This is the perfect time to consider the Rivian Automotive (NASDAQ:RIVN) stock outlook. The electric vehicle maker will release earnings on Feb. 21 and follow that up on Mar. 7 by unveiling its newest EV, the R2S. Rivian hinted the quarterly report will be better than expected as it pre-announced it topped production guidance of 54,000 vehicles.
Deliveries dropped to around 14,000 vehicles in Q4. It’s 10% lower than the EV maker’s Q3 performance. The lower number may be due to seasonality, but ideally, sales should grow each quarter. With the EV market slowing down, what is the outlook for RIVN stock? Let’s take a closer look at the RIVN stock outlook and see whether the EV stock can buck the wider trend.
Making EVs More Affordable
Rivian is pursuing a dual-market strategy. Focusing on pickup trucks (the R1T) and SUVs (the R1S), the company sells to both consumers and commercial buyers.
The R2S SUV is Rivian’s attempt at a more mass-consumer model. Estimated pricing for the EV is between $40,000 and $60,000, making it more affordable than Rivian’s current expensive luxury vehicles. The R1S, for example, starts at $85,000. The problem is consumers already see EVs as overpriced.
The average cost of a new all-electric battery EV is around $50,000, so Rivian is dropping the R2S in right at that level. While that’s competitive to the price of a gas-powered car, at $48,000 Americans are already hedging their bets. Last year was a record year for EV sales, but the real growth component for alternative fuel vehicles was hybrids.
There were 1.19 million BEVs sold last year, up 40% year over year. More than half of them were from Tesla (NASDAQ:TSLA). That might still seem like strong growth, but it’s down from a 51% gain the year before.
In comparison, more than 1 million hybrids were also sold in the U.S., a big 76% gain from 2022. Toyota (NYSE:TM) was the big winner here since it was skeptical of going all-in on BEVs.
The Japanese automaker invested heavily in its lineup of hybrids. It sold 40,000 plug-in hybrids and some 600,000 non-rechargeable hybrids. It also sold almost 15,000 BEVs.
That is a powerful tide for Rivian to swim against.
The other thing the EV maker needs to show is improvement in its financials. Rivian is burning through cash and shocked Wall Street last year by tapping the public markets so soon to raise more cash. It burns through cash at a torrid pace, with $6.2 billion expected for 2023.
Investors should watch what the final tally to see if the higher sales helped Rivian keep the cash burn below the prior year’s $6.4 billion level.
Fortunately, Rivian doesn’t have much debt, just $2.7 billion, while sporting $9 billion in cash after the last equity raise. Amazon (NASDAQ:AMZN) still backs the EV maker despite tiring of waiting for its commercial trucks.
The e-commerce leader is looking elsewhere for electric vehicles to build out its fleet and is no longer exclusive to Rivian.
Plenty of Time to Buy
RIVN stock enjoyed a nice run higher in 2023 but is falling flat this year. Shares are down 30% after just six weeks of trading. The market is obviously concerned the cooling EV industry is a problem for Rivian’s pricey vehicles. Even the R2 might not be cheap enough to spur sufficient demand.
That’s why my outlook for RIVN stock recommends staying on the sidelines. There is plenty of time for the EV maker to prove itself worthy of investor support, even if it means missing out on a few points of share gains.
On the date of publication, Rich Duprey did not hold (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 InvestorPlace.com Publishing Guidelines.
