Rivian Automotive (RIVN +3.94%) was on top of the world when it went public in late 2021 at the height of electric vehicle (EV) industry optimism. With a market cap that exceeded $100 billion, the start-up was briefly America's second-most valuable automaker, ahead of Ford Motor Company and General Motors despite reporting almost no sales.
Naturally, the overvaluation didn't last. Now, Rivian's stock has fallen a whopping 93% from its all-time high, which is sure to catch the attention of value-conscious investors who are optimistic about the future of America's EV industry.
Let's explore what the next three years may have in store for the company.
NASDAQ: RIVN
Key Data Points
Trump's economic policy is a mixed bag
Like many companies, Rivian saw its stock price soar after Donald Trump's election victory in November 2024. But that optimism was premature. As a candidate, Trump made it clear that he planned to reduce support for green energy policies, and that's exactly what he has done in office.
The new administration has directed the Environmental Protection Agency (EPA) to terminate Biden's so-called "EV mandate," which aimed to make 56% of vehicles sold in the US electric by 2032. Furthermore, the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, will roll back critical industry support, such as the $7,500 tax credit for new electric passenger vehicle sales.
According to CBS News, EVs typically cost around $9,000 more than equivalent gasoline-powered cars, and the tax credit helped them stay competitive for cost-conscious consumers. This change could undermine Rivian's planned pivot to lower-priced vehicle offerings like the new R2 platform, expected to start at $45,000 when it launches in 2026.
Image source: Getty Images.
That said, Trump's policy isn't all bad news for Rivian. The government's 25% tariff on imported vehicles could hurt the company's foreign rivals. Rivian manufactures all its cars at its 3.3 million-square-foot facility in Normal, Illinois, and possible expansion plans (for the new R2 line) could benefit from the OBBBA's incentives for domestic capital investment.
The rollback of EV industry support could also encourage Rivian's gasoline-powered rival to stick to traditional combustion engine technology longer, reducing the level of competition in the EV industry.
Can Rivian become profitable?
Rivian is in a tough spot right now, as highlighted by first-quarter earnings. Revenue grew by just 3% year over year to $1.24 billion, which isn't very encouraging for a growth stock trying to scale up its operations. Furthermore, the company generated an operating loss of $655 million.
However, there is a silver lining to the story. Rivian's losses have shrunk by almost half over the past 12 months despite the lackluster top-line growth. This trend indicates that management's dramatic cost-cutting efforts (in staffing, supply chain, and manufacturing processes) are yielding impressive results.
Furthermore, Rivian has secured $1 billion in much-needed financing from Volkswagen, and the two companies are working together on a joint venture to develop software, which could bring down costs through economies of scale.
At this point, more top-line growth may be the only thing Rivian needs to establish a pathway to profitability and become a successful company. And over the next few years, the rollout of new, lower-priced vehicles like the R2 and R3 could help make this a reality.
Is Rivian a buy?
Rivian's future almost entirely depends on the popularity of its new vehicle platforms, expected to launch next year. Unfortunately, it is way too early to draw conclusions because we still don't know how the removal of subsidies and other government policies will influence consumer demand for EVs. Investors may want to wait on the sidelines until more information becomes available.
