Electric vehicle startup Rivian (NASDAQ:RIVN) delivered slightly fewer EVs than analysts had expected last quarter. This will have important implications for RIVN stock holders. Much more importantly, the firm’s deliveries fell 10% versus the previous quarter. While I certainly didn’t anticipate such a drop and it is a negative development, Rivian’s other positive catalysts will, in all likelihood, enable it to overcome any reduction in the demand for its current EVs from consumers.
As a result, I remain very bullish on RIVN stock and recommend that investors buy the shares on their current weakness.
The Delivery Decline and Potential Demand Issues
On Jan. 2, Rivian disclosed that it had delivered 13,972 EVs in Q4, representing a decline of 10% versus the previous quarter. Analysts, on average, had expected the firm to provide its customers with about 14,000 EVs in Q4.
Meanwhile, Rivian was able to produce over 17, 500 EVs last quarter, suggesting that the drop in deliveries was not caused by any sort of problems with the automaker’s supply chain or its factory.
Therefore, I believe that the demand for Rivian’s two current, costly EVs for consumers — its R1S SUV and its R1T pickup truck — may have fallen last quarter. (The R1S starts at $85,000, while the R1T’s base price is $73,000).
Among the possible reasons for the decline in demand are Tesla’s (NASDAQ:TSLA) initiation of deliveries of its much-anticipated Cybertruck last quarter and increased interest in Ford’s (NYSE:F) F150 Lightning, whose sales set a record last quarter.
Other factors that may have played a role are elevated interest rates and the American media’s recent campaign against EVs, including its false, often repeated assertion that the demand for EVs made by companies other than Tesla has been weak (Actually, in Q3, U.S. EV sales jumped 50% year-over-year, while Tesla’s market share fell meaningfully).
Moreover, in recent weeks, conservative media outlets have been “pounding the table” about the alleged shortcomings of EVs (Many if not most of these assertions have also been unfounded).
Some defenders of RIVN stock have pointed to the company’s assertion that Amazon (NASDAQ:AMZN) accepts fewer delivery vans during the holiday season as a reason for the decline of RIVN’s deliveries last quarter. However, if the demand for Rivian’s consumer vehicles was strong,, I believe that the automaker would have produced more of those EVs and fewer delivery vans, enabling its overall Q4 deliveries to still be higher versus Q3.
Rivian’s Delivery Van Business and Its Cheaper, Upcoming SUV Will Save RIVN Stock
There’s an excellent chance that any decline in demand that RIVN is experiencing will fade over the longer term as interest rates drop, the initial fascination with Tesla’s Cybertruck dissipates, and consumers realize that the media’s campaign against EVs is mostly built on inaccurate assertions.
However, even if consumers’ demand for Rivian’s current EVs does not rebound, the company can respond by ramping up the production of its delivery vans. As of mid-October, Amazon had only obtained 10,000 delivery vans from Rivian. The e-commerce giant, which wants to have over 1000,000 of EVs on the road by 2030, could probably significantly accelerate the rate at which it’s receiving the vans.
Moreover, another huge company, AT&T (NYSE:T), recently announced that it would begin buying RIVN’s delivery van and its R1T pickup truck in the framework of “a pilot program.” I believe that there’s an excellent chance that AT&T will buy a large number of Rivian’s EVs, although of course, it will probably ultimately purchase many fewer vehicles from Rivian than Amazon whose whole e-commerce business is based on deliveries.
Finally, in 2026, Rivian plans to launch an SUV called the R2 that’s expected to cost $40,000 to $60,000. Given Rivian’s sterling reputation and the fact that this EV will be much cheaper than the firm’s other offerings for consumers, the demand for the R2 should be very high.
Although the EV is not expected to be launched until 2026, Rivian will likely start taking orders for it this year. I believe that the order totals will be very impressive, providing a strong, positive catalyst for RIVN stock.
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.