What happened
Just when investors thought Rivian Automotive (RIVN 2.44%) would sink to new lows today after the stock tanked 6.7% by 10:12 a.m. ET, shares rebounded sharply and surged 3.3% by the close on Tuesday. Yes, Rivian rode the broader market rebound, but something else about the electric vehicle (EV) start-up could finally be giving investors a reason to turn hopeful.
So what
Rivian bulls were caught on the wrong foot earlier this month when the company faced a backlash on social media after it increased prices of its EVs by up to 20% and decided to slap the raise even on those who had already booked vehicles at specific list prices.
As expected, Rivian rolled back the price increase for vehicles reserved before March 1, but it wasn't enough to win back the market's confidence. To add to the woes, the company reported a massive loss for its fourth quarter days later and said it expects to produce only 25,000 EVs in 2022 amid cost and supply concerns.
This morning, EV leader and Rivian competitor Tesla (TSLA 0.66%) confirmed the challenges are real when it increased prices of its EVs in the U.S. as well as in China for the second time in a week, citing significant cost pressure.
Image source: Getty Images.
Tesla, though, has the scale, size, and brand loyalty to afford passing on higher costs to customers without risking demand much. The same cannot be said about Rivian, a company that delivered only 920 vehicles in 2021 and is burning through billions of dollars.
But then shouldn't Tesla's move have sent Rivian shares even lower today? It did, but only briefly as investors in Rivian found a silver lining in the company's latest executive appointment.
Rivian knows the road ahead is bumpy, and so it's just hired Frank Klein as its chief operations officer to help it navigate the rough patches. Klein has rich experience in the auto industry, having spent 27 years at Daimler before joining Magna Steyr, a subsidiary of Magna International (MGA -3.55%). At Magna Steyr, he oversaw the company's electric mobility operations, and that looks to be why Rivian has hired him.
Now what
Klein's hiring won't be effective until June 1, but investors already see it as a sign that Rivian is taking its problems seriously and is keen to rectify mistakes and establish itself as a viable EV maker. That sounds good, but for now, there's only so much Rivian can do about costs and supply concerns. If Tesla is finding it hard, it won't be easy for Rivian, either.
