Rivian Automotive (RIVN) continues to endure a bumpy road to success in the electric vehicle (EV) space, battling production challenges, shifting guidance, and growing investor scrutiny. That said, the most recent quarter, reported in early May, did show some positive signs, particularly with margin improvements thanks to a solid strategy focused on cutting costs. The hope is that the recent delivery guidance cut means Rivian is taking a step back now, to take two steps forward later.
It’s still uncertain if this will play out as hoped. Rivian doesn’t have a large cash buffer as it once did, and the investment thesis still carries more risk than reward, in my humble opinion. As a result, I’m taking a neutral stance on Rivian Automotive with a Hold rating, for the time being.
Rivian Stumbles as Scaling Challenges Mount
As a key part of Rivian’s investment thesis, the company aims for long-term relevance and stability by becoming a major player in the global electric vehicle (EV) market, especially in pickups, SUVs, and commercial fleets. Lately, however, Rivian has been hitting some serious headwinds, mostly tied to its struggles in scaling production.
Looking closer, Rivian recently reported production of 14,611 vehicles and 8,640 deliveries for the quarter ending in March. While the gap between production and deliveries might raise eyebrows (hinting at either demand issues or logistical hiccups), both numbers came in above the company’s own guidance of 14,000 and 8,000, respectively. Still, deliveries, which are often viewed as a proxy for sales, were down year-over-year from 13,588 in the same quarter of 2024.
Rivian Automotive (RIVN)
The broader slowdown isn’t just a Rivian issue—Tesla (TSLA) also posted year-over-year declines—but Rivian’s situation is more urgent. It’s still burning cash and hasn’t reached profitability. Just over a month ago, management reaffirmed its 2025 guidance of 46,000 to 51,000 vehicle deliveries. But things took a turn: during its Q1 earnings release last week, Rivian cut that guidance to 40,000–46,000 for the full year.
If the earlier range already suggested stagnation, this revised forecast now points to a step backward. For context, Rivian delivered over 51,500 vehicles in 2024 and 50,122 in 2023. That kind of drop is a red flag for a company that is still heavily dependent on external funding and far from self-sustaining. It also clashes directly with the company’s original investment thesis of rapid growth and scaling.
The Silver Lining Behind the Deliveries Guidance Cut
Despite what looked like bad news on the delivery front, Rivian stock surged more than 15% after the company announced its earnings.
Rivian Automotive (RIVN) price history over the past 5 days
First, both the top and bottom lines beat analyst expectations by a wide margin. Revenue grew 3% year-over-year, which is a big deal considering analysts were expecting a 15% decline. The key driver was a significant upside surprise in the average selling price (ASP), which is essentially automotive revenue divided by the number of deliveries. ASP in the quarter came in at $107,000, a massive jump from $82,000 a year ago. That suggests customers are leaning toward higher-end models.
Plus, software and services revenue tripled versus the same period last year—another strong signal that Rivian is diversifying its income sources.
The second major positive was gross margin improvement—a weak spot that’s long weighed on Rivian’s bullish case. In Q1, gross margins hit 17%, up 7 percentage points from last quarter, and a huge improvement over -44% in the same quarter last year. This came alongside a $22,000 reduction in vehicle cost year-over-year, showing real progress in cost control and manufacturing efficiency.
Rivian Automotive (RIVN) revenue, earnings and profit margin history
Last but not least, there is some added context behind the decline in deliveries. The year-over-year delivery dip might look worrying on the surface, but it’s not necessarily a red flag. Instead, it reflects a transitional phase as Rivian gears up for the launch of its iconic R2 in 2026. The new model is expected to start around $45,000, positioning it as Rivian’s first real mass-market EV.
Rivian R2 electric vehicle being demonstrated at Rivian Spaces in New York (2024)
That said, when R2 was initially announced, it was eligible for the $7,500 U.S. EV tax credit, which may no longer apply by the time it ships—a potential wildcard. However, even with that uncertainty, R2 is shaping up to be a critical milestone for Rivian. With ongoing cost reductions, margin gains, and preparations at its Illinois manufacturing plant, investors are starting to believe that R2 could be the turning point that leads to longer-term margin expansion and grand scale.
Rivian Automotive (RIVN) balance sheet showing assets, liabilities and debt-to-assets
While liquidity isn’t at risk for now, Rivian’s heavy reliance on future funding remains a big concern for shareholders, especially through equity issuance.
The good news is that recent margin improvements signal a move away from constant capital dilution, which has helped drive the stock higher. Additionally, the Volkswagen partnership provides a financial lifeline, though it remains a temporary buffer. The $5.8 billion joint venture, Rivian and Volkswagen Group Technologies, gives both companies equal stakes, offering Rivian some breathing room.
On the flip side, there are still worries about Rivian’s ambitious plans to sell hundreds of thousands of R2 models soon, especially with the help of its new factory in Atlanta, Georgia. In fact, this new facility could be at risk due to the Department of Energy’s Loan Programs Office, which is considering revoking the $6.6 billion loan that was intended to help Rivian build the plant. If this transpires, we could see a protracted legal battle, and the halt in funding could force Rivian to seek additional capital to keep its plans chugging along.
Is Rivian Automotive a Buy, Sell, or Hold?
Currently, Wall Street isn’t showing much love for Rivian stock. Among the 25 analysts covering the stock, seven are bullish, 14 are neutral, and four are bearish. RIVN’s average stock price target is $13.96, which implies a downside potential of ~6% from the current share price.
RIVN Caught Between Improved Margins and Cash Burn
At first glance, the delivery guidance cut might seem like a huge red flag for a company still in the scaling and growth phase. However, improved margins have offered some relief, showing that profitability, once R2 sales ramp up, could be closer than expected.
That said, while the management team deserves credit for adapting to challenging market conditions, scaling back expansion plans, and securing funding, Rivian still burns too much cash, though not as much as before.
While the Volkswagen deal has provided some financial stability, the company’s trend still points to future dilution, especially with the path to efficient profitability still unclear as Rivian scales its business. I’m still not comfortable holding the stock at this stage, with so much left to prove before it becomes a consistently profitable business. For the time being, I think it’s best to keep Rivian on the sidelines and not get too excited about recent progress.
