Ford Motor (NYSE:F) has sold nearly all of its stake in Rivian Automotive (NASDAQ:RIVN), the electric vehicle (EV) start-up. An SEC filing shows Ford owning just 1.15% of the smaller company, with whom it competes in electric trucks.
RIVN stock fell 3.3% on the news and a further 2.4% overnight. It opened Feb. 10 at about $19 with a market capitalization of $17.9 billion. Meanwhile, Ford shares opened at about $12.75 with a market cap of $53.8 billion.
A Hard Slog
Rivian was a hot stock in 2021, thanks in part to Ford’s investment and a huge order from another investor, Amazon (NASDAQ:AMZN), for electric delivery vans. Amazon has also written down part of its investment. At the end of 2022, however, Amazon still owned more than 17% of Rivian.
Rivian is due to release earnings Feb. 28. During the third quarter, Rivian lost $1.72 billion, or $1.88 per share, on revenue of $536 million. It ended the quarter with $18 billion in cash and equivalents.
Rivian claims to have more than 114,000 preorders for its R1T truck and R1S SUV, along with the rest of the 100,000 vehicle Amazon van order. In addition to the Ford and Amazon investments, Rivian also got a $1.5 billion incentive from Georgia to build an assembly plant along Interstate 20 east of Atlanta. While the deal has been criticized, Georgia Governor Brian Kemp won reelection easily.
Supply chain issues and competition from Ford’s F-150 Lightning have helped slow Rivian’s rise. The company recently held its second round of layoffs. Rivian said it produced about 25,000 cars last year and its Illinois plant could produce 70,000 this year on two shifts.
Despite its economizing, Rivian is expanding its charging network. It has patented a new off-road gearbox. CEO R.J. Scaringe also confirmed it is working on an electric bike. Electric bikes are outselling electric cars in the U.S., and outselling all cars in Europe.
What Happens Next for RIVN Stock?
While Rivian has enough cash to get through another two years of losses, it needs to show a profit to remain credible with investors. Price cuts from Ford and Tesla (NASDAQ:TSLA) don’t help.
On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
