Ford Deal Back-Out Isn’t the End of the Road for Rivian

Is seems like there’s a constant influx of new electric vehicle (EV) start-ups, doesn’t it? Among the most interesting contenders is Rivian Automotive (NASDAQ:RIVN), and there’s no shortage of buzz on social media about RIVN stock lately.

The back of a silver Rivian (RIVN) pick-up truck.
Source: Miro Vrlik Photography /

In case you didn’t get the memo, Rivian specializes in big vehicles, especially trucks and SUVs. There’s a no-cruelty focus here, as the interiors of Rivian’s vehicles are made from 100% animal-free materials.

That’s not the only feature that sets the audacious automaker apart. Specifically, Rivian’s battery packs are designed to be easily removed from the vehicles, and can either be recycled or used in “second-life” applications such as stationary storage.

A collaboration with an automotive-industry icon also provides a unique advantage to Rivian – yet, this appears to be partnership in flux, and possibly in a state of dissolution. It’s something for prospective investors to consider, though it actually might not be a deal breaker.

A Closer Look at RIVN Stock

RIVN stock started off with a winning streak, rising for five consecutive trading days after Rivian’s initial public offering (IPO).

That’s a great start, though as the old saying goes, stocks don’t just grow straight to the heavens. In other words, no stock is destined to go up without any retracements.

This harsh lesson was learned on Nov. 17, when RIVN stock tumbled by as much as 18% in a single trading session.

Even on that day, however, the share price was still comparatively high as it settled into the $140s. Bear in mind, the Rivian IPO was priced at $78.

The chatter surrounding RIVN stock has been bearish lately, as the share price pulled back to $118 in the days leading up to Thanksgiving.

Cautious traders might choose to wait for the selling pressure to subside before taking a position.

If your long-term view on Rivian is still optimistic, though, then it could be fine to pick up a few shares at the current price.

An Alliance Is Formed

It’s typically a good thing when a newer start-up has a big-money backer. This is especially true when that backer is an iconic business with extensive resources.

Thus, it was certainly a positive development when Ford (NYSE:F) took a 14.4% stake in Rivian.

Sure, Rivian has other big-name backers. These include Amazon (NASDAQ:AMZN) with a 22.4% stake, and T.Rowe Price (NASDAQ:TROW) with 18.8%.

But of course, there’s something special about the connection between Ford and Rivian. After all, they’re in the same industry, and have similar visions of producing clean-energy vehicles.

Heck, there was even an agreement between the two automakers that extended far beyond taking a stake in Rivian’s shares.

Reportedly, in 2019 the two companies planned to work together to create an “all-new, next-generation battery electric vehicle” using Rivian’s development platform.

High Hopes, Harsh Reality

At that time, there was no reason to believe that this collaboration would fall apart.

“As we continue in our transformation of Ford with new forms of intelligent vehicles and propulsion, this partnership with Rivian brings a fresh approach to both,” former Ford CEO Jim Hackett assured.

A funny thing can happen when companies change their CEOs, though. Priorities can change, and partnerships formed under previous CEOs can fall through.

With current CEO James Farley at the helm, Ford has strongly focused on its own line of EVs.

So, perhaps a break in relations was inevitable.

“We respect Rivian and have had extensive exploratory discussions with them, however, both sides have agreed not to pursue any kind of joint vehicle development or platform sharing,” Ford revealed not long ago.

The ties between the two companies isn’t completely broken, though. Ford is still a major investor in Rivian.

Furthermore, Rivian took in billions of dollars in proceeds from the IPO. That, undoubtedly, will help the company stay afloat as Rivian develops and markets its tough but eco-friendly EVs.

The Bottom Line

The loosening of ties between Rivian and Ford may be a tough pill for some investors to swallow.

Still, Ford still has a stake in Rivian. Plus, there are other big-name backers in the mix.

So, RIVN stock isn’t dead in the water. Setbacks are part of the business world, and sometimes they provide opportunities for audacious EV-market investors.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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