Between the price wars that have raged throughout 2023, inflation and excess inventory, the electric vehicle (EV) market has not been as robust as many investors hoped. Certainly, the electric vehicle market continues to grow, but not as quickly as expected.
Despite the headwinds which slowed down the competitors, Rivian Automobile (NASDAQ:RIVN) is one of the few electric vehicle makers with momentum heading into 2024, and it just got some more good news. Let’s dig.
AT&T calls
One of the most intriguing developments in the second half of 2023 came when Rivian announced that it was in negotiations with the e-commerce giant. Amazon on the end of the exclusive part of its agreement.
Amazon was originally expected to order 100,000 electric vans from Rivian before 2030, and while that remains the plan, Amazon also filed a smaller-than-expected annual order that prompted Rivian to ask how to deliver its vans to others consumers.
That’s exactly what happened, and while Amazon remains committed to its large order, the doors are now open for other delivery consumers to purchase fleets of Rivian’s electric vans. Until last week, it was only an intriguing possibility, and management had alluded to Rivian keeping potential customers on the back burner.
Then AT&T came along and an intriguing potential turned into a real development. While details are scarce this early, particularly regarding the number of vehicles covered by the deal, it appears that AT&T will add not only Rivian electric vans, but also R1T and R1S models to its fleet to help reduce carbon emissions on its way. achieve carbon neutrality by 2035.
Staging
After a turbulent 2023 that began with production bottlenecks, Rivian posted two increases to its full-year production guidance and crushed third-quarter financial estimates. Beyond its financials, the company is getting closer to launching its R2 vehicle platform next year, which will reduce prices to $40,000.
If AT&T is just the first of a handful of electric van fleet orders, it could go a long way toward convincing investors to come back on board after the stock sell-off throughout 2023. Rivian plans to accelerate the production and deliveries of the van in 2023. 2025, and will initially prioritize orders from larger fleets, such as those from Amazon and potentially AT&T or other large companies.
It won’t take much to make a difference in terms of increased demand. Amazon’s order of around 10,000 units turned out to be modest compared to expectations. If Rivian can sign a handful of deals with deliveries starting in 2024 or 2025, even for half the annual size of Amazon’s deal, that would add up quickly for a company that expects production to reach 54 000 for 2023.
On the way to 2024
Rivian is one of the few electric vehicle makers that appears to have momentum heading into 2024, and the stage is set for the stock to recover if it can squeeze some life out of the unenthusiastic EV market.
Or Rivian could potentially leave the lackluster electric vehicle market behind and grow on its own if it continues to show strong demand for its vehicles, continues to reduce costs, fuels demand with its new leasing program, accelerates production and deliveries with new orders for electric vans and progresses towards positive gross profit looking forward to 2024.
Growth in the electric vehicle industry was slower than expected in the US market, but Rivian offers a great buying opportunity now as it enters 2024 with momentum and having lost approximately 75% of its stock price since its initial public offering (IPO).
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.
More great news for Rivian as we head into 2024. Is it a buy now? was originally published by The Motley Fool
