Hope springs eternal, as the old saying goes. Electric vehicle manufacturer Rivian Automotive (NASDAQ:RIVN) continues to pursue a risky strategy of focusing on luxury over affordability in 2023. RIVN stock did bounce off of a key level this year. However, this doesn’t add up to a compelling bull case and Rivian Automotive’s long-term investors could end up getting trapped.
Rivian Automotive is a company with a persistently optimistic vision. For instance, Chief Financial Officer Claire Rauh McDonough expects Rivian Automotive to produce 400,000 of its upcoming R2 SUVs every year, starting in 2027.
However, vision and reality are two different things. Notably, Rivian Automotive only produced 9,395 vehicles during the first quarter of 2023.
Ultimately, use caution as Rivian Automotive’s questionable pricing strategy could prevent the automaker from selling many vehicles, even if it produces 400,000 of them annually in a few years.
| RIVN | Rivian Automotive | $14.44 |
RIVN Stock Avoids Total Destruction, for Now
The bulls will undoubtedly point out that Rivian stock bounced off of $12 earlier this year. This doesn’t mean it can’t fall back down, though.
Remember, the longer-term trend is still to the downside as Rivian Automotive shares traded at $40 apiece not very long ago.
Now more than ever, RIVN stock investors need a major catalyst. Could it be the upcoming release of Rivian Automotive’s dual-motor R1T electric pickup truck? Reportedly, deliveries of the R1T are set for June.
Previously, MotorTrend reported that the cheapest quad-motor R1T Max pack electric pickup truck cost an eye-watering $90,315. At long last, Rivian Automotive seems to respond to the needs of non-affluent EV shoppers with a less pricey R1T iteration. Is it actually affordable for the typical clean-energy vehicle buyer, though?
Rivian Still Relies on Pricey Vehicles Models
As Josh Enomoto reported, “According to the U.S. Census Bureau, the real median household income in 2021 sat at $70,784.” It might be moderately higher than that in 2023.
It’s hard to imagine that many people would choose to spend a full year’s household (not individual) income on an automobile.
Yet, Rivian Automotive is apparently counting on people doing just that. The R1T reportedly starts at $73,000, and if you’ve ever shopped for a new vehicle, you’ll know that it’s rare to actually buy a car at its listed starting price. Meanwhile, Rivian Automotive’s R1S electric seven-seat SUV apparently starts at $78,000.
Inflation and recession worried haven’t gone away in mid-2023. Rivian Automotive might end up producing 400,000 EVs per year but actually selling a much smaller number than that.
Hence, Rivian’s focus on selling pricey vehicles is high-risk, especially for a consistently unprofitable company.
Rivian Stock Could Quickly Lose Its Gains
Rivian stock bounced, but it’s still on a long-term downtrend. At the same time, Rivian Automotive has fierce EV industry competition and a less-than-ideal financial profile.
Sure, it’s possible that Rivian Automotive’s pricing strategy might work out well for the automaker. Are you really willing to bet your hard-earned money on this strategy, though? After careful consideration, chances are good that you’ll look for more promising EV market investments than RIVN stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.