Cars and Drivers

Rivian Shares Plunge on Tesla News

Rivian electric vehicle
Kevauto / Wikimedia Commons

The quarterly results of electric vehicle (EV) market leader Tesla Inc. (NASDAQ: TSLA) will probably determine the success or failure of the EV business in America, at least in the near term. Tesla delivered 386,810 vehicles in the first quarter, less than expected. Tesla stock dropped 4.9%. Those of tiny rival Rivian Automotive Inc. (NASDAQ: RIVN) dropped more, ending the day off 5.2%.

Rivian and other tiny EV companies, like Lucid, are already viewed as casualties of the slowing sales of electric vehicles in America. Rivian stock is down 77% in the past two years to $10.50 per share.

Unfortunately, Rivian’s recent good news could not support its stock price. the company delivered 13,588 vehicles in the first quarter and said it would produce 57,000 for the year. Both numbers were considered positive compared to expectations. However, Rivian’s stock price is based on whether it will survive more than its quarter-to-quarter sales.

Rivian has two disadvantages and challenges. The first is its small share of a challenging industry. EVs continue to do poorly because of price, range, and number of charging stations.

The second is that the EV market gets more competition each year. Management has to worry that, beyond companies like Tesla and Ford, less expensive vehicles from Chinese companies, led by BYD, eventually will be available in the United States. The federal government is blocking sales of these Chinese products. That will not last. Chinese EVs are often priced at half what U.S. EVs are.

Rivian needs to be bigger to survive, particularly as the number of consumer EV options rise.

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