Rivian Automotive (RIVN -2.34%) has been a polarizing stock. The bulls praised the maker of electric pickups, SUVs, and delivery vans for producing more vehicles than many other fledgling electric vehicle (EV) makers, and noted that its preorders continued to rise. The bears will point out that Rivian already halved its production target for 2022 from 50,000 to 25,000 vehicles back in March, it's still struggling with supply chain constraints, and its net losses are widening.

Judging by the stock price, the bears have clearly been winning that argument: Rivian's stock is down about 85% from its all-time high last November, and it remains nearly 70% below its IPO share price of $78. It might be tempting to buy Rivian stock at these depressed levels, but three recent red flags indicate it might still be too early to bet on its long-term recovery.

Rivian's R1T pickup.

Image source: Rivian.

Red flag 1: A massive recall

In early October, Rivian issued a voluntary recall of 13,000 vehicles -- which accounted for most of the 14,317 vehicles it had produced in the first nine months of 2022 -- to check potentially loose fasteners that could cause a loss of steering control under "rare circumstances." Rivian handled the recall quickly with free service appointments and loaner vehicles, but it cast doubts on its ability to safely achieve its full-year production target of 25,000 vehicles.

During Rivian's latest conference call on Nov. 9, CEO RJ Scaringe said it had already checked "over 83%" of its vehicles for the defect, and that its customers largely appreciated the company's "transparency" in handling the situation.

Red flag 2: Allegations of safety violations

In late November, a dozen of Rivian's employees filed safety complaints with the U.S. Occupational Safety and Health Administration in regard to the work conditions at its main manufacturing plant in Normal, Illinois. Those allegations include a lack of crucial safety equipment like respirators, the intentional salvage and use of damaged electrical components, and various workplace injuries. The plant also recently suffered a bedbug infestation.

Along with the aforementioned recalls, these allegations suggest that Rivian's production capabilities are being stretched to unsafe and unsustainable levels. In a statement, Rivian pointed out that the 12 employees only represented a tiny percentage of the plant's workforce of 6,700, and it was focused on "creating a safe and inspiring" environment for all its workers.

Red flag 3: Pausing its joint venture with Mercedes-Benz

Back in September, Rivian announced a joint venture with Mercedes-Benz to produce electric vans in Europe. Many investors likely saw that partnership as another vote of confidence for Rivian's EV technologies. But on Dec. 12, Rivian announced it would pause that joint venture to focus on strengthening its core businesses and cash flows in the U.S.

That strategic shift makes sense, since Rivian still needs to deliver 100,000 electric delivery vans to Amazon, its largest investor, and fulfill its preorders for more than 114,000 R1 vehicles. It's wise to prioritize those orders over an expansion into Europe, but Rivian's stock still stumbled in response to that unexpected announcement.

Will these red flags drive away the bulls?

Rivian is still holding up a lot better than other young EV makers like Lucid, which only expects to deliver 6,000-7,000 vehicles this year, and Canoo, which hasn't shipped a single vehicle yet. But it's definitely not in the same league as Tesla, which delivered 936,172 vehicles last year.

Rivian is still a speculative stock that trades at 13 times this year's sales (assuming it can actually deliver those 25,000 vehicles), and it will stay unprofitable for the foreseeable future. In short, it will likely remain out of favor as long as rising interest rates continue to drive investors toward more conservative investments. Even Tesla, which trades at 6 times this year's sales, looks like a much safer bet on the EV market than Rivian right now.