Investors had some conflicting feelings about the future of Rivian Automotive (RIVN 6.10%) stock today. But there's a good explanation for why its shares plunged and then recovered from their lows.
Rivian shares sank by more than 6% this morning, but recovered some of that drop by mid-afternoon. As of 3:30 p.m. ET, Rivian stock was still lower by 3.9%.
Good news, but bad news
The big news that drove Rivian stock movements today was that Ford announced plans to slash its production estimates in half for the electric F-150 Lightning next year. Instead of planning for a production volume of 3,200 Lightning pickup trucks per week, Ford now expects to make about 1,600 per week starting in January.
Considering the Lightning is currently the closest available competitor to Rivian's R1T fully electric pickup truck, that could mean more business for Rivian next year. But Ford said it is cutting manufacturing volume "to match production with customer demand." That could mean that Rivian's pickup trucks may also face demand headwinds.
Rivian may be top dog
Rivian hopes to produce about 54,000 total electric vehicles (EVs) this year. That's across its three-vehicle lineup consisting of the pickup truck, the R1S SUV, and an electric commercial delivery van. The company hasn't announced its volume plans for 2024 yet, but it will need to meaningfully increase production and sales to stem its losses.
Ford's announcement means it should now produce about 80,000 F-150 Lightning trucks next year. That production adjustment is significant unit volume when considering Rivian's capacity.
That leaves investors with one of two thought processes looking into 2024. Either Rivian's trucks are dominating the market and siphoning expected demand from Ford, or overall demand for electric pickup trucks could be diving.
Investors today seem to be betting the latter may be more likely, especially with other signs of EV demand decreasing. That's the more conservative investing approach, of course. But if Rivian's trucks don't end up seeing the demand drop that Ford is seeing, Rivian could show that it is the top dog for EV trucks next year. That could move the stock higher in 2024.
