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Once the darling of the EV world, the electric truck-maker Rivian is reeling

Samantha Masunaga, Los Angeles Times on

Published in Automotive News

Rivian Automotive Inc. emerged as a darling of investors — a brand with promise of bringing the "cool" factor to the once-red-hot market for electric vehicles.

But the Irvine-based company hit the brakes Wednesday, announcing a 10% cut to its workforce and lower production expectations. The news sent its stock plummeting. The 25% drop in stock price that it notched Thursday was its worst day in its history.

It's all part of a larger reckoning for EV companies, which now face falling demand amid a shrinking pool of wealthy buyers who don't already have an EV and lingering questions from the broader consumer market about whether EVs can truly fit into their lives and budgets.

"We've been living in this wave of 'Oh, EVs are great, they're going to continue the accelerated growth and only going to get better,' and now it seems like they're hitting this reality point," said Jessica Caldwell, head of insights at Edmunds. "Mass-market buyers have less income and a lot more questions."

Rivian's trucks and sport utility vehicles certainly command attention — the sleek design and outdoorsy features got investors, analysts and the public excited about its potential. The company, which counts Amazon as an investor, blew the roof off during its initial public offering of stock in 2021, ending its first day of trading valued at nearly $88 billion.

But the average car buyer probably is not able to afford the price points of Rivian's current slate of vehicles — the company's R1T electric pickup truck starts at nearly $70,000, while its R1S SUV starts at almost $75,000. The company, which is not yet profitable, reported a net loss of $1.52 billion for the three-month period that ended Dec. 31, compared with $1.72 billion during the same period a year earlier. Much rides on the company's plan to produce its more affordable R2, which will debut in March, but won't start mass production until 2026.

 

Despite years of growth in EV sales, mass-market customers remain wary of EV battery life, range and the availability of reliable charging stations. That's why hybrid vehicle sales have grown alongside those of EVs, Caldwell said.

"It's not always easy to set up a charger where you live," she said. "At the end of the day, for EVs to take off and become mass market, there needs to be major growth in infrastructure."

That hesitation is showing up in Rivian's production and delivery expectations for 2024. The company said its backlog of orders had shrunk, partially due to fulfillment, but also due to cancellations and fewer new orders.

The company said it expects to produce 57,000 vehicles this year, which the company said was in line with 2023 figures, though it disappointed Wall Street analysts who expected that number to be higher. Last year, the company produced 57,232 vehicles and delivered 50,122 cars, more than double its 2022 figures.

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