and that deliveries for the R3X will begin after the R2.
"It takes the package of R2 and the platform, it shrinks it, it puts it into our take on what is a crossover," Scaringe said of the R3.
In less than 24 hours after the launch, Rivian said it received more than 68,000 reservations for the R2.
On the Feb. 21 Q4 earnings call, Scaringe said that the "R2 represents the essence of our brand, while targeting the significant midsized SUV segment, a massive market with limited compelling EV options beyond Tesla."
"We remain very bullish on the R2 segment and the R2 product itself," he added on Feb. 21. "We've engaged with our suppliers to ensure that we can ramp effectively as well as laying out the production road map."
Analyst Adam Jonas Weighs In On Rivian Stock
After the event, Morgan Stanley analyst Adam Jonas kept a RIVN price target of 14 and an overweight rating on the shares. Jonas wrote that the R3 reveal "stole the show." However, the analyst also voiced caution.
"While Rivian excited the market with the unveil of its next 3 years of new product pipeline, investors may also want to contemplate the potential risks of showing too much," Jonas said.
The analyst added that potentially just as important as the new products was the decision to pause its Georgia plant plans, which should save around $2.25 billion in capital spending. However, Jonas also wrote that he does not believe Rivian can bring its new products to the market by itself.
"We believe the company may require significantly greater capital resources to commercialize the R2 and R3 model plan with confidence," he wrote.
Jonas said his "key question" is whether Rivian should "seek out a new strategic 'sponsor' before launching the 'heavy lift' phase of development or do they continue to 'go-it-alone' and potentially look for partners later phase."
It is Jonas' view that Rivian may "benefit" from a partnership to bring the R2 and R3 to market at scale.
Rivian Stock Sinks On Q4 Earnings
RIVN shares dropped more than 25% on Feb. 22 after reporting fourth-quarter earnings and revenue, along with announcing layoffs and plans to keep production in 2024 flat compared to 2023.
Rivian reported on Feb. 21 a loss of $1.36 per share in Q4 with sales doubling to $1.31 billion. Wall Street expected a loss of $1.35 and revenue totaling $1.28 billion. Looking to 2024, Rivian said it expects production of 57,000 vehicles, remaining flat compared with 2023. The EV startup also predicts consumer and commercial vehicle deliveries to grow by low single-digits in 2024.
The carmaker also forecast that vehicle deliveries in Q1 2024 will be about 10%-15% lower than in Q4 2023 and that it is laying off 10% of its salaried workers.
Tesla Chief Executive Elon Musk posted on X, formerly Twitter, late on Feb. 21 that based on Rivian's quarterly cash on hand, the company could go bankrupt in around six quarters.
Chief Financial Officer Claire McDonough told investors on the Q4 earnings call that Rivian remains "confident that our cash, cash equivalents and short-term investments can fund our operations through 2025."
"We aim to maintain a strong balance sheet position by continuing to drive cost efficiencies and improve our vehicle unit economics, while opportunistically evaluating a variety of capital markets available to Rivian ranging across the capital structure," McDonough said.
Rivian Stock Falters
Rivian ended 2023 on a high note as interest in electric-pickup trucks appeared to be picking up following initial deliveries of the Tesla Cybertruck. At the end of December, Baird even designated RIVN as a "best idea" for 2024. The firm wrote that Rivian has remained supply constrained relative to demand longer than several of its EV peers.
However, RIVN shares have dropped to begin 2024.
On Jan. 2, Rivian topped its own 2023 vehicle production forecast, but the electric-vehicle maker fell slightly short of Wall Street predictions for deliveries.
The company said it produced 17,541 units and delivered 13,972 vehicles in the fourth quarter. Analysts had predicted fourth-quarter vehicle deliveries growing 75% to 14,000.
The Laguna Beach, Calif.-based company also announced that for the full year it produced 57,232 vehicles and delivered 50,122. While Rivian exceeded its own 2023 production forecast at 54,000 vehicles, Wall Street called for full-year deliveries surging 155% to 51,000 units.
Rivian stock plunged 10% on the announcement and fell 34.7% in January.
RIVN Gets Boost From AT&T And Ford
The decline in 2024 comes after RIVN gained 40% in December 2023, moving above key levels of resistance and clearing an aggressive entry point.
On Dec. 14, AT&T announced that starting in 2024 it will begin "piloting" Rivian vehicles in its fleet. AT&T expects to begin adding the Rivian Commercial Van and R1 vehicles to its fleet in early 2024. It is unclear how many Rivian vehicles AT&T will order. The company partnership also sees AT&T as the exclusive provider of connectivity to all Rivian vehicles, in the U.S. and Canada.
Rivian had reported during its third-quarter earnings it would allow more customers beyond Amazon, which remains a key buyer, to purchase its commercial electric vans.
On Dec. 11, news broke that Ford halved its F-150 Lightning production forecast, citing "changing market demand" according to a company memo obtained by Automotive News. The automaker now expects to manufacture 1,600 of the EV pickups per week at its Rogue Electric Vehicle Center in Dearborn, Mich.
Meanwhile, Rivian surprised Wall Street on Nov. 7, reporting better-than-expected third-quarter revenue and raising its EV production guidance for the full year.
Rivian Stock: Tesla Cybertruck Competition Or Opportunity
Tesla delivered its first 12 Cybertrucks on Nov. 30. The long-awaited arrival of the new Tesla vehicle sent Rivian shares 7.6% higher the following day.
The EV giant is offering three trims of the Cybertruck, with the rear-wheel drive version starting at $60,990 with a 250 mile range. The base model will be available in 2025, according to Tesla's website.
The all-wheel drive version has a starting price of $79,990 with 340 miles of range. Tesla is also offering a top end trim, called the Cyberbeast, starting at $99,990 with a 320 mile range. Both the all-wheel drive version and the Cyberbeast have 2024 deliveries.
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Four years ago, Tesla announced the price would start at $39,900 with Chief Executive Elon Musk previously saying he wanted to price the base model under $50,000. Originally, Tesla and Musk stated the tri-motor Cybertruck would have 500 miles of range with the dual-motor model managing 300 miles and the base rear-wheel version getting 250 miles per charge.
The price point and the unique design language of the Cybertruck may lead more consumers to look at Rivian's offerings.
Bumps In the Road For Rivian
The EV startup has been on a roller-coaster ride since its initial public offering two years ago, due both to overall market conditions and execution hiccups. Meanwhile, supply-chain issues have hampered the entire industry. Rivian has also had problems of its own complicate its launch.
Bumps in the road have included product recalls and price increases that had to be rolled back. Rivian is not likely to be profitable for a while as it continues to ramp up production.
The Road To Profitability
The EV startup currently produces an electric pickup-truck, SUV and commercial vans. Rivian makes its vehicles in Normal, Ill. The plant has a production capacity of 150,000 units annually. With the R2 production line, the capacity will total 215,000 units per year, according to Rivian,
The factory is expected to shutdown in the second quarter of 2024, after a one-week shutdown in Q4, to introduce new vehicle technology to the R1 platform.
Meanwhile, the company announced on March 7 its planned Georgia factory remains an "extremely important part of its strategy to scale production of R2 and R3."
"The timing for resuming construction is expected to be later to focus its teams on the capital-efficient launch of R2 in Normal, Illinois," Rivian announced.
"Increasing our production is the primary lever in our path to profitability," the company said in 2023.
Meanwhile, on June 20, Rivian announced it signed a deal to use Tesla's supercharging stations beginning in 2024. Ford and General Motors along with a slew of other automakers had previously signed similar deals with Tesla.
Rivian Stock IPO
Rivian rolled out the first all-electric pickup truck, the R1T, on Sept. 14, 2021, and its R1S SUV in the fall of 2022. The company launched with great fanfare on Wall Street.
On Nov. 9, 2021, the much-anticipated RIVN IPO priced strong, an upsized 153 million shares at $78 a share — above the expected range. Rivian stock has since fallen well below its IPO price.
Nevertheless, Rivian had a monster IPO, raising $11.9 billion and giving the company an initial valuation of roughly $77 billion. Rivian stock soared to 179.47 on Nov. 16, 2021, then sold off sharply over the following weeks and months.
Amazon Has A Major Stake In Rivian
Rivian is currently prioritizing production of electric vans for Amazon. The online marketplace already has around 1,000 Rivian commercial vans delivering packages in major cities in the U.S. It has ordered 100,000 of Rivian's electric vans.
Rivian reported in its Q3 results it has amended the exclusivity portion of its Amazon agreement allowing the company to sell commercial vans to other customers.
On Feb. 21, Rivian reported it had lower Q4 deliveries due to Amazon's "expected seasonality." Rivian's total revenue attributed to Amazon was 8% in Q4 compared to 30% in Q3.
"Given our commercial vans have lower material costs due to the technology changes made in 2023, the lower delivery during the quarter negatively impacted our gross margin," Chief Financial Officer McDonough told investors on Feb. 21.
Amazon currently has a 16.7% stake in Rivian, according to FactSet. However, Amazon is also looking elsewhere to electrify its fleet. On Jan. 5, 2022, Amazon and Stellantis said they're partnering to develop vehicles with Amazon software in the dashboards. Stellantis will also make electric delivery vans for Amazon.
Rivian Stock: The EV Price War
Tesla and other automakers have slashed EV prices amid economic and demand concerns. On Dec. 7, reports emerged Rivian laid off around 20 members of its long-range battery cell development team, including Victor Prajapati, a former senior manager at Tesla.
Rivian has already been in cost-cutting mode to improve its competitive stance vis-a-vis other EV makers. In 2022, the company said it had paused plans to build electric commercial vans in Europe with Mercedes-Benz. Rivian stock fell 5% on the news.
CEO Scaringe has said the company is evaluating "growth opportunities" and pursuing "the best risk-adjusted returns on our capital investments."
"At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian," he said in a Dec. 2022 statement.
As of March 21, Rivian has a starting price of $69,900 for its R1T electric pickup and $74,900 for the R1S SUV.
All prices are before federal tax credits. New Rivian vehicles are currently not eligible for full $7,500 EV tax credits under the IRA. The company's pickup truck and the SUV both meet the standards for $3,750 tax credit, according to the Internal Revenue Service (IRS) website.
Rivian Stock
RIVN surged after it announced its R2 and R3 productions. However, RIVN shares tumbling around 50% in 2024, dropping back below their 200-day and 50-day lines. The stock is currently trading about 84% below their IPO price of $78, according to MarketSurge analysis.
Rivian stock ranks ninth in IBD's Automakers industry group. RIVN has a 20 Composite Rating out of 99. Additionally, the stock has a 7 Relative Strength Rating and its EPS Rating is 40 out of 99.
Rivian sales are picking up, but heavy losses are likely to continue for some time. Shares are down 50% in 2024 and are down just a fraction in March. For now, RIVN is still not yet a buy.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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