There’s no way to hide the plain facts: Rivian (NASDAQ: RIVN) management sees 2024 as a key turning point for the business. But if it doesn’t achieve the operational goals it has set for itself, the future could be rougher than expected. On the flip side, if Rivian does hit its audacious goals, this electric vehicle maker’s stock could quickly become very popular — and could help to make you a millionaire.
Rivian is going head-to-head with some big automakers
When you think of electric vehicles (EVs), the first name that probably pops into your mind is Tesla (NASDAQ: TSLA). That makes complete sense since Elon Musk’s company managed what can only be described as a coup in the auto sector. Not only did it build a profitable car company from the ground up, it did so with a technology that the major auto companies didn’t think was viable. That success attracted a lot of imitators, one of which is Rivian.
Image source: Rivian.
But Rivian is building itself upon a slightly different foundation. Tesla started off with a high-cost sports car. Rivian has started off with a high-cost pickup truck. That truck has been well received by consumers, and has won numerous design and quality awards. There’s just one problem. Rivian loses money on every truck it sells. The numbers are not pretty, with a loss of more than $38,000 per vehicle delivered in the first quarter of 2024.
Company management knows this is a problem. But up until 2024, its focus had been on manufacturing trucks at volume. It achieved that in 2023, when it produced more than 57,000 vehicles, so it has proven it can operate at scale. In 2024, the goal is to prove that it can operate at scale and make money doing so. The company’s future pretty much depends on it succeeding.
Rivian just revamped its production facility
The first step in the process was actually to stop increasing its production rate and focus instead on improving its production processes. In fact, its per vehicle loss in the first quarter included more than $9,000 “primarily related to various supplier and other costs incurred in advance of the new technology changes and parts integration into the R1 platform as part of its cost of revenue efficiency initiatives.” That’s a mouthful of corporate jargon, but what it means is Rivian switched to cheaper suppliers, improved its products to increase their desirability, and, at the same time, increased its capacity to produce vehicles by a whopping 30%.
The next few quarters will reveal important information for investors. Rivian is aiming to achieve a positive gross profit in the fourth quarter. It will still lose money in 2024, though, and even if it manages to achieve a full-year gross profit in 2025, other expenses (like R&D and selling, general, and administrative costs) could keep it from achieving absolute profitability. But getting to gross profitability would be an important step.
The next big achievement will be the company finally offering trucks for less affluent buyers. Right now, Rivian’s trucks are expensive, which is fine, but materially limits the company’s addressable market. It really needs to follow Tesla’s lead and start offering some mass-market models. On that front, it plans to launch its lower-cost R2 truck in the first half of 2026. There are other models in the works, as well. But the real story is that once it proves it can profitably make an EV, its next big goal will be profitably making EVs for the masses.
Could Rivian be a millionaire-maker stock?
So far, Rivian has not been a great stock to own. The shares have fallen by more than 90% from their highest point. That’s a clear sign that investing in the stock comes with material risks, and that only the most aggressive and risk-tolerant investors should consider buying it.
However, the company has been executing well on its internal operational targets. And if the massive stock price gains Tesla witnessed as it inched its way toward profitability are any indication, there could be a huge upside for Rivian’s shares as it traverses the same path. The risk, of course, is that Rivian could stall out before it achieves Tesla-like success.
Investing in Rivian could help more aggressive investors build seven-figure portfolios, but the risk/reward balance still looks tilted toward the risk side of the equation. If you do jump aboard, don’t back up the truck until management has ticked a few more items off its to-do list.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
