Rivian Ruined

Electric vehicle maker Rivian Automotive Inc. (NASDAQ: RIVN) has been close to death for some time. A massive loss last quarter and revenue that missed forecasts cannot offset what appears to be a good backlog of orders. Everything else aside, Rivian is too small to matter in an extremely crowded market.

In an overly long and complex letter to shareholders, Rivian results for the most recent quarter were buried near the end. Revenue reached $536 million. The company lost a staggering $1.5 billion. Rivian produced 7,363 vehicles in the period, which is so few as to be meaningless.

The New York Times noted this about Rivian’s third-quarter results: “The company’s big challenge now is increasing production enough to meet demand for its vehicles, cover the cost of making those vehicles and, eventually, turning a profit.” Rivian says it has enough cash to take it into 2025. It still needs to build enough vehicles to drive revenue up quickly. It also needs demand, which may or may not materialize over the next two years.

The company said that one of its strengths was it has reservations of 114,000 vehicles. Those reservations could disappear as fast as they appeared.

It would have been hard for Rivian’s stock to be hammered more than it was after the results were released. The share price dropped 12% to $28. That puts it down 70% for the past year.

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Rivian’s problem is not its balance sheet. The competition will become more and more intense as time passes. Tesla will introduce its truck next year. It already has a sport utility vehicle. Ford’s F-150 Lightning model has the advantage that there are millions of F-150s in the market. If even a small percentage of the owners go electric, it could have the world’s biggest market share of any vehicle in this category.

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No large car manufacturer in the world is without plans for electric SUVs and pickups. This is particularly important to GM’s Chevy Silverado and the Ram brand. And these large companies have tremendous R&D, product management, marketing and distribution systems already in place.

Rivian’s final downfall is that it is too small.

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