Investors knew that 2025 might be a slow one for Rivian Automotive (NASDAQ: RIVN). The young electric vehicle (EV) maker doesn’t have any obvious catalysts to boost demand or deliveries throughout the year, and its highly anticipated R2 model doesn’t launch until 2026. But is the company’s slow start a reason to raise a red flag, or is it just the beginning of a lackluster year most anticipated?
As Rivian investors prepared for an unspectacular year, the company still managed to top estimates, although that might not be enough to appease investors, judging by the stock’s 5% drop this past Wednesday following the first-quarter news release.
Digging into the numbers, Rivian delivered 8,640 vehicles during the first quarter. That result was far from the prior year’s 13,588 deliveries, but still ahead of analysts’ estimates calling for first-quarter deliveries of 8,200.
The problem or potential red flag is because there isn’t much of a reason, other than soft demand, causing the 36% drop in first-quarter deliveries. Rivian previously had a crunch in parts during the third quarter that held up deliveries, but management has since explained that’s no longer a constraint. But the drop in deliveries may leave an uneasy feeling for investors who have watched the company’s deliveries peak and trend lower.
There are a few developments that could be pumping the brakes on Rivian’s deliveries. Investors must consider that consumers have increasingly opted for cheaper hybrid and gasoline-powered models. Management also noted that the California fires negatively impacted demand in a key EV market.
Investors also have to remember that due to the supply chain disruption during the third quarter, Rivian’s fourth quarter had more deliveries than expected and could have pulled a little demand forward as it pressed to catch up on deliveries.
It’s also possible that consumers are growing weary of tariffs and the potential cost increases being passed along; Rivian CEO RJ Scaringe admitted the company expects higher costs due to the tariffs, as it has a supply chain footprint in both Mexico and Canada.
Rivian is currently expanding its original Illinois factory to begin production of the highly anticipated R2 next year, and that will be the boost in deliveries that investors have been looking for. The R2 is priced well under its R1 vehicles, at roughly $45,000, and should open the door to an entirely new and more price-sensitive consumer.
