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Some automakers are reining in their investments in electric vehicles (EVs). Sluggish demand and shifting regulatory climates have caused nearly every major automaker to cut investments, delay projects underway, and generally deemphasize the role EVs will play in their upcoming lineups. "It is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds," Volvo's CEO explained after it ditched plans to make its lineup 100% electric by 2030.
While it will take some patience, all of this could end up being great news for Rivian (RIVN +0.03%), which expects to launch three new EVs in 2026 and 2027.
In June, General Motors announced that it would invest $4 billion to expand production of gas-powered vehicles. "It blows my mind this is happening, but nonetheless it is," Rivian CEO RJ Scaringe responded, adding that the industry's deprioritization of EVs will end up being "very bad for the U.S. auto industry."
But here's the good news for Rivian investors: Competition will be drastically reduced over the next few years. Rivian's new models will face less direct competition, a situation that could persist for years, given capital investment timelines.
Rivian's CEO also thinks the industry shift will end up benefiting his company. "You're going to have a sort of a vacuum of competition," Scaringe said. "The pure-play EV-focused companies Rivian, Tesla, there's not very many, because they're completely and fully focused on electrification, will have the advantage of a pretty thin competitive playing field."
This silver lining will take a long-term perspective for investors to profit. Current market conditions remain difficult. But if buyer sentiment shifts as many forecasts expect it to, pure-play EV makers like Rivian and Tesla will face a hollowed-out competitive field. That adds even more excitement for patient shareholders taking the long view.