Is Rivian a Buy in this Struggling EV Market?


  • Shares of Rivian (RIVN) stock have been on a rather consistent downtrend this year.
  • Much of this has to do with the state of the EV market, which appears to be deteriorating. 
  • Let’s dive into some headwinds and catalysts to see if we can make sense of this name. 
RIVN stock - Is Rivian a Buy in this Struggling EV Market?

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Rivian (NASDAQ:RIVN) stock had a strong Q1 2024, producing 13,980 vehicles and delivering 13,588, reaffirming its goal to produce 57,000 cars this year. ‘

Despite the fact that RIVN stock had a 48% drop in 2024 because of recent losses, Rivian aims to improve cost management and production efficiency, with $7.86 billion in cash to fund expansion. 

Despite short-term concerns, Rivian Automotive has gained significant support from the local government.

Rivian announced an $827 million incentive package from the Illinois Department of Commerce & Economic Opportunity, aiding expansion in Normal, Illinois. This funding allows Rivian to focus on its Illinois development. 

While it also paused work, the company will delay plans on the $5 billion Georgia factory to save $2.25 billion. The company revealed its production of 400,000 units every year.

Additional Layoffs Announced

Rivian is among the companies that have announced further layoffs, which makes sense in this current economy. These layoffs will take place in California, and look to counteract ongoing industry challenges.

The company’s VP of People, Scott Griffin, informed the state’s Employment Development Department about plans to permanently lay-off over 120 employees in Irvine and Palo Alto starting in June.

This follows a 10% workforce reduction in February, reflecting the company’s sharp valuation drop from nearly $88 billion to around $11 billion.

A Rivian spokesman stated the layoffs aim to “right-size the business and ensure alignment to our priorities,” targeting gross margin positivity by year-end.

These adjustments will affect 1% of Rivian’s workforce and are part of ongoing operational optimization. 

The layoffs reflect broader EV industry challenges, including declining demand among wealthier consumers and lingering market hesitancy.

Android and RIVN Stock

Google’s Android Automotive software, widely adopted by carmakers for EVs, has varied implementations across brands. This week, Google and Rivian confirmed to 9to5Google that Rivian’s software for its R1T and R1S, as well as the upcoming R2 and R3, is based on Android Automotive.

The platform, customized for Rivian’s vehicles, controls nearly all EV features but remains fundamentally Android.

Google confirmed to 9to5Google that Rivian uses Android Automotive as the base OS for its software, a detail previously unconfirmed by Rivian.

Rivian emphasized that using Android Automotive differs from supporting Android Auto and highlighted its commitment to developing an in-house owner experience with integrated software and built-in apps.

Google’s Android Automotive platform powers infotainment systems in vehicles, customizable by automakers. Rivian, now adopting Google services, will introduce more apps and Google Cast, starting with its cars.

Rivian emphasizes its unique software stack while leveraging Android Automotive OS for enhanced vehicle experiences.

Aiming for Financial Stability

Rivian Automotive recently unveiled its Q1 2024 results, with revenue hitting $1.204 billion, aligning with market projections. However, a noteworthy detail emerged amid this: Rivian anticipates attaining a “modest” gross profit by Q4 2024, a significant shift from its Q1 loss.

Note that the negative gross profit in Q1 2024 for Rivian Automotive was influenced by $171 million in expenses related to updates at its Normal Factory. To address this, the company is enacting efficiency initiatives and an EV-platform retooling upgrade. Rivian aims for material and conversion cost improvements, expecting a modest Q4 gross profit.

Buy at Your Own Risk

The $45,000 R2 and the upcoming R3 may provide Rivian the scale needed for long-term profitability. With sufficient cash for R2 production, Rivian focuses on cost reduction efforts under CEO RJ Scaringe’s leadership. However, investors anticipating significant share price growth may need patience, likely waiting a few more years.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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