Trading for around $13.57 at the time of writing, Rivian Automotive (RIVN 1.30%) is a far cry from its all-time high of $172, reached in November 2021.
A lot has changed since then. Electric vehicles (EVs) have shifted from a seemingly sure bet to an uncertain and competitive market. At the same time, Rivian has consistently disappointed investors with massive losses and a slower-than-expected ramp-up.
That being said, it's still far too early to write the company off. Battery electric technology continues to improve alongside manufacturing efficiency. And automotive analysts still widely expect EVs to eventually replace gasoline-powered alternatives.
Let's see what the next few years might have in store for Rivian as it navigates the difficult road ahead.
NASDAQ: RIVN
Key Data Points
The government shifts from a fan to a foe
2025 has been a surprisingly strong year for the U.S. EV industry as consumers rush to purchase cars ahead of the end of a $7,500 tax credit that aimed to support demand. Under the Trump administration, the U.S. government shifted from a facilitator of the industry to a potential obstacle. And investors should expect demand to drop dramatically in 2026, and possibly beyond, as companies must now work harder to remain competitive with gasoline-powered alternatives.
There is a silver lining to the situation. Many of Rivian's products weren't even fully eligible for the full $7,500 tax credit because of their high price points and battery sourcing. And the loss of incentive could give the company some breathing room by disproportionately hurting rivals like Tesla, Ford Motor Company, and General Motors, even though the changes could interfere with Rivian's plans to pivot to lower-cost offerings in the future.
The Trump administration has also changed its policy on regulatory credits, which are transferable tokens that traditional automakers buy from EV makers to avoid fines for their tailpipe emissions. The loss of this incentive effectively makes gasoline-powered cars more competitive relative to EVs while eliminating a crucial high-margin revenue source for Rivian. In August, the company filed a petition stating that the policy changes had already left $100 million worth of its revenue in limbo.
Going mass-market will make or break Rivian
Rivian has taken a page out of Tesla's playbook by starting its brand with exclusive high-priced vehicles before eventually pivoting to the mass market. This strategy helped the company establish a desirable luxury brand image, build up economies of scale, and work out the kinks in its manufacturing before rolling out higher-volume, affordable offerings.
Despite the changes in tax credits, management is still pursuing this strategy with the new R2 midsize SUV that's expected to start at just $45,000 when it launches in 2026. The product is expected to dramatically increase Rivian's pool of potential buyers, many of whom were scared away by the company's flagship R1's starting price of over $70,000.
Image source: Getty Images.
The R2 will need to make a big splash if it is going to turn Rivian's situation around. Second-quarter earnings were extremely weak, with revenue growing just 12.5% year over year to $1.3 billion. The company also generated a gross loss of $206 million, which means it still costs Rivian more to manufacture and deliver its vehicles than it can recoup by actually selling them.
When you factor in operating costs like research and administrative salaries, the company's cash burn balloons to an eye-watering $1.1 billion, with no clear pathway out of the hole.
Where will Rivian be in three years?
The next three years will probably be the most difficult in Rivian's history. The hype has faded. The government is no longer supporting the EV industry. And if investors don't see results, the company could easily find itself dropping to penny stock status.
That said, the new R2 could potentially turn the situation around in 2026. And investors should keep Rivian on their watch list until more information becomes available.
