As electric vehicle (EV) industry leaders Tesla Inc. (NASDAQ: TSLA) and China’s BYD were announcing record sales for the fourth quarter and full year 2023, shareholders hammered one of their much smaller rivals due to its disappointing unit sales.
What Happened to Rivian?
Rivian Automotive Inc. (NASDAQ: RIVN) stock dropped 10% on news that it delivered 13,972 vehicles in the year’s final quarter. That was down 10.3% from the same period a year ago and below Wall Street’s expectations of 14,000. It is hard to imagine how an EV company, part of one of America’s hottest industries, could post such a decline. By contrast, Tesla delivered 484,507 cars in the final quarter of 2023. Tesla’s deliveries for the year reached 1.81 million, up 38% from 2022.
Rivian’s management was silent on why deliveries were less than expected. Many industry observers believe that EV sales across the country have started to slow and that the number of companies in the sector has grown quickly, splintering market share. (Here are five reasons to avoid Rivian R1T no matter what.)
EV Sales Headwinds
Among the reasons for EV sales challenges is price. For example, the base price of a Rivian R1T pickup is $73,000, which is well above that of the best-selling gasoline-powered pickups, including the Ford F-150, Chevy Silverado and Ram. These carry manufacturer’s suggested retail prices that are often below $40,000.
Another challenge to the EV market is range. Most EVs have ranges between 300 miles and 350 million. Gasoline-powered cars can often go over 400 miles on a tank of gas. EV charging stations are in short supply compared to gas stations, particularly outside big cities. There are approximately 125,000 gas stations in the United States, which almost guarantees convenience. And EVs can take several hours to charge fully. A gasoline-powered vehicle’s tank can be filled in a few minutes.
Rivian is also running out of financial runway. The company lost $1.3 billion in the third quarter. It lost $1.7 billion in the same quarter of 2022.
Rivian is a niche player in an industry dominated by Tesla and growing crowded as every major car company in the world invests heavily in EV fleets.
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