Rivian shares (NYSE: RIVN) shares rose 24.5% on Friday and had their best day since the 2021 IPO after the company released its 2024 production and delivery numbers.
The electric vehicle (EV) company produced 49,476 vehicles last year. In October, the company guided for production of between 47,000-49,000 units in 2024 which was below its original guidance of 57,000 units. RIVN delivered 51,579 vehicles last year which was towards the upper end of its guidance of 50,500 and 52,000 units.
Rivian reported a fall in 2024 production
Rivian’s production fell on a YoY basis in 2024 amid supply-side issues and production bottlenecks. These issues have however since been resolved and in its release the company said that “the previously discussed shortage of a shared component on the R1 and RCV platforms is no longer a constraint on Rivian’s production.”
Rivian’s 2024 deliveries were higher than the previous year which is no mean feat considering the turmoil in the US EV industry. Even Tesla’s global deliveries fell on a YoY basis last year as the Elon Musk-run company failed to grow sales despite sounding optimistic about doing so.
Meanwhile, the rise in Rivian shares is a welcome break for investors as the shares fell 43% last year despite the strong double-digit rally in US markets.
Trump has vowed to end the “EV mandate”
Notably, there are reports that President-elect Donald Trump who vowed to end the “EV mandate” on the very first day of his presidency will do away with the $7,500 EV credit. While green energy shares were weak in November following Trump’s election, Tesla was an exception.
Tesla rose around 38% in November and had their best month since January 2023. November was the 10th best month overall for Tesla and in absolute terms, the company added more than $300 billion to its market cap. Tesla CEO Elon Musk is a close confidante of Trump and the president-elect has appointed him along with Vivek Ramaswamy to head the Department of Government Efficiency (DOGE).
Notably, while Trump is expected to roll back some of the electric vehicle (EV) friendly policies like the EV tax credit, a section of the market believes that he would ease the regulations for autonomous driving, which by Musk’s own assertion accounts for the bulk of Tesla’s valuation.
Can Tesla shares rise further in 2025?
Bulls believe that Tesla is set to rally further in 2025 after the stellar rally. However, not all buy the story of TSLA benefiting from a Trump presidency. Bernstein – a long-standing Tesla bear – said in its note, “Trump is anti-EVs, but TSLA is on a tear. Tesla’s stock is up 28% since Trump’s election victory, despite the fact that the new administration will likely end IRA consumer and battery manufacturing tax credits, potentially lower emissions standards and could increase tariffs on Chinese batteries.”
Rivian set to receive a federal loan
In November, the Biden administration conditionally approved a $6.6 billion federal loan to Rivian, which would help the company complete its factory in Georgia and create 7,500 jobs by the end of this decade.
Ramaswamy slammed the move and said that it “smells more like a political shot across the bow” at Tesla and Elon Musk. Ramaswamy also mocked the job creation and said that the $7,500 jobs that the plant would create would come to an “insane” cost of 880,000 per job.
Several social media users pointed out that Tesla has benefited from government loans and subsidies in the past. However, of late Musk has been speaking out against government subsidies as the co-head of DOGE will be tasked with advising Trump on cutting “wasteful” government expenditure.
Rivian expects to earn significantly from sales of regulatory credits
Rivian expects to earn $275 million in regulatory credits in Q4. As legacy automakers have been slow to ramp up their EV production – mainly because of low demand – EV companies like Rivian and Tesla are raking in money by selling regulatory credits.
There are fears that he might relax emission norms which could hurt the regulatory credit sales of EV companies like Rivian. Even Tesla is raking in millions of dollars every quarter by selling these regulatory credits.
On a separate note, Rivian and Tesla have settled a four-year lawsuit out of court. The lawsuit alleged that Rivian stole Tesla’s trade secrets by poaching employees. Rivian shares rallied on it settling the long-standing dispute with Tesla.
Rivian and Volkswagen have begun their joint venture
In November, Rivian and Volkswagen formally began the joint venture with the deal size upped to $5.8 billion from the previous guidance of $5.5 billion. In 2023, Volkswagen also invested in Chinese EV company Xpeng Motors and is also the biggest shareholder of solid-state battery company QuantumScape.
The deal with Volkswagen would help strengthen Rivian’s balance sheet. While the company still holds a decent amount of cash, it has also been burning billions of dollars every year as it ramps up its production capacity.
While Rivian is currently posting losses, the company guided for a positive gross margin in Q4. However, we’ll get to know about the company’s Q4 financial performance only in February when it reports its earnings.
Baird downgraded RIVN shares
Last month, Baird downgraded Rivian shares from an “outperform” to “neutral” while lowering the target price from $18 to $16. “With the Volkswagen JV having recently closed and DOE funding announcement (a positive surprise) in the rearview, we see few catalysts in 2025 and expect shares to languish with EV sales, which may be sluggish relative to expectations,” said Baird analyst Ben Kallo in his note.
He however added, “We remain positive on RIVN’s product/brand and the long-term opportunity which remains intact.”
Bank of America also previously echoed similar views and downgraded Rivian shares from a “buy” to “neutral” citing higher regulatory risk under the Trump administration.
Meanwhile, Rivian shares are trading slightly lower in US premarket price action today after the mammoth rally on Friday.
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Mohit Oberoi
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