Rivian Automotive (RIVN -0.10%) was one of the hottest electric vehicle IPOs of 2021. The bulls initially rushed to Rivian because it was ramping up its production, it was backed by Amazon (AMZN 1.60%) and Ford (F -0.84%), and Amazon had already placed a long-term order for 100,000 of its electric delivery vans (EDVs).

Yet Rivian now trades more than 80% below its offering price of $78. The bears eventually overwhelmed the bulls as the company suffered supply chain issues, slashed production targets, and racked up staggering losses. Rising interest rates exacerbated that pressure by driving investors away from speculative and unprofitable EV makers.

Most investors are likely familiar with those bullet points, so today I'll focus on three aspects of Rivian's business which smart investors should also be familiar with: its complicated relationship with Amazon, Ford's exit, and its recent recalls.

Rivian's 2022 R1T pickup truck.

Image source: Rivian.

1. Its relationship with Amazon is complicated

Amazon still held 17% of Rivian's shares at the end of 2022. The company refused to reduce that stake, even as the stock plummeted, and it incurred a paper loss of $12.7 billion from that investment last year. That staggering loss, which caused Amazon to turn unprofitable in 2022, caused some investors to wonder if the e-commerce company should cut its losses.

Amazon insists it's sticking with Rivian, but a few red flags have appeared in that complicated relationship. Rivian initially claimed it could deliver all 100,000 of its EDVs to Amazon by 2025, but the two companies extended that deadline to 2030 last year. Amazon also agreed to start buying Stellantis' similar electric Ram ProMaster van this year.

To make matters worse, Amazon's firm order for 10,000 EDVs from Rivian this year fell short of Rivian's own expectations. Rivian has been trying to end the exclusivity clause in its EDV deal with Amazon -- which would enable it to sell EDVs to other companies -- but doing so could prompt Amazon to reduce its stake in Rivian and shop around for other partners.

That relationship seems rocky, but Amazon still announced it was fulfilling its deliveries in over 500 U.S. cities and regions with a fleet of more than 3,000 Rivian EDVs at the end of March. That's triple the figure Amazon reported last November.

2. Ford has given up on Rivian

Ford owned 11% of Rivian at the time of its IPO, making it the company's second-largest shareholder after Amazon. But over the past year Ford gradually reduced its stake to about 1% and took at $7.3 billion writedown on that investment in 2022.

Ford originally planned to develop an electric pickup with Rivian, but those plans were disrupted by the pandemic and formally scrapped shortly after the EV maker's IPO. Ford subsequently started to mass produce its own electric F-150 Lightning trucks last April, and it plans to launch another electric pickup in 2025.

Those new vehicles suggest that Ford could become one of Rivian's biggest competitors in the electric pickup market, so it makes sense to cut ties with Rivian, sell its battered shares, and simply write down the losses. Investors should also recall that Rivian paused a similar joint venture with Mercedes-Benz to produce electric vans in Europe last December. That suspension could prompt Mercedes to develop its own electric vans to compete against Rivian in the future.

3. It's recalled a lot of vehicles

Rivian produced 24,337 vehicles in 2022, less than half of its original target of 50,000 vehicles. It expects to produce 50,000 vehicles this year, but that was also well below the consensus forecast for at least 62,000 vehicles.

That's why Rivian's two big recalls rattled investors. Last October it issued a recall for 13,000 vehicles -- which accounted for most of the 14,317 vehicles it had produced in the first nine months of 2022 -- due to potential steering problems. Earlier this year it issued another recall for nearly 13,000 vehicles due to potential airbag issues.

These massive recalls raise troubling questions about Rivian's ability to ramp up its production while maintaining adequate quality control. If Rivian issues more brand-tarnishing recalls, its R1T trucks could lose customers to Ford's new electric trucks, Tesla's Cybertruck, and other similar vehicles.

There are better EV stocks to buy right now

Rivian's stock might seem cheap right now with an enterprise value of $7.7 billion, which values it at less than two times this year's sales. But it's also deeply unprofitable, and it recently raised another $1.3 billion in a debt offering to shore up its liquidity. Instead of betting on Rivian's long-term turnaround in this tough market, investors should probably stick with EV makers like Tesla or Nio that have successfully scaled up their businesses.