It's probably fair to call electric vehicle (EV) investors a little skittish. That's reasonable when you consider the EV industry is growing slower than expected in the U.S. market. And when you consider that many young EV manufacturers are dealing with price wars, unprofitable vehicles, and a cash crunch, it doesn't take much bad news to derail an EV stock right now.
Rivian's (RIVN 3.76%) stock dipped when it released fourth-quarter production and delivery figures, but is it a reason for investors to panic? Not so fast: Let's dig in.
By the numbers
Rivian produced 17,541 vehicles during the fourth quarter and delivered 13,972 of those during the same period. Those figures are obviously favorable compared to the prior year's 10,020 produced, with deliveries of 8,054. But they are not as favorable in terms of deliveries when compared to the third quarter's 16,304 in production with deliveries of 15,564.
Rather than throw a number salad at you, let's look at how these quarterly production and delivery figures graph over time.
Chart by author. Source: Rivian.
Wall Street likely saw the sequential decline in deliveries as a bad sign, perhaps a signal that demand might be softening. And after three consecutive quarters in which the gap between production and deliveries narrowed, it bloated to a 20% gap during the fourth quarter.
Adding perspective
While the short-term investor likely saw the decline in deliveries as a speed bump, we have to remember that one quarter doesn't make a trend.
There are plenty of possible explanations for the slight decline in deliveries, such as seasonality in the auto industry, the holidays causing a slowdown in big-ticket purchases, or simply that some extra deliveries landed at the end of the third quarter rather than in the fourth quarter.
But most important is that Amazon limits the number of new commercial van deliveries during its peak holiday period.
To be fair, if there is similar weakness in deliveries during the first quarter, and the gap between production and deliveries increases further, there will be cause for concern surrounding demand.
Possible demand boost
On the bright side, investors could see a boost in demand from Rivian's newly launched leasing program. Leasing is a popular option with high-priced vehicles, and Rivian's R1S and R1T start at roughly $78,000.
The leasing program will start slowly in select states, and won't initially include the R1S, though that's on the to-do list, per management. And the leasing program should grow through 2024 and unlock incremental demand from consumers desiring a leasing option.
Don't panic
While fourth-quarter deliveries could end up being a red flag for investors, it would be wise not to have a knee-jerk reaction to a company that entered 2024 with momentum. Much of the slowdown in deliveries is likely attributable to Amazon, and first-quarter results should bounce back to a more normal trend line.
Rivian still has much going for it: It inked a new commercial van customer with AT&T, it has launched its leasing program, it's about to break ground on its second factory designed to produce its next-generation vehicle platform, and it aims to be gross-profit positive this year.
Rivian is a young EV company, and investors will have to take these small bumps with a grain of salt and keep an eye on the bigger picture.
