Thanks to its product pipeline, support from Amazon, and positive word of mouth, Rivian looks like a smart electric vehicle investment.
There are plenty of reasons to be pessimistic about the electric vehicle (EV) industry now, but that could also make it a perfect time to buy in while stock prices are depressed. To be fair, not every EV investment is going to pan out as many companies are in a cash crunch or worse. Rivian, (RIVN -5.85%) however, is in a better position than many competitors, and here are three reasons buying now makes sense.
Product pipeline
While production and deliveries are expected to remain flat this year compared to 2023, there are reinforcements on the way. In 2026, Rivian expects to roll out its R2 crossover, which will be more competitively priced.
But that’s just part of the story. The company moved initial production from its next factory, in Georgia, to its original factory in Illinois. The move saves the company roughly $2.25 billion dollars, will speed up its launch schedule, and soak up excess-production capacity in its original factory. It’s a no-brainer move that will pay huge dividends to the company if the R2 is as much of a hit with consumers as hoped.
Also, in a surprise move, the company announced the future of the R3 and R3X, which should be expected to push Rivian’s influence on the EV world even further.
Word of mouth
As hinted at, the company needs the R2 to be a hit with consumers, and the good news is that the company has a great track record of quality, which is hugely important to new automakers. The R1T ranked highest overall for consumer satisfaction in J.D. Power’s “2023 U.S. Electric Vehicle Experience Ownership Study,” tossing aside the well-known Tesla Model 3.
Furthermore, the R1S was the fourth best-selling EV in the U.S. during the first quarter of 2024 and the best-selling EV above $70,000. These things matter, especially to start-up automakers trying to gain traction with consumers.
Amazon backing
In this case, Amazon‘s bite might be larger than its bark. That’s because while the retail juggernaut remains mostly quiet, few remember that the company is also Rivian’s largest shareholder. That’s mostly because of the partnership that remains focused on bringing 100,000 Rivian electric delivery vans (EDVs) to the road by the end of 2030.
That’s a strong backbone of commitment that should help ease investors’ worries at a time when EV demand in general is slowing.
What it all means
Ultimately, Rivian has separated itself from many of its young, start-up EV-maker competitors. Rivian has the liquidity to ensure it operates until the R2 is launched and the company isn’t in a dire cash crunch such as competitors. It has the backing of Amazon, solid word-of-mouth marketing, and a product pipeline to show investors the long-term vision. These are three easy reasons investors can buy into the young EV maker Rivian.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.
Add Comment