Rivian Automotive (RIVN) had an initial IPO of close to $130 back in November 2021. It hasn’t eclipsed that mark since. In a mere 7 months after the IPO, the electric vehicle manufacturer’s stock traded at $100 less per share from its original offering.
Currently, Rivian trades just north of the critical single digit range, reflecting a drop of more than 90% from its IPO price. As a heavily-sold stock in recent years, does it have enough juice to drive out of its hole?
A Recent Downgrade Isn’t Helping Rivian Stock
One Wall Street analyst downgraded Rivian due to political and supply chain uncertainties. Possible tariffs are likely to hurt the automaker’s core business model. And yes, they will damage other automakers, too.
But Rivian is a relatively small automaker compared to others. It sold 51,579 units in 2024, nearly 1,500 more than in 2023.
Tesla (TSLA) sold 1.79 million vehicles globally in 2024, its first decline in 12 years. Rivian sold just 3% of Tesla’s volume in 2024.
The downgrade comes despite headlines depicting upset Tesla owners getting rid of their vehicles. A recall of more than 46,000 Tesla Cybertrucks doesn’t help its reputation. Nor does the recent stock slide for the EV manufacturer. Tesla peaked at around $480 a share in mid-December 2024. A correction brought it back to its normal levels of around $250 a share in March. The three-month drop was around 50%.
The news isn’t all gloomy for Rivian.
Electric Vehicle Market Still Mushrooming
Last year 1.3 million EVs were snapped up by consumers and that represents a 7.3% boost versus the year prior. A surge in the fourth quarter supported EV sales tallies thanks to a 15.2% year-over-year increase.
Three out of the top five EVs sold in America in 2024 belonged to Tesla but traditional automakers are catching up. Two Ford models were in the top 10. Two General Motors models (GM), with one Chevy and one Cadillac model, also placed two models in the top 10.
Placing tenth for 2024 sales was the Rivian R1S. It’s a three-row SUV that prices out ordinary buyers at more than $70,000 MSRP. Rivian has an answer for its high-priced SUVs, with the first model arriving in the early half of 2026.
Lower-Priced Rivian Models Are 1-2 Years Out
Rivian lowered material costs by 50% for its lower-priced, five-seat SUV, the R2 and plans to deliver it in the first half of 2026. The mass-market price is $45,000, which still isn’t as low as the Chevy Equinox EV at around $35,000 MSRP.
In 2027, Rivian plans to launch the R3 and R3X as entry-level SUVs starting at around $37,000 MSRP. Those two models are likely to make electric vehicles more appealing to a wider range of buyers.
Rivian has an ever-growing brand and increasingly affordable prices, but will the combination be enough to lure more investors to buy?
Other Challenges for Rivian’s Stock Price
Two other challenges await Rivian that could make its growth pattern slower, the first being hybrid sales.
More Americans are embracing hybrid and plug-in hybrid (PHEV) models rather than pure electric vehicles. As of Q3 2024, pure EV sales accounted for 8.9% of all vehicle sales.
Hybrids made up 10.6% of the market in that time period, a record. Hybrid sales rose 23% in Q4 2024 versus the same quarter in 2023.
Drivers in the United States clearly want to save on refueling costs. However, they still want the convenience of filling up on gasoline due to more gas stations versus public charging stations.
Another challenge to contend with is public charging stations. There needs to be more charging infrastructure to make Americans more prepared to take the plunge into EV owners.
Electricity is cheaper, in general, than gasoline. Charging an EV at home is around $5 to $7 per 100 miles, while gasoline is $10 to $15 per 100 miles. However, Americans have a propensity to take long drives and that means there must be more public EV charging stations to meet demand.
As of Q1 2025, there are around 75,000 EV charging stations in America. That is compared to 193,000 gas stations, roughly 2.5x the number of EV charging stations.
This is a chicken-and-egg scenario. Do Americans need to buy more EVs before more charging stations come online? Or should more charging stations be built first? Government incentives fostered growth in EV charging stations. Will the new administration keep those incentives on the books?
Will Rivian Stock Go Up?
Perhaps, but it may take another four quarters. It posted a positive gross profit for the first time ever in Q4 2024, which is a good sign for investors. The cheaper R2 could help Rivian move from a niche market to a higher-volume, mass market player in the EV market.
The problem is funding. Rivian secured a federal loan from the Department of Energy worth $6.6 billion in November 2024 to construct a manufacturing plant to build the R2 at scale. But federal budget hawks in the new administration may slash that loan.
Can Rivian catch Tesla? Not right now. Tesla began producing vehicles in 2008 with its Roadster, five years after it was founded. It has cornered the EV market for over a decade.
Rivian has always taken a slower approach. It was founded in 2009, producing its first model nine years later in 2018 after a few hiccups and setbacks.
Investors need to remember that Tesla didn’t get off to a roaring start, either. Tesla’s stock hit the trading block at $17 per share in 2010. It didn’t go above $20 until late 2019. Tesla stock is solid now in the midst of a bull market, but it wasn’t always so. The bestselling EVs in America faced scrutiny over the Autopilot system and faced a net loss of $775 million six years ago, despite selling a record number of vehicles in 2019.
The point is, Tesla faced an uphill struggle, too.
Is Rivian a Good Stock to Buy?
Right now, analysts have a Hold rating on Rivian with an average target price of $14.92. The stock could soar in the next two years, but it needs help with the federal loan to construct its new factory, which will add jobs, to build its lower-priced SUV.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.
