tl;dr: In 2-3 years, Rivian stock could be worth several times its current price, possibly way more.
Doom and gloom
Look at this chart:

Wow, how depressing. Once a high-flyer with investor optimism, publicity, and an attractive product, Rivian's share price has been on a steady march towards the abyss. Now worth around $10 a share, I'd hate to be one of the early investors holding the bag after paying $172 per share (its all-time high right after the IPO). Fortunately, I'm not.
This is clearly an electric car company whose time has come, as they fizzle out under lackluster deliveries, production challenges, and investor downgrades. The future sure does look bleak. Or... does it?
Tesla: A great American success story, until it's not
Tesla has had an incredible run. Adjusted for splits, the stock has mooned from what was approximately $1 to a high of around $400 per share. A lot of people have made a lot of money from Tesla, some of which I was fortunate enough to grab. For a while, they were a scrappy upstart trying to survive, producing cars popular among their loyal fans. They were succeeding despite the eyerolls of traditional auto manufacturers. Their original "secret plan" (which has changed drastically in recent years) was:
- Build sports car (Roadster)
- Use that money to build an affordable car (Model S, X)
- Use that money to build an even more affordable car (Model 3, Y)
Granted, "affordable" is relative there. But it was genius, and it worked. They stuck to the plan through grit, determination, and timing. Tesla was able successfully produce a desirable, mass-market car. Their production couldn't keep up with demand, and they sold every car they made as they scaled production to impressive levels. After losing money for years, Tesla turned the corner and started making money -- gobs of it, in short order. This was reflected in their stock price accordingly.
However, that insane growth can't happen forever. Demand is now lower than supply. Their CEO's antics have, to put it lightly, soured their target market. The company routinely gets side-tracked with vanity projects, like an unimpressive humanoid robot or a hideous abomination that nobody asked for. Their next vanity project is the so-called "Robotaxi", a fully-autonomous vehicle which purports to eliminate the driver entirely. (As an aside, anybody who has their "Full Self Driving" package, like I do, knows that delivering this within the next half-decade is utterly laughable.) Elon Musk regularly absconds with money and talent from Tesla, in order to fund his Truth Social clone. Tesla's updated master plans have specified that they fully intend to pivot into a solar power company who happens to make cars. I think it's the only way they can justify the insane valuation compared to all other auto manufacturers.
They've squandered their brand cachet, alienated customers, and made unrealistic claims about the company's direction. Their distractions have spread them thinly, and company morale is at an all-time low.
To put it bluntly, Tesla has jumped the shark. I fully divested in July 2024.
Who will rise to replace them?
As the EV euphoria has subsided and realistic growth is now projected for EV sales, legacy auto manufacturers have jumped back off the EV bandwagon -- for now. If you believe, as I do, that EVs are the undisputed future of personal transportation, then EV companies stand to usher in that revolution and disrupt (bleh) the auto industry. Legacy manufacturers don't know how to deal with this sea change, so it's best to just put their heads back in the sand and rake in quarterly profits. That is, until they get caught with their pants down again.
Anyway, the EV revolution marches on. Legacy auto refuses to adapt. Lucid is a dead company walking. Canoo was always a con. Faraday Future, a punchline. Polestar is a decent brand with some traction, but they are simply a sub-brand of a Legacy auto company. And then there's Rivian.
Following the Tesla playbook
Rivian's real story began in 2016 when they purchased a former Mitsubishi Motors plant, gaining what was essentially a turnkey facility to produce their just-announced R1T vehicle. Tesla did the same when they purchased their first facility which was a General Motors plant. The R1T was made available for preorder, and 3 years later they began deliveries. Skipping part 1 of Tesla's initial "master plan", Rivian went directly to selling the "affordable but very nice" model. The R1T is high-end for consumers, commanding almost $100k when well equipped, similar to a Tesla Model S or Model X. To this day, Tesla sells about 50k Model S and Model X per year. Rivian sold around 57k vehicles last year. They announced the R2, a lower-cost, mass-market Rivian, in March of this year. Preorders have been strong, signaling significant demand for the vehicle. Like Tesla, Rivian has the strategy and the demand. They "just" need to execute, which is in quotes because this is the hardest part.
Let's take a look at Tesla's story and timeline:

In the time between the Model 3 announcement and when it was first delivered to customers, the share price was relatively flat. Nobody was sure if Tesla could accomplish the feat of production scaling. But, once deliveries started happening... up, up, and away! Tesla had proven it could deliver mass produced, desirable vehicles.
But, it most definitely wasn't a sure thing for Tesla. In fact, they teetered on the edge of bankruptcy as they ramped production. Scaling production is hard. Tesla had to seek loans and other lifelines along the way; but in the end, they did it and the company and its shareholders were richly rewarded.
Before we take a look at Rivian, I want you to consider that Rivian's share price at and after its IPO was sky-high due to the Tesla success inertia. The IPO was successfully timed to capitalize on the hype. As the shine wore off, the share price fell back to earth where it belonged. So, for the purposes of this exercise, Ignore the left mountain on the chart. With that, let's take a look:

The race against time
So, can they?
At first blush, it may seem like the runway is too short. They currently have $5bn in cash, and are burning about $1bn a quarter. They sell their vehicles at a loss, but the V2 ones are cheaper to produce. The production ramp for the R2 probably won't happen until 2026. That means they're due to run out sometime next year, given the current burn rate. However, the $5bn is not all they will have.
Among the milestones in the chart above is the "VW Partnership". It means VW gives them $1bn off the bat, and then another $1bn per year as they help VW use Rivian's underlying software and connectivity. This gave a temporary bump to the share price, but will certainly help their prospects. It's not a panacea, but it's a nice lifeline. Remember also that they have a contract with Amazon to produce electric delivery vans for them.
Rivian also expects to turn a small gross profit in the last quarter of 2024, due to factory efficiency gains and their recent vehicle production redesign. That means some of the bleeding subsides, assuming this comes to fruition. True positive cash flow won't happen until they scale the production of their vehicles.
So, if they need more money, where can they turn? They could sell more shares, further diluting the stock. That wouldn't be a wise move with the share price so low. Thankfully, Rivian has some friends in high places. Check out the top 4 shareholders of Rivian:
Holder | Percentage |
---|---|
Amazon | 15.83% |
Vanguard Group | 7.51% |
T. Rowe Price | 5.59% |
Blackrock | 4.75% |
Furthermore, the top 10 investors own almost 50% of the shares. Of particular note, Amazon having a 15% stake is important. The company has bottomless pockets, and their electrification strategy currently depends on Rivian existing. I'm not in the board rooms or C-suite of these heavyweights, but I find it hard to believe that they won't extend a loan to Rivian to keep them afloat as they execute the production ramp.
What success means
So, let's assume they're able to make it through the production ramp. What does that mean for their stock? Tesla experienced, at its highest, about a 2500% increase from their plan announcement until they had proven they could produce and sell at scale. A 1000% increase for Rivian puts the share price at $110. a 500% increase puts it at $60. Conservatively, one stands to do very well if they invest now and wait a couple years, assuming Rivian can ramp production. If they can't, the stock goes to 0. Therefore, I see way more upside than downside. It's definitely a gamble, but an educated one. History does not repeat, but it certainly rhymes. EVs are absolutely the future, and there is plenty of room for more than one successful brand. Rivian isn't dependent on constant carrots-on-sticks to keep their share price up. The proof will be in the production, and I'd love to see Rivian succeed, both personally and financially.
Disclaimers
I'm not a financial advisor, or accountant, or anything with letters after my name. I'm only a financial advisor to myself. I believe in Rivian's future for the reasons outlined above, and invested some of my TSLA gains in RIVN.