With one of Rivian’s (NASDAQ:RIVN) largest competitors reportedly suffering a major setback and another cutting the production of its electric vehicle that competes directly with Rivian’s offerings, the EV startup’s outlook has certainly improved in recent weeks. This is a central part of this RIVN stock analysis.
Moreover, the automaker is developing a new EV that should tremendously boost its top and bottom lines. Also noteworthy is that a recent data point suggests that the demise of the U.S. EV market has been greatly exaggerated, while the proliferation of EV chargers in America should cause the demand for electric vehicles in the country to spike significantly over the longer term.
With all of that said, here are the details of my RIVN stock analysis.
Favorable Developments for Rivian at Its Competitors
Ford (NYSE:F) is meaningfully reducing production of its popular F150 Lighting electric pickup truck. Specifically, the automaker said there would only be one shift of workers making the EV starting in April, down from two shifts currently and three shifts in October. The EV competes directly with Rivian’s R1T truck.
Ford blamed its decision on the supposed lack of demand for the F150 Lighting. However, since the automaker reported that the sales of the EV had reached a record in November, I believe that Ford decided to reduce production of the EVs, on which it lost significant amounts of money, in order to boost its bottom line.
Meanwhile, Tesla’s (NASDAQ:TSLA) Cybertruck, which also competes with Rivian’s R1T, apparently has a significant aesthetics issue, as two owners of the Cybertruck complained that their expensive EVs had been marred by “corrosion,” along with “orange rust marks.”
A Tesla engineer, Wes Morrill, subsequently claimed that the marks were tiny and were caused by “metal particles” that are separate from its body. Justin Demaree, the owner of a Tesla-oriented YouTube channel, “said the tiny orange specks were likely the result of ‘rust dust’ or particles that had landed on the surface of the truck and embedded into the material,” Business Insider reported. The Cybertruck’s rather unique “stainless steel exterior” makes it more likely than other vehicles to suffer from this issue, he said.
Although Morrill and Demaree both reported that the marks could be rubbed off, the pain point may prevent many consumers from buying the Cybertruck, ultimately resulting in some of them purchasing the R1T instead.
A New, More Affordable EV for Rivian and a Positive Data Point for the U.S. EV Market
Rivian plans to introduce its smaller, cheaper SUV, the R2, to the world on March 7. The R2’s baseline price will be ” $40,000 to $50,000, or nearly half the cost of its R1S and R1T,” Elektrek noted recently. As a result of the lower price, Rivian will be able to generate revenue from many consumers who could not afford one of its much more expensive EVs.
Also noteworthy is that Rivian intends to sell the EV in Europe, marking the first time that the automaker will offer its EVs to consumers on the continent. (Amazon (NASDAQ:AMZN) has used its delivery vans in Europe) Of course, Rivian’s foray into Europe, where the overall penetration of EVs is much higher than in America, will greatly increase its total available market and significantly lift its top line.
Meanwhile, fears about a huge decline of the U.S. EV market appear to be significantly overdone, as Hyundai and its partner, Kia, sold a combined 6,627 EVs in America last month, representing a 51% gain versus the same period a year earlier.
Also positive for the U.S. EV sector, including Rivian, is the continued, rapid expansion of the number of EV chargers in the country. As a result of this phenomenon, “range anxiety,” one of the main pain points preventing consumers from buying EVs, should decline tremendously over the longer term.
The Bottom Line on My RIVN Stock Analysis
Rivian’s EV sales jumped more than 100% last year to over 50,000, while the brand’s vans appear to be very popular with companies. Given these points, along with the firm’s positive catalysts that I outlined above, I believe that the automaker is well-positioned to become the next Tesla. Consequently, I view RIVN as a great stock to buy for long-term investors.
On the date of publication, Larry Ramer held a long position in RIVN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.