Rivian’s Investment Prospects: Challenges and Opportunities Ahead

Electric vehicle (EV) maker Rivian (NASDAQ: RIVN) has become a challenging investment for many shareholders. Currently, its shares are trading 93% below the all-time high of around $172 reached in November 2021, shortly after the company went public. At that time, the stock was arguably overvalued. Now, some investors may see its significantly lower valuation as a potential buying opportunity.

Rivian’s Upcoming Model Launches

Over the next year, Rivian will unveil its R2 SUV and R3 crossover models. These lower-priced, mass-market EVs are expected to provide the company with opportunities to capture market share from established competitor Tesla. However, whether Rivian can control its cash burn rate remains a critical question.

Market Turbulence: A Chance for Rivian

2025 has proven tumultuous for the automotive sector and the U.S. economy overall. Tesla has reported a 13% year-over-year decline in first-quarter deliveries, partly due to criticism aimed at CEO Elon Musk. This loss could position Rivian to attract consumers hesitant to support Tesla.

Moreover, Rivian could benefit from the 25% tariffs on vehicle and auto parts imports enacted during President Trump’s administration. The company’s domestic supply chain, featuring U.S.-made motors and batteries with local assembly in Normal, Illinois, presents an advantage over rivals like Ford, which produces the electric Mustang Mach-E crossover in Mexico.

Despite these advantages, Rivian is not completely shielded from tariff impacts. It relies on a global supply chain for components and essential materials like steel and aluminum, which are now subject to increased import taxes. This situation could lead to reduced gross margins throughout the auto industry. As a smaller, unprofitable company, Rivian may struggle to absorb these costs more than its larger competitors.

Improving Operations Amidst Ongoing Hurdles

Rivian’s fourth-quarter performance reflected mixed results. Total revenue increased by 32% year-over-year to $1.73 billion, primarily due to a rise in sales. While its operating losses did shrink 58% to $661 million, the losses remain significant for a company of Rivian’s size. Nevertheless, the company is making strides toward potential profitability and positive cash flow if it can continue scaling effectively while managing expenses.

Image source: Getty Images.

However, achieving success is not guaranteed. Rivian’s first-quarter earnings will be available in early May, but preliminary reports indicate disappointment, with 8,640 R1T and R1S vehicle deliveries—36% lower than the same period last year.

It appears Rivian may be reaching a saturation point for consumer demand for its high-end EVs, facing stiff competition from alternatives like General Motors‘ Cadillac Lyriq and Tesla’s Cybertruck. Demand for these vehicles has also dropped in the first quarter. However, Rivian is set to broaden its appeal with the introduction of the more affordable R2 mid-sized SUV, which launches in late 2025 starting at approximately $45,000, significantly lower than the full-sized R1S priced around $78,000.

Prospects for Rivian’s Stock: What Lies Ahead?

The primary considerations for a stock’s performance are a company’s current profitability and future profit potential. Rivian’s share price has fallen substantially as investors question its ability to establish a solid, sustainable business model and halt its cash burn.

In the coming year, a successful launch of its new, less expensive SUVs could alter perceptions of Rivian. The potential to attract mass-market interest, especially with potential tariff advantages favoring its domestic production, presents a favorable scenario. However, investors should proceed with caution and await additional information before committing to a position in Rivian’s stock.

Investment Considerations for Rivian Automotive

Before investing in Rivian Automotive, consider the advice of analysts who currently do not list Rivian among the top investment choices. They believe there are other stocks with stronger potential for returns.

Will Ebiefung does not hold positions in any stocks referenced. The discussions and analyses provided are influenced by the author’s perspectives and may not represent those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.