Is Rivian a Buy Right Now?

PUBLISHED Jul 11, 2022, 11:24:43 PM        SHARE

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Everyone knows about Tesla these days, but what about its up-and-coming rival, Rivian (RIVN)? The electric vehicle (EV) producer has a pickup truck, the R1T, and an SUV, the R1S, ready to deliver. It's got big connections with Amazon and has a fan in Apple CEO Tim Cook, but is it a buy?

Stock Market Volatility

Right now is a bad time for auto stocks, including fellow EV makers Tesla and Lucid. With people fearing a potential recession in 2023, and interest rates rising as the Fed fights inflation, the auto industry will see decreasing sales. If you're not looking at the long term, any auto stock is probably not a good investment for you in 2022. But if you're willing to give it at least 8 years, keep reading!

R1T vs F-150 Lightning

Tesla is a household name, but currently only producers cars and a car-like crossover SUV (the Model Y). The controversial Tesla Cybertruck is late to the party and will come out only after the Ford F-150 Lightning and GMC Hummer truck EVs. In comparison, though, only the F-150 makes a suitable competitor: both EVs look "normal" and have a price under $108,000 (looking at you, GMC). They're also both full-size but not oversized, with both the Cybertruck and Hummer clocking in at super-duty status

Although Ford has a much, much larger market footprint and name recognition, Rivian has beaten the auto giant to the punch in terms of delivery. This positive news could shift some prospective buyers, as those with enough cash for a brand-new EV truck may be willing to pay a premium for a company that is more likely to deliver the goods faster. In terms of quality, though, it's a draw - both the R1T and the Lightning have drawn high praise.

R1S vs Tesla Model Y

In terms of conventional, square-body SUVs, Rivian has the EV market cornered. Tesla claims a mid-size SUV, the Model Y, but it's a rounded-body crossover. Ford has the Mustang Mach E, which is a similarly-styled SUV. Rivian's square-bodied R1S boosts the company by giving it an open lane - pun intended. If you have the money to drop on an EV SUV, you probably want some classic straight lines like a Range Rover rather than an egg-shaped crossover.

Growing Pains

Although both the pickup truck and SUV are scoring glowing reviews, Rivian is courting bad press with impending layoffs. Apparently, Rivian is overstaffed, potentially including the numerous Tesla employees it picked up. But the layoffs at Rivian are reported to be in non-manufacturing roles, meaning the EV producer's output may remain steady. This could mean it's keeping most of its Tesla hires and utilizing their EV expertise, which should come in handy.

Will Buyers Pay a Premium?

While Rivian's R1S is the best-looking EV SUV on the market, its price comes in a little higher than a Tesla Model 1 and much higher than a Ford Mustang Mach E. The R1T pickup is also much more expensive than a Ford F-150 Lightning (at least, the base model). But at $67,500 for the R1T truck and $72,500 for the R1S SUV, the premium price is not outlandish, especially given the rising prices for cars these days.

Bottom Line: Growing Pains Means Growth

Rivian's certainly not a stable blue-chip stock. The EV firm could easily still be considered a start-up. However, it has delivered! And if Tesla can do it, other EV startups have a similar avenue for success. The EV market is not yet saturated, meaning there is plenty of space for Rivian. Product reviews are good, and Rivian has some powerful connections in business. Style-wise, Rivian should do well with upper-middle-class and wealthy buyers who want classic lines for their trucks and SUVs. It's hard to picture a Cybertruck or massive Hummer EV truck at a ritzy event in the suburbs.

The recent layoffs at Rivian may lead to increased efficiency, meaning the company is ready to focus on profitability now that it has proven it can put rubber to the road. I wouldn't put a lot of money into RIVN stock, but I would grab at least a few shares right now.

I/we have a position in an asset mentioned


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