Rivian Automotive (NASDAQ: RIVN) has lost almost all its value in a short period, with shares down by an eye-watering 92% since hitting public markets in late 2021. However, the company still promises patient investors the opportunity to get in on the ground floor of the long-term electric vehicle (EV) opportunity. Let’s weigh Rivian’s pros and cons to decide if this struggling automaker still has millionaire-maker potential.
Today, the EV industry is radically different from when Rivian hit the scene three years ago. At the time, the market was soaring — led by the industry leader Tesla, which had essentially proven that pure-play EV manufacturers could operate profitably at scale. Traditional automakers like Ford, General Motors, and Stellantis seemed relatively late to the party, giving Rivian an opportunity to possibly exploit the gap in Tesla’s model lineup through its focus on pickup trucks and large SUVs.
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Today, the thesis that may have justified Rivian’s peak valuation of over $153 billion (the company is worth just over $10 billion today) has largely evaporated. Growth for the pure-play EV companies has stalled, and the traditional automakers are flooding the market with many different options — particularly in Rivian’s core SUV and truck segment.
Most alarmingly, the growth story seems to have shifted in favor of legacy automakers, possibly because they can leverage their more established brands and dealership networks to reach more customers.
The dynamic has become quite striking. For example, in the third quarter, Ford’s electric F-150 pickup truck saw sales double year over year to 7,162 units. GM is also seeing massive success with many of its products, including the Cadillac Lyriq, a luxury SUV that saw sales soar 139% to over 7,000 units. Both offerings compete with Rivian’s lineup of high-end trucks and SUVs.
Rivian’s second-quarter earnings highlight the severity of its challenges. Sales grew by a measly 3% year over year to $1.12 billion, while operating losses expanded 7% to $1.38 billion. The company’s Q3 earnings (expected on Nov. 7) probably won’t be much better. Vehicle deliveries are known to have declined 36% year over year to just 10,018 vehicles (compared to analyst expectations of 13,000).
That said, Rivian doesn’t plan to take these challenges lying down. CEO R.J. Scaringe believes he can lead his company to a modest gross profit by the fourth quarter of 2024 by reducing materials costs and improving factory efficiency. If successful, this move could open the door for the company to scale into operating profitability over the long term.
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