When Rivian Automotive (RIVN 3.91%) stock crashed last week, I believed it had further to fall. The electric vehicle (EV) stock tumbled 5.4% as of 11:05 a.m. ET today before recouping those losses by two hours later. Even then, Rivian shares though were still down about 7% through the week.
Rivian announced a partnership this morning, but investors seemed to care less about it and more about the bumpy road ahead for the company, especially the looming threat of a large investor off-loading its stake in Rivian.
Today, Rivian announced a partnership with Clearloop under which the EV maker will buy its first megawatt of solar energy to provide electricity for its charging network planned for Tennessee state parks. The move is part of Rivian's carbon neutrality goals.
This partnership doesn't affect Rivian's business much, but it could have still sent the languishing stock higher any other day. Today, though, investors are focused elsewhere, specifically on how rival Ford (F 6.24%) is racing ahead even as Rivian struggles to make a mark in the EV market.
Here's what's Ford's been up to in the past two days: On April 26, it officially started producing its much-awaited all-electric F-150 Lightning pickup truck, a competitor to Rivian's R1T pickup truck. Ford has nearly 200,000 orders for the F-150 Lightning pickup and stopped taking further orders some months ago as demand exceeded expectations and production capacity.
On April 27, Ford beat adjusted earnings estimates for its first quarter and projected 10% to 15% growth in vehicle wholesale volumes for the full year; however, the automaker suffered a net loss of $3.1 billion in the quarter on account of the dramatic fall in the value of its investment in Rivian. Ford owns a nearly 12% stake in Rivian.
So how could Ford's losses on its Rivian investment affect investors in the latter? It shouldn't, until Ford decides to off-load its stake in Rivian. The market now fears Ford might take that step given the steep recent decline in Rivian's stock price that's hitting Ford's bottom line hard. And that it might happen as early as the first half of May, during which Ford's 180-day lockup period on its Rivian IPO investment expires.
Ford has massive EV plans, and on April 27, it reiterated its goal to produce 600,000 EVs by the end of 2023 and 2 million EVs by the end of 2026.
And, at the production launch event of F-150 Lightning, Ford CEO Jim Farley even hinted that the company plans to build a second electric truck.
That's enough reason for the market to turn wary about Rivian, which is struggling to ramp up production among rising costs and supply pressures. So even though Rivian shares might be bouncing back today in line with the broader market by the time you read this, I'd expect it to remain volatile, even weak, especially as its quarterly earnings day on May 11 nears.