In relation to Rivian Automotive (NASDAQ:RIVN) and competitors, Tesla (NASDAQ:TSLA) could also be what first involves thoughts. But whereas many buyers are shopping for RIVN inventory within the hopes it’s the subsequent TSLA inventory, the electrical car market chief isn’t this firm’s foremost aggressive menace.
Slightly, that honor belongs to incumbent automaker Ford (NYSE:F), with its F-150 Lightning EV pickup truck. Ford was an early RIVN investor, at one level proudly owning a 12% stake within the firm. Over the previous 12 months, nevertheless, the venerable automotive firm has cashed out of its fairness place.
Ford could have reaped billions from its funding, however the query now’s whether or not this upstart will find yourself having the final snort. To search out out, let’s dive in, and see whether or not Rivian can nonetheless thrive, as its former backer turns into extra distinguished on the planet of EVs.
| RIVN | Rivian Automotive | $17.32 |
The Battle Between New Faculty and Outdated Faculty
When Ford invested $500 million into then-privately-held Rivian again in 2019, it wasn’t merely an fairness funding. It was the formation of a strategic partnership. By that time, the Ford Motor Firm had dedicated billions to its solo EV endeavors.
Nevertheless, as a part of the strategic funding, the 2 firms agreed to collaborate on the event of an EV for Ford, utilizing Rivian’s skateboard platform. That stated, the 2 firms by no means introduced a jointly-developed car to market. Slightly, by late 2021, not too lengthy after RIVN inventory debuted within the public markets, the partnership got here to an finish.
Ford’s resolution to scrap its collaboration plans largely stemmed from CEO Jim Farley’s confidence that his firm, by way of its personal efforts, may “win within the electrical house.” From that time on, what began off as an alliance has turn out to be a rivalry between the brand new faculty and the old fashioned.
This grew to become extra obvious throughout 2022 when Ford started cashing out of RIVN whereas ramping up manufacturing of its EV choices just like the F-150 Lightning. To date successful quite a few accolades for the car, in response to the corporate, the F-150 Lightning was the primary promoting electrical truck within the U.S. throughout December.
Neck and Neck
Ford’s success with the Lightning in late 2022 has carried over into 2023. Throughout January, Ford bought 2,264 models of this car. But whereas Ford continues to be crushing it with electrical truck gross sales, Rivian probably isn’t far behind, with gross sales of its R1T truck.
Though the up-and-coming EV maker has but to launch gross sales figures for final month, primarily based upon its This fall 2022 supply numbers, and its ramping up of manufacturing, it’s probably delivering hundreds of this car on a month-to-month foundation at current.
Nevertheless, will certainly one of these opponents quickly pull forward, or will they continue to be neck and neck? For my part, rely on the latter. Each Rivian and Ford have multiyear backlogs for his or her respective EV truck fashions.
Ford has skilled a manufacturing shutdown as a consequence of a battery fireplace incident, however this shutdown is more likely to be non permanent. Ford, like Rivian, intends to vastly ramp up electrical truck manufacturing this 12 months.
So, shaping as much as be similarly-sized opponents on this fast-growing house, this bodes effectively for RIVN inventory, proper? Not essentially. Though the corporate could also be maintaining with its former backer, ends in the quarters forward may nonetheless fall wanting expectations.
What This Means for the Inventory
In my final Rivian article, I argued that “slight misses” may knock RIVN all the way down to decrease costs. In different phrases, an oz. of disappointment may produce a ton of weak spot for shares.
Quite a few components may trigger this, however the rising reputation of the F-150 Lightning may very well be a key issue. The bottom mannequin of Ford’s EV truck providing is just not solely a lot cheaper than the R1T, it qualifies for the brand new U.S. federal EV tax credit score.
Whereas maybe not stopping Rivian from experiencing additional progress, it might imply future outcomes fall wanting expectations. A clearer image on this subject will emerge, when the corporate releases its quarterly outcomes and steerage updates on Feb. 28.
Until the likelihood of leaving Ford within the mud begins to actually climb, RIVN inventory might not be your greatest truck electrification wager.
On the date of publication, Thomas Niel didn’t maintain (both straight or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Tips.
