Rivian Rising to the Challenge

Rivian NASDAQ: RIVN was heavily hyped up EV play up due to the celebrity fund manager investors like Ray Dalio and David Einhorn as well as the investments by Amazon NASDAQ: AMZN and Ford NYSE: F. The Company is solely focused of scaling up production. The Company expects the impact of inflationary pressures to continue in the near term as their cost of materials has risen. However, this hasn’t deterred demand even with the 20% rise in prices in March 2022. Pre-orders continue demonstrating strong price elasticity. This is underscored by the 8,000 new pre-orders to backlog of 98,000 pre-orders end the of June 30, 2022. Rivian expects to reach its production target of 25,000 units in 2022 with the goal of ramping up production to its 150,000 unit capacity. U.S. electric vehicle (EV) manufacturer Fisker Inc. (NYSE: FSR) stock has been a rollercoaster hitting a high of $179.47 on Nov. 17, 2021, to a low of $19.25 on May 11, 2022. Shares are trading down (-67%) for the year.

Already in Production

Rivian is one of the very few U.S. EV makers that is already in production (way) behind leader Tesla NASDAQ: TSLA and Fisker NYSE: FSR set to go into production on Nov. 17, 2022. They delivered 4,467 vehicles and produced 4,401 vehicles across its line of R1T, R1S, and EDV 720 models in its second quarter of 2022. The Company started its validation builds for its EDV 500 model. Rivian announced it was discontinuing its lower-priced models including the R1T pickup truck and R1 SUV.

More Money, More Problems

On Aug. 11, 2022, Rivian released it Q2 2022 results for the quarter ending June 2022. The Company reported GAAP earnings-per-share (EPS) loss of (-$1.62), beating consensus analyst estimates by $0.01. Revenues rose year-over-year (YoY) from zero sales to $364 million beating $338 consensus analyst estimates. R&D expense rose to $543 million, up from $364 million a year ago. Low volumes on production lines designed for high volumes results in losses from labor and overhead costs, but that improves with rising volume. Production capacity is 150,000 units. Net losses were (-$704 million) but that’s expected until production volume ramps up. Rivian has $15.463 billion in cash, restricted cash, and cash equivalents.

Amazon Business

Rivian has been operating pilot deployments with Amazon to refine its electric delivery vans (EDVs) products. Amazon is not only an investor but a major customer for Rivian with plans to purchase 100,000 EDVs. The Company has developments a fleet management system called FleetOS, which is an end-to-end centralized system that includes vehicle distribution, service, charging, telematics, connectivity, life cycle management. Every EV delivered to Amazon will have a FleetOS subscription. The Company is also ramping up it fast charging network, the Rivian Adventure Network. They expect to deliver EDVs to 100 cities by the end of 2022.

Ramping Up Production  

Rivian has stated that its core focus is solely on ramping up production. They re-affirmed the target of 25,000 total units produced in 2022. Annual adjusted EBITDA is expected around (-$5.45 billion) but capex was lowered to $2 billion. The Company is confident in its ability to launch the R2 in Georgia in 2025 with current cash in hand. However, on Aug. 19, 2022.

Inflation Reduction Act Benefits

The Inflation Reduction Act was signed into law by President Biden on Aug. 17, 2022. In addition to the $430 million allocated to clean energy and greenhouse gas reduction, the law provides a $7,500 credit applied towards the purchases of an EV provided it meets certain requirements in regard to pricing, manufacturing and component parts. Rivian CEO RJ Scaringe commented on how it will impact its business, “The commercial segment, in particular, will benefit from the strong incentives for fleet operators to electrify and our RCV platform has been developed for a wide range of applications. While many of our R1 configurations won’t meet the bill’s pricing requirements, our R2 product line and associated cell road map are being developed to allow our customers to capture the value of these incentives. We have plenty of work ahead of us, but I couldn’t be more excited about the work our teams are doing for the ramp of the R1 EDV vehicles as well as the products, services and technologies we have in the pipeline.”

Here’s What the Chart Says

Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the landscape for RIVN stock. The weekly rifle chart found support under the $22.44 Fibonacci (fib) level. RIVN struggled for many weeks until finally triggering the breakout the weekly market structure low (MSL) buy trigger above $30.60. The weekly 5-period moving average (MA) is starting to flatten at $35.24 followed by the rising 15-period MA support at $31.48. The weekly stochastic peaked just below the 80-band as shares peaked at $40.56. The weekly upper Bollinger Bands (BBs) sit at $41.65 and lower BBs at $21.56. The daily rifle chart has been downtrending led by the 5-period MA at $33.04 followed by the 15-period MA resistance at $35.91. The daily stochastic formed a mini inverse pup to fall through the 80-band to the oversold 10-band level. The daily 50-period MA support is rising at $32.26. The daily upper BBs sit at $41.09 and lower BBs at $30.47. Attractive pullback levels are at the $31.74 fib, $29.35 fib, $28.21 fib, $26.30 fib, $24.95 fib, and the $23.50 fib level.