Rivian Automotive Inc., a brand that promised to bring a “cool” factor to the once-hot electric vehicle market, has emerged as a darling of investors.
But the Irvine-based company slammed the brakes on Wednesday, announcing a 10% reduction in its workforce and lowering its production forecast. The company's stock price plummeted on the news. The 25% drop in stock price on Thursday was the worst day in the company's history.
All of this is a challenge for EV companies as the class of affluent buyers who don't own an EV shrinks and demand dwindles amid deep questions from the broader consumer market about whether EVs really fit into their lives and budgets. It is part of a larger reckoning in the face of decline. .
“We've been living in a wave of, 'Oh, EVs are great, they're going to continue to grow at an accelerated rate and get even better,' and now it seems like EVs are reaching this point of reality.” Jessica said. Mr. Caldwell, Head of Insights at Edmunds. “Mass-market buyers have lower incomes and more questions.”
Rivian trucks and sport utility vehicles are certainly turning heads. Its sleek design and outdoor features got investors, analysts, and the public excited about its potential. The company, which counts Amazon as an investor, blew the roof off during its 2021 initial public offering, closing its first day of trading worth about $88 billion.
But the average car buyer probably can't afford Rivian's current vehicle price range. The company's R1T electric pickup truck starts at nearly $70,000, and the R1S SUV starts at nearly $75,000. The company, which is not yet profitable, had a net loss of $1.52 billion for the three months ended Dec. 31, compared with a net loss of $1.72 billion a year earlier. It's largely in line with the company's plans to debut a more affordable R2 in March, but mass production won't begin until 2026.
Even though EV sales have been growing for years, mass-market customers are still wary of EV battery life, range, and availability of reliable charging stations. That's why hybrid vehicle sales have grown alongside EV sales, Caldwell said.
“It’s not always easy to get a charger installed where you live,” she said. “Ultimately, significant infrastructure growth is required for EVs to become widespread and mass market.”
That hesitation is reflected in Rivian's 2024 production and delivery outlook. The company said its backlog has decreased. This is partly due to fulfillment, but also due to cancellations and a drop in new orders.
The company said it expects to produce 57,000 cars this year, which it said would be in line with 2023 numbers, although Wall Street analysts had expected it to be higher. Was disappointed. Last year, the company produced 57,232 vehicles and delivered 50,122 vehicles, more than double the 2022 figures.
Dan Ives, managing director and senior equity analyst at Wedbush Securities, said this year's forecast “has dark clouds hanging around the story.”
“We are reducing costs and headcount to reflect environmental mitigation and production issues,” he said in an email. “Rivian went from being a Cinderella story to being a horror show.”
Deutsche Bank analyst Emmanuel Rozner said in a note to clients that he expects deliveries to be “flat” at 50,000 in 2024, compared to the previous forecast of 65,000. .
“In our view, Rivian's fairly bleak outlook for 2024 indicates that the company has serious challenges ahead, including a lack of volume growth and continued significant losses.” said.
The company attributed the decline in its 2024 forecast to “economic and geopolitical uncertainties” and highlighted the impact of rising interest rates on new car loans. Rivian said it will continue its “company-wide cost transformation program” that has helped drive down prices on the company's electric pickup trucks, SUVs and delivery vans.
“While we strongly believe in the fully electric auto industry, we recognize the challenging macroeconomic conditions in the near term,” CEO RJ Scaringe said in a statement.
Rivian isn't the only EV maker upset. Shares of electric car maker Lucid Group fell nearly 17% on Thursday after a disappointing earnings report. Shares of Elon Musk's automaker Tesla rose slightly on Thursday, even though the company last month warned of a possible slowdown in growth in 2024.The company reported a modest increase in revenue in the fourth quarter.
For Rivian, the details surrounding R2's debut are particularly important to both consumers and analysts.
“Rivian is very exciting and their product is very exciting and certainly cool, but especially with how much market and how much runway they have while we wait for R2,” Edmunds Caldwell said. I have doubts.” “If we can develop a cheaper vehicle, of course there will be a bigger market.”