Analysts have informed investors that their downgrade of Rivian is based on three factors, with the first being that the company has an excellent product, but their technology is not sufficient to avoid increased pressure on demand due to the overall slowdown in the electric vehicle sector. Secondly, the bank believes that the weakening demand is associated with price risk and slower volume growth. As a result, there is a “longer road to profitability.”
Instead of direct quotes from the original article, it can be noted that analysts explain that signs of weakened demand are observed regarding the EDV and R1T models, which were launched last year, but the hope was that demand would remain strong for the R1S model, supported by solid orders. Unfortunately, this is no longer the case – recent data on the sales of R1S backup units and the acceleration of the Standard version’s launch (likely reducing margins) indicate weakening demand.
Barclays also believes that Rivian will still need capital for further development. The consequences of weak demand are significant. Not only does it pose a challenge to volume prospects but also represents potential price risk, and both issues further indicate that Rivian is unlikely to achieve its gross profitability goal by 2024. “Furthermore, considering the need for further capital raising as it prepares to introduce the high-production R2 model in 2026, we see future tension,” concludes the bank.
Therefore, although Rivian has a great product and is an important player in the electric vehicle market, the current demand challenges seem to disrupt the company’s prospects. The need for additional capital and concerns about achieving profitability indicate the difficulties that Rivian must overcome to maintain its stellar position in the market.
FAQ: Rivian – Challenges Related to Electric Vehicle Demand
The source of the article is from the blog krama.net