Electric vehicle (EV) maker Rivian Automotive Inc. (NASDAQ: RIVN) has been hit by trouble that might ruin a car company startup. Three weeks ago, it recalled 13,000 vehicles, almost every single one it has sold. However, the company recovered quickly. It sent out mobile repair vehicles and pushed owners into its service centers. The stock has recovered 8% in the past five trading days.
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The jump in shares needs to be juxtaposed with Rivian’s stock performance since the start of the year. It has dropped 66%. Sales of its pickups and sport utility vehicles remain very modest. A small army of competitors includes Ford’s F-150 Lightning and the upcoming launch by Tesla of its own light truck.

Buried very deep inside Rivian’s shareholder letter for the most recently reported quarter was a loss of $1.7 billion, which is breathtaking for a company so small. Management said it has $15 billion on the balance sheet. Over time, that will not matter if people do not buy its vehicles in much greater numbers. Management said backorders totaled 98,000. That means very little and could evaporate quickly if Rivian cannot get much more than 100,000 vehicles to market.

Rivian continues to brag about a huge order from Amazon. Once again, that success depends on manufacturing at scale, which still needs to be tested.

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Rivian also faces extreme skepticism about its valuation. It is $30 billion, which compares with auto giant Ford’s market cap of $52 billion. Rivian has only made a handful of vehicles. Ford sold 158,000 in August. Demand for its F-150 EV was unusually strong.

Rivian’s recovery from its stumble is impressive. Now comes the hard part. It needs to be able to make 30,000 vehicles a month if its backorder level turns into sales and its Amazon deal turns from a contract to reality.

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