Rivian could be the next Tesla – but it has a long ways to go

Rivian has become an interesting company to follow, largely because the electric vehicle manufacturer’s ups and downs reflect the complexity of the challenges that EV-based manufacturers face in the business.

The automaker’s highs and lows have been quite apparent in 2024, from the company’s fluctuating stock prices to the $5 billion investment commitment it received from Volkswagen. 

A snapshot: It’s hard to believe that it’s been 15 years since Rivian launched, after several name iterations. It’s even harder to believe that the first Rivian was envisioned to be a mid-engine hybrid coupe bearing the name R1, given how the brand is now known for electric pickups and SUVs.

Then to now:

• Rivian’s current available product lineup includes the R1S SUV and R1T pickups. 

• In March, Rivian revealed three new models  ̶  the R2, R3, R3X SUVs  ̶  key to the company’s future product strategy.

• Amid some fluctuation in Rivian sales in 2024, the R1S has posted some impressive numbers, including being up 127% in April, with 2,855 registrations, compared to 1,259 registrations in April 2023.

• More recently Rivian deliveries declined in Q3 as the EV maker shut down its Normal, IL manufacturing plant for upgrades and face supply chain troubles. Rivian said it now expects to make as many as 49,000 vehicles this year, down from 57,000.

But Rivian’s March reveal of its R2, R3 and R3X models gave the company a major boost in market positioning, given that the future viability of EV manufacturers lies in more cost-efficient models.  The $45,000 mid-size R2 SUV garnered more than 68,000 reservations in 24 hours.

Zoom out: Rivian’s biggest shot in the arm this year came in the announcement that Volkswagen was investing $1 billion into the EV manufacturer to create next-generation software-defined vehicle platforms, with plans for VW to invest another $4 billion into the company by 2026.

The announcement of Volkswagen’s investment – amid Rivian reporting a $1.45 billion loss in Q1 drove Rivian’s stock shares up by 50% in March.

Eyeing the numbers: Like many of the smaller EV manufacturers, Rivian has had to endure some major challenges stemming from the fluctuating dynamics of the business, including waning consumer demand and high manufacturing costs.  

• In the second quarter of 2024, Rivian’s losses were $1.46 billion and $1.37 billion in Q3.

• Rivian’s balance of cash and cash equivalents was $5.76 billion at the end of Q2, including the $1 billion investment from Volkswagen.

• Rivian stock has dropped more than 30% over the past two months. As of October 3, Rivan stock was more than 80% below its IPO price of $78.  

Changing the tide: Rivian’s strategy for improving its business operations and profitability is centered on the addition of more cost-efficient models to its lineup (R2 and R3 SUVs) and lowering its manufacturing costs. 

• Rivian is retooling its plant in Normal, Illinois, to save 35% in material costs for its vans, which accounts for one-fifth of its revenue.

• Rivian expects similar material cost cuts for its other vehicles, as it looks to streamline its manufacturing processes.  

• Plans for a new Rivian plant in Georgia, initially announced as the location where the R2 will be built, have been paused. Rivian expects to save $2.25 billion by building the first line of R2 at its Illinois plant.     

Moving forward: Despite its ups and downs, Rivian seems well positioned to find more sustainable footing in the business, especially with the launch of its R2 expected in 2026, followed by the R3. Having Volkswagen as a financial and strategic partner will also go a long way towards those efforts.

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