The Bumpy Road Traveled
As Rivian Automotive hit the public markets in November 2021, eyes sparkled with visions of it mirroring Tesla’s meteoric rise. With Amazon and Ford Motor Company backing the company, and a focus on electric pickup trucks and vans, Rivian’s stock catapulted from $78 to $172.01 in a week, only to spiral down to $13. Missed production targets, colossal losses, and Ford parting ways caused a drastic dip, shattering investor dreams of a Tesla-esque future.
Image source: Rivian.
Uncertain futures loom over Rivian, but at just 2 times next year’s sales, its stock appears a bargain compared to Tesla’s nearly 7 times valuation based on the same metric. Can Rivian rev up production and emerge as a Tesla contender?
Recent Obstacles and Achievements
Rivian boasted ambitious targets pre-IPO, aiming for 50,000 vehicles in 2022. Post public debut, it scaled back to 24,337 cars due to supply chain hurdles and EV market slowdown. However, a 2023 rebound saw 57,232 vehicles roll off the production line, fueled by its in-house Enduro drive unit, slashing costs and reducing reliance on third-party parts.
Despite this, 2024 forecasts a modest 57,000 vehicles, plagued by macro headwinds, fierce competition, and a plant overhaul in Illinois halt, all contributing to plunging stock values amidst continued losses.
|
Metric |
2022 |
2023 |
1H 2024 |
|---|---|---|---|
|
Vehicles produced |
24,337 |
57,232 |
23,592 |
|
Vehicles delivered |
20,332 |
50,122 |
27,378 |
|
Revenue |
$1.66 billion |
$4.43 billion |
$2.36 billion |
|
Net loss |
($6.75 billion) |
($5.43 billion) |
($2.90 billion) |
Data source: Rivian.
Plotting the Path Forward
Rivian sets its sights on unveiling the R2 SUV in 2026, with the R3 and R3X SUVs following shortly. It maintains the Amazon van deal till 2030, but diversifies by selling to other firms after breaking the exclusivity clause. Analysts foresee a 29% compound annual growth rate from 2023-2026, likely yielding sales of 108,000 vehicles.
Compared to Tesla’s exponential growth during 2015-2017 – from 50,517 to 103,091 deliveries – Rivian’s journey faces added hurdles. Absent Tesla’s subsidies, encountering a mature EV market amid plummeting consumer EV price expectations, and lacking a nationwide charging network, Rivian navigates rough seas.
However, recent partnership initiatives with Volkswagen signal hope. A fresh joint venture pledges $5 billion for Rivian and the venture’s growth prospects, propelling production and novel vehicle launches.
A Glimpse into the Crystal Ball
Rivian eyes positive gross margins by Q4 2024, though lingering analyst doubts persist concerning profitability. Tesla’s past losses pale compared to Rivian’s projections – a daunting $3.37 billion net loss over $9.54 billion revenue in 2026, painting a challenging financial outlook for the aspiring automaker.
Rivian Automotive: Challenging the Status Quo in the EV Market
Rivian Faces Uphill Battle Against Volkswagen’s Support
The journey ahead for Rivian in scaling its business operations may be more arduous than anticipated due to the substantial backing it receives from Volkswagen. While the global Electric Vehicle (EV) market is projected to expand at a Compound Annual Growth Rate (CAGR) of 13.8% from 2024 to 2032, this pace is significantly slower compared to the industry’s growth trajectory over the past decade. A considerable portion of this growth is expected to be fueled by China, a market where Tesla has established a strong presence, leaving Rivian trailing in this vital region.
Consequently, the aspiration for Rivian to achieve the same monumental status as Tesla appears increasingly doubtful. Although Rivian demonstrates resilience when pitted against other underdogs in the market like Lucid and Polestar, it remains premature to anoint Rivian as the next dominant figure in the EV landscape.
Rivian’s Investment Proposition Under Scrutiny
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