While many investors are currently pessimistic regarding the electric vehicle (EV) industry, as sales growth continues to creep along rather than explode higher, Rivian (RIVN 7.44%) continues to buck the trend with positive news. Not only did it exceed expectations with second-quarter deliveries, it also inked a massive potential $5 billion deal with Volkswagen AG, helping drive the stock up 93% over the past three months.
Better yet, the most recent registration data shows that Rivian is outperforming its rivals. Here are the details and why it matters.
What is registration data?
Registration data in the U.S. serves as a proxy for sales, and investors can use this information to glean insights that aren't found in monthly or quarterly sales data. Many automakers don't release this information, or don't break it down to individual vehicles. The downside is that this more insightful information is slower to reach investors and is delayed by a few weeks -- the most recent data, for example, is from May. But the insights are invaluable.
What does the data show?
With the EV market saturated with high-priced EVs, consumer demand has slowed to a crawl until automakers can offer more affordable products. That's forced automakers into a tough position where they can choose to offer massive incentive deals, cut production, delay launches, let inventory stack up and lose value, or focus on comparable products such as hybrids.
We're seeing the choices automakers make in the May registration data, and the effects they're having on each automaker. The good news for Rivian investors is that its data is a large bright spot. Here are some examples.
Let's start with opposite ends of the spectrum. On one hand, we have Kia, which posted an incredible 146% gain in new U.S. EV registrations in May. At first glance, those gains appear wonderful, but the issue with these gains is that Kia pushed massive incentives to move product. Its incentives on its EV6 and EV9 reached nearly $17,000 and topped $18,000 per vehicle, respectively.
On the other end of the spectrum, industry leader Tesla (TSLA 3.33%) opted to pump the brakes on incentives. It offered roughly $5,570 per vehicle in May, which caused its registrations to fall 15%. Tesla's share is still dominant at 46% of the segment, but significantly lower than the prior year's mark of 60%.
Rivian's bright spot
While the trends from these examples are clear, more incentives mean more -- and less profitable -- sales and registrations, and a reduction in incentives means a loss of market share and sales. Rivian has managed to buck the trend.
Consider that Rivian posted one of the strongest year-over-year gains at 87%, and that was done with only a modest $4,060 incentive on its R1T. But wait -- it gets even better.
"Whatever the brand is, you have to refresh your products or they're going to fade, and that's what's happening with Tesla now," said Tom Libby, associate director of industry analysis at S&P Global Mobility, according to Autonews.
Early in June, Rivian announced the introduction of the second generation of its flagship R1 vehicles. The R1S SUV and R1T pickup truck were reengineered with hundreds of hardware improvements, performance upgrades, a new software experience, and drive systems. The refresh included two entirely new premium Ascend trims, new Storm Blue paint, and blackout trim options. These premium trims typically generate higher margins for automakers.
NASDAQ: RIVN
Key Data Points
Is Rivian a buy?
The next year is likely to be a bumpy road for the EV industry, but Rivian investors should walk away impressed with the company's recent developments. Those developments include solid results on low incentives, a joint venture with Volkswagen, and the refresh of its R1 vehicles that could keep demand stable until its R2 crossover is launched in the first half of 2026 -- a vehicle that could help drive the company into a profitable future. Right now, Rivian looks like one of the better buys within the start-up EV industry.
