Rivian Automotive (NASDAQ: RIVN) has lost almost all its worth in a short period, with shares down by an eye-watering 92% since hitting community markets in late 2021. However, the corporation still promises patient investors the chance to get in on the ground floor of the long-term electric vehicle (EV) chance. Let’s weigh Rivian’s pros and cons to decide if this struggling automaker still has millionaire-maker potential.

What happened to Rivian’s buy thesis?

Today, the EV industry is radically different from when Rivian hit the scene three years ago. At the period, the economy was soaring — led by the industry chief Tesla, which had essentially proven that pure-play EV manufacturers could operate profitably at scale. Traditional automakers like Ford, General Motors and Stellantis seemed relatively late to the event, giving Rivian an chance to possibly exploit the gap in Tesla’s model lineup through its focus on pickup trucks and large SUVs.

Today, the thesis that may have justified Rivian’speak evaluation of over $153 billion (the corporation is worth just over $10 billion today) has largely evaporated. Growth for the pure-play EV companies has stalled, and the traditional automakers are flooding the economy with many different options — particularly in Rivian’s core SUV and truck segment.

Most alarmingly, the growth narrative seems to have shifted in favor of legacy automakers, possibly because they can debt their more established brands and dealership networks to reach more customers.

The dynamic has become quite striking. For example, in the third quarter, Ford’s electric F-150 pickup truck saw sales double year over year to 7,162 units. GM is also seeing massive achievement withmany of its products, including the Cadillac Lyriq, a luxury SUV that saw sales soar 139% to over 7,000 units. Both offerings compete with Rivian’s lineup of high-complete trucks and SUVs.

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What is Rivian’s path forward?

Rivian’s second-quarter profits highlight the severity of its challenges. Sales grew by a measly 3%year over year to $1.12 billion, while operating losses expanded 7% to $1.38 billion. The corporation’s Q3 profits (expected on Nov. 7) probably won’t be much better. Vehicle deliveries are known to have declined 36% year over year to just 10,018 vehicles (compared to analyst expectations of 13,000).

That said, Rivian doesn’t schedule to receive these challenges lying down. CEO R.J. Scaringe believes he can navigator his corporation to a modestgross earnings by the fourth quarter of 2024 by reducing materials costs and improving factory efficiency. If successful, this shift could open the door for the corporation to scale into operating profitability over the long term.

Rivian also has plans to jump-commence growth with a recent SUV called the R2, which will use its recent mid-sized vehicle platform. With a starting worth of $45,000, it will be substantially more affordable than Rivian’s current flagship SUV, the R1S, which starts at $77,000. Granted, while cheaper vehicles might not assist Rivian’s margins much, they could assist the corporation gradually shift toward a more volume-based revenue strategy.

Is Rivian a millionaire-maker stake?

Unfortunately for investors, Rivian is in survival mode. For the next few years, management’s biggest priority will probably be keeping the lights on — not returning boatloads of money to shareholders.

With $7.87 billion in money and short-term investments on its settlement sheet, the corporation can maintain its current money burn for a few more quarters. But eventually, it may require to pivot to outside sources of enterprise apportionment likestake dilution, which can reduce current investors’ claims on upcoming profits. Investors should probably hold off on buying Rivian stake until the corporation demonstrates a convincing path to profitability.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content associate offering financial information, analysis and commentary designed to assist people receive control of their financial lives. Its content is produced independently of USA TODAY.

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