Ford’s Impact on Rivian Amidst EV Slowdown Ford’s Impact on Rivian Amidst EV Slowdown

By: Alex Freidmen

As electric vehicles (EVs) rise, the U.S. is on a slower trajectory than anticipated. Reports highlight a slowdown in EV sales growth and dropping EV prices. Despite this, Rivian (NASDAQ: RIVN) has fared relatively well, though signs of weakness are pervasive elsewhere.

For example, Ford Motor Company (NYSE: F) has recently made a substantial move to scale back the production of its key EV model, the F-150 Lightning. Should this development raise concerns among Rivian investors about the demand for its R1T truck?

Ford’s Labor Cutbacks

Let’s delve into Ford’s significant decision. The Blue Oval personnel unveiled plans to slash two-thirds of the jobs at its Michigan plant responsible for manufacturing the F-150 Lightning — a pivotal aspect of Ford’s EV expansion — as production slows.

More specifically, Ford is urging 1,400 employees at the plant to retire or relocate to another facility as it reduces the F-150 Lightning to just one daily production shift, down from its previous two-shift, three-crew operation.

This shift aligns with Ford’s objective to halve F-150 Lightning production in 2024 due to “changing market demand,” from 3,200 trucks a week to 1,600. In the broader context, Ford is deferring approximately $12 billion in EV investments, including postponing the opening of one of two planned battery plants in Kentucky.

Rivian investors are left pondering whether this implies a forthcoming softening in demand for the R1T.

Possibly Preceding Decline

The reality may be that Rivian is already confronting a diminishing demand for its R1T. In the third quarter, management announced that production of the R1S had surpassed that of the R1T for the first time.

Initially perceived as positive news, especially since the R1S is currently more profitable than the truck, this shift might indicate Rivian’s production adaptability to align with dwindling demand for the truck while bolstering production for the more lucrative R1S.

The unquantifiable factor is the nebulous state of Rivian’s order backlog. The company ceased updating its backlog several quarters ago, and Rivian’s apparent immunity to a demand deceleration may be due to its formerly robust order backlog.

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The Unpleasant Reality

Rivian’s production was sturdy in the fourth quarter, yet deliveries experienced a slowdown.

Graphic showing a delivery slowdown in Q4.

Image source: Author. Data source: Rivian production and delivery releases.

Further scrutiny reveals that the deceleration was largely linked to Amazon not accepting deliveries of its electric van during the holiday season.

Nonetheless, Rivian is not impervious to the ebbing tide of EV demand, even if it has not materialized yet. In the broader scheme, this is a minor occurrence to react to. Ultimately, substantial EV growth remains feasible, even if progress is slightly slower than anticipated.

EV stocks are still a long-term play, despite numerous fluctuations as companies navigate price and demand oscillations. Provided one can endure these oscillations, EV stocks hold a promising future, contingent on their ability to sustain operations until demand regains momentum.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Miller holds positions in Ford Motor Company. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.