Rivian (RIVN) shares have plummeted 38% in 2024 as the EV startup is looking to challenge Tesla (TSLA), Ford (F), General Motors (GM) and other autos with its adventure-styled electric vehicles.
RIVN shares advanced 1.2% t0 14.37 during market trade on Friday. The stock is up more than 17% in December. Rivian shares have also advanced around 40% since the U.S. Department of Energy on Nov. 25 announced the EV startup would receive a loan up to $6.6 billion.
Rivian said in the announcement that, if the loan is finalized, it plans to use the federal money for the development and construction of its EV plant in Georgia, which would have an annual production capacity of 400,000 vehicles. The company said the first phase of the Georgia project is expected to start production in 2028.
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This comes after Rivian announced on Nov. 13 it finalized its $5.8 billion joint venture with Volkswagen (VWAGY). The deal gives Volkswagen access to Rivian’s software technology, while the U.S. EV maker gets much-needed cash and better economies of scale. The joint venture will be headed by Wassym Bensan, Rivian’s chief software officer, and Carsten Helbing, VW’s chief technology officer. They’ll oversee some 1,000 engineers from both companies.
VW aims to launch vehicles in 2027 with tech from the JV in the Volkswagen and Scout brands.
“After seeing lots of choppiness and pain points in the supply chain in the past year, we believe this is the right partner announcement coming in at the right time as RIVN looks to navigate the ship in stormy waters with sufficient capital to fund its EV roadmap over the coming years,” Wedbush Securities analyst Dan Ives wrote on Nov. 13.
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Rivian’s Volkswagen Deal
The EV startup in June announced a $5 billion joint venture with Volkswagen that involves the global auto giant investing in the EV startup in order to leverage some of its engineering and designs.
However on Nov. 12, Rivian and VW announced the joint venture will see the auto giant invest up $5.8 billion in Rivian by 2027, 16% more than the original announcement.
The initial $1 billion investment has been made. At the closing of the joint venture, VW will invest another $1.3 billion. The remaining $3.5 billion is expected to come in the form of equity, convertible notes and debt at “future dates.”
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The partnership will focus on software and building electric vehicle platforms at scale along with electrical architecture design and development, according to Rivian executives.
The JV plans to use Rivian’s existing electrical architecture and software which will enable the launch of the Rivian R2 in the first half of 2026 and “support the expected launch of the first models from the Volkswagen Group as early as 2027.”
Through 2028, VW will fund 75% of shared platform costs in the JV with Rivian covering 25% of the costs. Each company will fund 100% of the development for each brand’s respective vehicles.
Volkswagen recently relaunched the Scout Motors brand making all-electric SUVs and pickup trucks that bear a marked resemblance to Rivian’s vehicles. Scout engineered and designed the vehicles in Michigan, and plans to build them at a new factory in South Carolina.
Rivian’s Third-Quarter
Meanwhile on Nov. 7, Rivian reported another loss in its third-quarter, while also reaffirming its 2024 delivery outlook, as well as its goal for positive gross profit per vehicle delivered in Q4.
Rivian announced a net loss of $1.08 per share in Q3 — compared to a $1.44 per share loss a year ago — while revenue totaled $874 million, down 34% vs. Q3 2023. Total revenue from the sale of regulatory credits was $8 million for the quarter, according to the after-hours report.
Rivian ended the third quarter with $6.739 billion in cash, cash equivalents and short-term investments. This includes $1 billion of an unsecured convertible note issued to Volkswagen, according to Rivian. At the end of Q2, Rivian had $7.867 billion in cash, cash equivalents and short-term investments.
Rivian added on Nov. 7 it remains “on track” for positive gross profit per vehicle by the fourth quarter. The startup has repeatedly stated its path to gross profit per unit delivered is primarily by reducing material costs, along with regulatory credits and other efforts.
Rivian lost around $39,130 per vehicle in Q3, up from $32,700 per vehicle in the second quarter. In Q1, Rivian lost more than $38,700 per vehicle delivered.
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The EV startup also said that Q3 operating expenses decreased to $777 million, compared to $963 million in the same period last year.
Along with earnings, Rivian announced a strategic supply agreement with LG Energy Solution to power its next-generation midsize electric vehicle platform. LG Energy Solution will supply 4695 cylindrical battery cells to Rivian.
Lowering Production Guidance
Rivian already reduced its full-year production guidance as it missed third-quarter vehicle deliveries forecasts amid an ongoing “component shortage” in its vehicle production.
Rivian announced in early October it delivered 10,018 vehicles in Q3 and produced 13,157 units at its manufacturing facility in Normal, Ill. Analyst consensus had Rivian third-quarter deliveries totaling around 12,670 units, according to FactSet. A year ago, Rivian delivered 15,564 units while producing 16,304 vehicles.
Rivian on Oct. 4 said it was revising its annual production guidance to 47,000-49,000 vehicles. Rivian did reaffirm its annual delivery outlook of 50,500 to 52,000 vehicles, representing low single-digit growth compared to 2023. The company had been targeting full-year production of 57,000 units.
The EV startup said it is “experiencing a production disruption due to a shortage of a shared component on the R1 and RCV platforms.”
“This supply shortage impact began in Q3 of this year, has become more acute in recent weeks, and continues,” the company wrote.
Bloomberg then reported last month there was a miscommunication earlier in 2024 between Rivian and supplier Essex Furukawa, a unit of Superior Essex. This resulted in Rivian not having access to copper windings, a key component for Rivian’s electric motors.
On Nov. 7, Rivian said it is also revising down its annual adjusted EBITDA guidance to a loss of between $2.825 billion and $2.875 billion, due to this disruption.
EVs And Trump
Analysts expect a second term under President-elect Donald Trump to be broadly negative for EVs but is a “huge positive” for Tesla (TSLA) and Chief Executive Elon Musk.
Analyst Dan Ives wrote recently that a Trump presidency could be an “overall negative for the EV industry,” with the potential for EV rebates and tax incentives to be repealed.
“Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players,” Ives wrote.
Adam Jonas, Morgan Stanley’s high-profile auto analyst, on Tuesday wrote that “while Tesla may see share gain long term even with a less supportive EV regulatory backdrop, smaller scale EV start-ups Rivian and Lucid (LCID) may see greater risks to production into an uncertain demand environment.”
Jonas keeps an equal weight rating on Rivian heading into 2025.
“We believe the company’s valuation and risk/reward appropriately reflects the balance between the company’s ability to achieve recovering profitability as a stand-alone EV manufacturer vs. the potential for the company to extract value as a technology provider of software-defined vehicle architectures,” Jonas said.
EV Startup Redesigns Lineup
In June, Rivian announced it revamped its pickup truck and SUV models. Rivian said pricing for the second-generation R1S SUV will increase $1,000 from current models to start at $75,900, with the trimotor trim starting at around $106,000.
The starting pricing for the R1T pickup will remain at $69,900. However, the trimotor option will run around $100,000.
Rivian has not yet shared details on range and pricing for all the vehicle trims.
The company said Thursday it has changed more than half the hardware components for the updated products and reengineered its batteries.
“We continue to evolve our flagship R1 vehicles, offering quality and performance without compromise,” Chief Executive RJ Scaringe said in a statement. “Our revamped R1S and R1T push the technical boundaries further, creating our most capable products to date.”
The Rivian Reveal
The EV startup unveiled the R2 — its smaller, cheaper, next-generation vehicle and platform — on March 7. The vehicle has an estimated starting price of $45,000 with expectations it will also qualify for the $7,500 Inflation Reduction Act tax credit.
Rivian planned to produce the vehicle at its new factory in Georgia. However, the company halted construction of the $5 billion plant and is opening an R2 production line at its Illinois plant.
Production of the R2 platform is expected to begin in 2026 with deliveries set for the first half of 2026.
Rivian also announced the R3, a more compact crossover style vehicle that uses the R2 platform, and a high-performance R3X offering. The company has not mentioned pricing or delivery estimates for the R3 or R3X.
Rivian has said the R3 will be at a lower price point than the R2 and that deliveries for the R3X will begin after the R2.
RIVN 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 since then. The decline in 2024 comes after RIVN gained 40% in December 2023, moving above key levels of resistance and clearing an aggressive entry point.
In December 2023, AT&T (T) announced that starting in 2024 it will begin “piloting” Rivian vehicles in its fleet. AT&T expected 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.
Rivian currently prioritizes 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.
Amazon currently has a 16.7% stake in Rivian, according to FactSet. However, Amazon is also looking elsewhere to electrify its fleet.
Rivian Stock IPO
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,
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.
Rivian Stock
RIVN shares have tumbled 40% in 2024. The stock is currently above both its 200-day moving average and 50-day line. Rivian stock is about 80% below its IPO price of $78, according to MarketSurge analysis.
Rivian’s chief executive has also repeatedly sold shares of RIVN since June, according to regulatory filings. Most recently, Scaringe sold 71,429 RIVN shares for about $975,191.57 on Dec. 12. Scaringe, in a prescheduled sale, sold 83,334 RIVN shares for about $937,507 on Nov. 25. Scaringe has exercised RIVN stock options more than eight times since June, according to SEC filings.
Wedbush analyst Ives wrote on Nov. 13 that although the Rivian-VW joint venture is “exciting” the focus will for investors remains “mostly on the R1 execution plans, production, optimization, the Georgia plant, and the profitability story” over the next year.
Ives has an outperform rating on RIVN stock with a 20 price target.
Rivian stock has a 33 Composite Rating out of 99. Additionally, the stock has a 35 Relative Strength Rating and its EPS Rating is 21 out of 99.
Rivian says it is on target for positive gross profit per vehicle in the fourth quarter and has rallied in recent weeks. However, shares are down 38% in 2024. For now, RIVN is not yet a buy.
Please follow Kit Norton on X @KitNorton for more coverage.
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