Summary
– EV industry is experiencing a slower rate of sales growth in 2024
– Rivian Automotive has seen success in building a customer base and ramping up production but disappointed investors by not planning to sell more EVs this year compared to 2023
– The company announced its R2 vehicle platform, a smaller and less expensive option than the R1S, with an expected base price of $45,000
– Rivian’s balance sheet is a focus, with management aiming to reduce capital expenditures by initially building the R2 at its existing plant in Illinois
– Investors considering buying Rivian stock should be aware of the risks associated with a potentially failing business, but may find potential value in the stock near all-time lows
Article
The year 2024 has been a time of transition for the electric vehicle (EV) industry, with sales continuing to grow but at a slower rate. This slowdown has led many EV makers to scale back their plans for production and new models, resulting in a decline in stock prices across the industry. Rivian Automotive (NASDAQ: RIVN) has been relatively successful in building a customer base and ramping up production, but the company has announced that it does not plan to sell more EVs this year compared to 2023. Despite disappointing investors and a significant decline in share price, this decision could benefit long-term investors if Rivian can successfully execute its expansion plans.
Rivian recently introduced its R2 vehicle platform, which is expected to be a smaller and less expensive option compared to the company’s previous models. The new R2 SUV is projected to cost approximately $30,000 less than Rivian’s R1S, making it more accessible to a wider market. The vehicle is designed to maintain the brand’s high-performance standards, with an acceleration from zero to 60 miles per hour in under three seconds and a range of more than 300 miles on a single battery charge. However, shipments of the R2 are not expected to begin until 2026, posing a risk for investors looking to invest in Rivian.
Cash management is a key focus for Rivian, as the company needs to balance its available cash with the need to invest in future growth. Despite building a significant cash reserve from early investors, Rivian’s cash pile has been depleting rapidly. Management has emphasized the importance of focusing on gross profit and cost efficiencies and has made strategic changes, such as delaying investments in a new manufacturing facility in Georgia and opting to produce the R2 at its existing plant in Illinois. These decisions are estimated to save the company $2.25 billion in capital expenditures in the near term.
Investors who believe in the Rivian brand and see potential in its future models, such as the R2 and future R3 crossover SUV, may consider investing in the company while its stock price is at near all-time lows. Rivian also has electric delivery vans that can generate revenue and utilize existing production capacity, helping to manage expenses in case of a consumer sales downturn. However, investors should approach any investment in Rivian with caution, as there is a real risk of the company failing as a business. Those looking for a riskier investment opportunity may view this as a potentially favorable time to buy Rivian stock.
Before investing in Rivian Automotive or any other stock, investors should weigh the potential risks and rewards, considering advice from financial analysts and industry experts. The Motley Fool Stock Advisor team has identified what they believe are the 10 best stocks for investors to buy now, with the goal of achieving significant returns in the coming years. While Rivian Automotive did not make the list, investors have the opportunity to explore other promising investment opportunities based on expert recommendations and market analysis.
Read the full article here
