Rivian Automotive (RIVN +2.92%) shares continued a downward slide today. With a drop of 4.7% as of 12:15 p.m. ET, Rivian stock has plummeted over 35% in the last three months.
Today's drop comes after the company updated investors on its expansion plans, and that could be the problem.
NASDAQ: RIVN
Key Data Points
Expanding amid demand concerns
Rivian provided investors with a progress update on its planned 400,000-vehicle annual capacity plant to be located about 40 minutes from Atlanta, Georgia. Rivian said site preparation is underway and nearly to the point where construction can begin. The company is on track to hold a groundbreaking ceremony in early 2024 after which building construction will start.
But the macro environment is worrisome on several fronts for electric vehicle (EV) makers right now, Rivian is losing substantial amounts of money with every EV it sells. Investors were reminded of that again when Mercedes-Benz CFO Harald Wilhelm described the EV market as a "pretty brutal space" in that company's third-quarter conference call for investors yesterday. In another statement that perhaps was aimed at EV start-ups like Rivian, Wilhelm added, "I can hardly imagine the current status quo is fully sustainable for everybody."
Rivian needs R2 to survive
EV leader Tesla's well-publicized vehicle price cuts have led to its own declining profit margin levels. The impacts of lower prices -- and higher losses -- have investors fleeing the smaller EV start-up stocks. At the same time, large traditional automakers are pushing back plans for their EV production expansions.
That signal of slowing growth was also highlighted by Toyota chairman Akio Toyoda at the Japan Mobility Show yesterday. Toyoda told reporters that he doesn't believe EVs will completely replace gasoline-powered vehicles and that "people are finally seeing reality."
Yet Rivian pushes forward spending billions to build its next factory, and investors may just see expanding losses on the horizon. But Rivian's planned next-generation R2 vehicle platform to be built at the Georgia facility is expected to give the company lower-cost models to launch.
Investors in the stock need to believe that will come to fruition. That's the only path for Rivian to be one of the EV makers left standing and earning profits, even if the market grows slower than many previously expected.
