The electric vehicle industry is under pressure from rising interest rates, which hurts consumer spending. Cars are big-ticket items usually purchased with loans, and higher rates make them more expensive. To cope with the softer demand, EV makers have engaged in a price war, putting even more pressure on unprofitable players like Rivian.
Rivian’s operations are scaling rapidly, and management expects full-year production of 52,000 cars in 2023. This positive growth trend could continue over the next five years and possibly accelerate when macroeconomic conditions ease. Rivian faces a wide range of competitors both in the broader automobile industry and in the small, but fast growing EV segment.
- Leasing accounts for only about 20% of new vehicles overall, but can account for nearly 80% of luxury vehicles, which is essentially the price range of Rivian’s larger R1S and R1T vehicles.
- A veteran Apple executive who oversaw the company’s electric vehicle efforts is reportedly resigning.
- Currently, Rivian is getting ready to build its second EV manufacturing plant in Georgia.
- Cars are big-ticket items usually purchased with loans, and higher rates make them more expensive.
To me, this suggests that the market has already priced in all of Rivian Automotive’s challenges and worst-case scenarios. Again, there’s a sense that investors are completely overlooking Rivian’s opportunities to grow and recover in 2024. Rivian said that it expects to generate most of its revenue in the near term from sales of vehicles, accessories, and regulatory credits. Gradually, it will then begin to generate more substantial revenue from offering value-added services spanning the lifecycle of its vehicles, which will deepen its relationship with customers. The electric vehicle (EV) industry is seeing a torrent of bad news recently.
The company vehicles are designed for sustainability and long lifespans across all components with repairability and reusability key to the end result. That includes engineering specifications such as easily removable batteries and batteries that can be easily recycled or repurposed https://bigbostrade.com/ into stationary power packs when their EV lifespan is spent. Rivian’s second-quarter earnings indicate where it could be heading over the long term. Revenue soared by 208% year over year to $1.12 billion as the automaker increased vehicle deliveries by 59% to 12,640.
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A Little Good News for Rivian Investors
The R1T is hailed as the world’s first EV adventure vehicle, it began production in early 2021 and the first deliveries were made later that same year. By mid-2022 the company had delivered more than 8,000 vehicles with production ramping quickly. Rivian Automotive, Inc. is an OEM EV manufacturer focused on pickup trucks and SUVs. The company was founded in 2009 and is based in San Jose, California.
Leasing is a big deal for high-priced-vehicle demand, and Rivian might have just unlocked more with this move.
Rivian is among the greenest of the EV makers choosing to achieve carbon neutrality well ahead of the Paris Climate Accord timeline. This latest leasing step is just a little more good news for the EV company that has so far avoided price wars and largely sidestepped a slowdown in production and deliveries. It could come at the perfect time to unlock more demand as the company looks to carry commodity trading strategy momentum from a fairly strong back half of 2023. Finder monitors and updates our site to ensure that what we’re sharing is clear, honest and current. Our information is based on independent research and may differ from what you see from a financial institution or service provider. When comparing offers or services, verify relevant information with the institution or provider’s site.
Rivian generated a second-quarter operating loss of $1.29 billion, a sharp improvement from the $1.7 billion lost in the previous-year Q2. And with $11.6 billion in cash and equivalents on its balance sheet, the company can sustain operations without over-relying on debt or equity dilution. Management expects a positive gross margin by the second half of 2024, which could be the first step in eventual net income profitability. Management is also hinting toward releasing smaller and more affordable options, which could help Rivian penetrate new markets like Europe, where consumers often prefer more compact options.
Knowing this, RIVN stock investors might worry about weak demand for Rivian’s R1T truck model. However, there aren’t any company-specific press releases indicating soft demand for the R1T. Rivian’s total book value, the difference between its assets and liabilities, was $5.5 billion as of June 30, 2021. Total cash and cash equivalents on the company’s balance sheet at the end of the June were $3.7 billion.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. The problem is that the high end of the EV market is saturated. It has promised to drop prices to $40,000 when it opens a new plant in Georgia.
Its last market close was $15.66 – a decrease of 2.85% over the previous day. Rivian employs 14,122 staff and has a trailing 12-month revenue of around $3.8 billion. Right now, it only boasts two cars (the R1T pickup truck and the R1S SUV) and its commercial delivery van. But the company plans to release a new R1X off-road SUV this year, which could appeal to wealthy outdoor enthusiasts. Shares of Rivian Automotive Inc. soared Thursday after the EV maker said it will supply electric vehicles for AT&T Inc.’s fleet, its first major announcement after it ended an exclusivity deal with Am…
Upgrade to MarketBeat All Access to add more stocks to your watchlist. Sign-up to receive the latest news and ratings for Rivian Automotive and its competitors with MarketBeat’s FREE daily newsletter. Rivian is also building the Rivian Adventure Network, a series of charging stations along popular routes and out-of-the-way destinations. The charging stations can add up to 120 miles of range to a battery pack in just 20 minutes. The company is planning to launch at least 2500 stations nationwide.
This electric truck company is making impressive progress. Will the boom last over the long term?
Later this year it plans to begin delivering a three-row, seven-passenger SUV named the R1S. These vehicles are equipped with a set of advanced technology systems and are designed to accommodate consumers with active lifestyles. Rivian also plans to launch an electric delivery van (EDV) for business customers. Investors in the automotive industry, especially the electric vehicle (EV) industry, are happy to soak up any positive news amid a flurry of price cuts, supply disruptions, and slowing growth.
Last week, I wrote that the portion of EV sales in the UK declined for the first time since records started in 2018. The company offers five-passenger pickup trucks and sports utility vehicles under the R1T and R1S labels. The R1T is a highly configurable pickup while the R1S is an off-road capable SUV.
Here’s our daily look at three charts connected to recent news-driven price moves, with key technical levels to monitor. Wolfe Research analyst Rod Lache downgrades Rivian stock to Hold from Buy. Initial-public-offering advisor Renaissance Capital LLC sold all of its holdings in Airbnb and Palantir stock. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions.