Finance
Bad news for Rivian investors
Despite the doom and gloom surrounding the electric vehicle (EV) industry lately, Rivaans (NASDAQ: RIVN) investors have found some glimmers of positive news to digest. Unfortunately, that has not been the case with the registration details of S&P Global Mobility, which saw a sharp decline in vehicle registrations and some of Rivian’s closest competitors, performed well.
By the numbers
Rivian carved out a niche in the EV market by beating rivals in the EV truck market in the fall of 2021. Unfortunately for Rivian investors, the competition quickly caught up, taking a toll on the upstart EV’s registrations.
Ford Motor Company‘S (NYSE:F) The F-150 Lightning remained the most popular EV truck in March, according to data from S&P Global Mobility. But perhaps even more surprising was that the Tesla (NASDAQ: TSLA) Cybertruck, with its untraditional styling, also sold Rivian’s R1T.
According to Automotive news, Tom Libby, deputy director of sector analysis at S&P Global Mobility, said:
In its fourth month, the Cybertruck had over a thousand registrations and outsold the R1T by more than two to one. And honestly, I’m a little surprised. The Cybertruck is very, very unique, and it’s interesting that it was able to make that kind of volume so quickly.
Looking specifically at the numbers, Ford’s F-150 Lightning recorded 2,893 registrations for the month of March, almost triple the previous year. The Cybertruck recorded 1,158 registrations in March, while Rivian’s R1T fell 65% to just 548 registrations.
This might surprise investors, as the Cybertruck was initially offered for just under $40,000 before the price rose to just over $60,000, but it didn’t seem to affect enthusiasm for the vehicle. What’s even worse for Rivian investors is that in February the price of the R1T was reduced by $3,100.
What it means
Investors knew Rivian’s production and deliveries would stagnate this year, as reflected in company forecasts. To be clear, registrations are not sales, but they do serve as an indication of sales as Tesla does not derive its US sales from global deliveries.
Investors should also keep in mind that Rivian is selling more of the R1S and it is currently a more profitable vehicle. The R1S registration details are not included here. It’s possible that an increase in R1S sales could offset the weakness in the R1T numbers.
What’s next?
These numbers illustrate what investors already know: Rivian needs to launch its R2 vehicles faster. Fortunately, that’s exactly the decision management recently made when it announced it would begin production of R2 vehicles at the original factory in Normal, Illinois, rather than waiting until the completion of the Georgia factory.
By using excess capacity at the Illinois facility instead of waiting for Georgia to come online, the company also saved $2.25 billion and, most importantly, accelerated its launch schedule.
Ultimately, these registration numbers aren’t something Rivian investors need to worry about. They’re just a symptom of something else investors already know: Competition is increasing. Rivian still has enough liquidity to survive until the launch of the R2 vehicles, but the drop in registrations shows how important it is that the next generation is a hit with consumers.
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Daniel Molenaar holds positions in Ford Motor Company. The Motley Fool holds and recommends positions in S&P Global and Tesla. The Motley Fool has one disclosure policy.
Bad news for Rivian investors was originally published by The Motley Fool
