Rivian Burns Toward the Ground

By Douglas A. McIntyre Published Oct 3, 7:30AM EDT

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Rivian Burns Toward the Ground — © Courtesy of Rivian

Rivian Automotive Inc. (NASDAQ: RIVN | RIVN Price Prediction) has burned through $9 billion to build trucks that have assembly difficulties. A new takedown of the company shows why it is unlikely to survive as an independent entity. (These are America’s least reliable new cars.)
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The Wall Street Journal reports, in an unusually prominent story, that “Rivian vehicles sell for over $80,000 on average. Yet they’re so expensive to build that in the second quarter the company lost $33,000 on every one it sold.” That is among the most positive comments in the article.
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Rivian’s stock should be thriving, but it is not. Evercore ISI upgraded Rivian to Outperform and raised its price target to $35. The stock dropped 2.6% on October 2. Rivian delivered 15,564 trucks in the most recent quarter, while expectations called for 14,000. However, the increase was meager, up only 23% from a year ago. At this pace, it will take a long time for Rivian to come close to selling 100,000 trucks a year.

Rivian competes with the electric version of the most popular vehicle in the American market, the Ford F-150. Ford says it can make 150,000 of the F-150 Lightnings next year and will ramp up from there. Ford has millions of F-150s in the market, making it a huge target for the electric model.
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Electric versions of the F-150’s rivals, the Chevy Silverado and Ram, will also be in the market next year. Once again, they have millions of gasoline-powered versions of their pickups in the market, giving their brands huge targets for their electric versions.
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The waiting list for the Tesla Cybertruck has grown to 2 million. Will all these people actually buy one? No. But is it a sign of rampant demand?

At $22 a share, Rivian’s stock is up from its 52-week low of just above $11. Below $11 is where it should trade.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.