At a time when many start-up electric vehicle (EV) automakers have felt pressure from Tesla's (TSLA 3.43%) price cuts, Rivian Automotive's (RIVN 9.81%) rally has trucked on. In fact, Rivian stock has spiked 108% over the past three months, an incredibly welcome relief from the persistent decline after its initial public offering in late 2021.
While Rivian's rally has remained strong recently, there's a new development that could throw it off track. Here's what's happening with Ford's (F 3.21%) F-150 Lightning EV truck, and why it matters.
Staying above the fray
Rivian's rally has remained strong while some competitors have struggled to compete for sales during Tesla's price cuts. That's in part because Rivian's R1T truck and R1S SUV aren't competing head to head with Tesla segments -- at least, not yet.
With Rivian's focus on larger vehicles, and a strong backlog of orders to deliver, management made it clear it wasn't planning on joining the EV price war in the near term. However, two recent Ford announcements could threaten Rivian's rally.
Ford boosts production
Ford announced Tuesday it had resumed production of the F-150 Lightning after a six-week shutdown. The downtime was a planned expansion and retooling of the Rogue Electric Vehicle Center to triple production capacity of its bread-and-butter EV truck.
If a picture is worth a thousand words, this graph should emphasize the difference in production scale these plant adjustments will have.
Image source: Ford Motor Company press release.
Ford is planning to produce more than 70,000 F-150 Lightning EVs in 2023, with that figure expanding to an annualized rate of 150,000 by this fall. To put that in perspective, while there have been rumblings that Rivian secretly believes it can produce around 62,000 units this calendar year, it's officially guiding for production of about 50,000 total R1T and R1S vehicles.
Price cuts gaining traction
While Rivian was less impacted by Tesla price cuts than some competitors, Ford recently slashed prices on its F-150 Lightning by as much as $10,000, depending on the trim. Those price cuts made the F-150 Lightning as cheap as $52,000, far less than the roughly $73,000 for Rivian's R1T.
Ford's price cuts also brought its more lucrative and high-priced trims down closer to competition with Rivian's EV truck, and its plant adjustments will improve customer wait times. In fact, Ford's sweeping F-150 Lightning price cuts have driven a threefold increase in web traffic and a sixfold increase in customer orders as its high-demand trims get a boost in production.
What it all means
Make no mistake, Rivian has a lot going for it as a long-term investment. The young EV maker has proven it has enough cash to buy time while it builds scale and increases production. And it has a debt maturity that won't hit until well after it launches its line of R2 vehicles. Its vehicles have won consumer satisfaction awards as well as high safety marks, and its backlog of orders should provide plenty of demand in the near term.
But savvy investors would be wise to keep an eye on Ford's F-150 Lightning with its recent price cuts, boost in production capacity, and reduction in consumer wait times. This will likely have more impact on Rivian than Tesla, as the trucks will compete directly.
Rivian's rally over the past three months is real and warranted, but investors' optimism might be tested when Tesla's Cybertruck, and even General Motors' Silverado EV, hit the roads in the coming months.
The competition is heating up, and Rivian will have to prove it belongs with companies like Ford that have historically dominated truck sales in the traditional automotive segments, as well as with Tesla, which has dominated in EVs.
