Once the darling of the electric vehicle world, electric truck maker Rivian is reeling

by admin
Once the darling of the electric vehicle world, electric truck maker Rivian is reeling

Rivian Automotive Inc. has become the darling of investors — a brand promising to bring the “cool” factor to the once hot electric vehicle market.

But the Irvine-based company hit the brakes Wednesday, announcing a 10% reduction in its workforce and lowered production expectations. The news sent its stock tumbling. Its 25% share price drop on Thursday was the worst day in its history.

It’s all part of a broader reckoning for electric vehicle companies, which now face declining demand amid a shrinking pool of wealthy buyers who don’t yet own an electric vehicle and lingering questions from the broader consumer market about whether electric vehicles can actually fit into their lives and budgets. .

“We’re living in this wave of ‘Oh, electric vehicles are great, they’re going to continue their accelerated growth and are only going to get better,’ and now it seems like they’re reaching that point of reality,” Jessica said. Caldwell, chief knowledge officer at Edmunds. “Mass market buyers have less income and a lot more questions. »

Rivian’s trucks and sport utility vehicles are certainly eye-catching: their sleek design and exterior features have investors, analysts and the public excited about their potential. The company, which counts Amazon as an investorblew the roof off during his stock IPO in 2021closing its first day of trading valued at nearly $88 billion.

But the average car buyer probably isn’t able to afford the prices of Rivian’s current lineup of vehicles: the company’s R1T electric pickup truck starts at nearly $70,000, while its R1S SUV starts at nearly of $75,000. The company, which is not yet profitable, reported a net loss of $1.52 billion for the three months ended Dec. 31, compared with $1.72 billion for the same period a year earlier. Much of it hinges on the company’s plan to produce its more affordable R2, which will debut in March, but not begin mass production until 2026.

Despite years of growth in electric vehicle sales, mass market customers remain wary of electric vehicle battery life, range and the availability of reliable charging stations. That’s why hybrid vehicle sales have increased alongside electric vehicle sales, Caldwell said.

“It’s not always easy to install a charging station where you live,” she says. “Ultimately, for electric vehicles to take off and become a mass market, there needs to be major infrastructure growth. »

This hesitation is reflected in Rivian’s production and delivery expectations for 2024. The company said its order backlog has declined, partly due to fulfillment, but also due to cancellations and fewer new orders.

Rivian said it planned to produce 57,000 vehicles this year, which the company said was in line with 2023 figures, although that disappointed Wall Street analysts who I expected this number to be higher. Last year, the company produced 57,232 vehicles and delivered 50,122, more than double its 2022 figures.

This year’s projections cast “a dark cloud around the story,” said Dan Ives, managing director and senior equity analyst at Wedbush Securities.

“Reduce costs and headcount to reflect a gentler environment and production issues,” he wrote in an email. “Rivian went from a Cinderella story to a horror show.”

Deutsche Bank analyst Emmanuel Rosner said in a note to clients that he now expects deliveries to be “flat” in 2024, at 50,000 vehicles, up from 65,000 vehicles previously.

“Rivian’s fairly bleak forecast for 2024, including a lack of volume growth and continued significant losses, in our view highlights the big challenges ahead for the company,” Rosner wrote.

The company attributed the lower expectations for 2024 to “economic and geopolitical uncertainties” and highlighted the effect of rising interest rates on new auto loans. Rivian said it would continue its “company-wide cost transformation program,” which it said has helped reduce the price of the company’s electric pickup truck, SUV and delivery van. ‘business.

“We strongly believe in the complete electrification of the automotive industry, but recognize that in the short term, macroeconomic conditions are challenging,” CEO RJ Scaringe said in the company statement.

Rivian isn’t the only electric vehicle maker reeling: Shares of electric car maker Lucid Group Inc. fell nearly 17% Thursday after a disappointing earnings report. Although Tesla Inc. shares rose slightly on Thursday, the Elon Musk-led automaker last month warned of potentially weaker growth in 2024. The company, however, reported a slight increase in revenue for the fourth quarter.

For Rivian, details regarding R2’s debut will be particularly important to both consumers and analysts.

“Rivian is very exciting, their products are very exciting, they’re really cool, but there are questions about how big the market is and how much reach they have, especially while we wait for the R2,” said Caldwell of Edmunds. “If they can offer a cheaper vehicle, that will naturally create a larger market.”

Source Link

You may also like

Leave a Comment