A year ago, the electric vehicle startup Rivian was celebrated as an industry “darling” and the next big competitor to Tesla. The Amazon-backed company enjoyed the world’s biggest initial public offering of 2021, with a valuation of over $100 billion when it made its NASDAQ debut in November of that year.
All that glowing press and acclaim is looking pretty far in the rearview mirror these days. In October 2022, Rivian recalled nearly every one of its vehicles, noting that a loose bolt in the front suspension could cause drivers to lose control of their vehicles. The problem affects a reported 12,212 electric pickups, vans, and SUVs, according to filings with the National Highway Traffic Safety Administration. The company had only produced 14,317 such vehicles over the course of the year.
In messages proactively sent to customers, Rivian noted that it was not aware of any injuries associated with the loose bolts. Anyone noticing “unusual noises or vibration” coming from the front of their vehicle was urged to contact Rivian immediately. In addition, the company announced plans to open pop-up service centers in areas populated with a high density of Rivian owners. Customers also learned of an option to schedule mobile service appointment. Any repairs associated with the recall would be completely free to the consumers.
But even with all these assurances and efforts to accommodate customers, Rivian’s stock fell by 7.3 percent immediately after the recall announcement. Or rather, it fell by another 7.3 percent, after dropping by 75 percent in the first half of 2022 in response to several other factors.
A big factor is, of course, Amazon. About three years ago, it announced its plans to buy 100,000 custom-made delivery vans from Rivian, but midway through 2022, only a few hundred of the vehicles have been delivered, and “questions remain” about how quickly the others will appear on roads. Amazon, in turn, has diversified its EV investment, putting money into other manufacturers, which calls Rivian’s business prospects further into question.
Rivian’s production problems are one problem. Another is increasing competition from other electric vehicle manufacturers, including established car companies that keep expanding their already vast product platforms to include EVs. Ford, for example, began selling an electric version of its immensely popular F-150 pickup this past spring, to great success and long waiting lists of willing buyers. General Motors is planning to sell an EV pickup truck beginning in 2023.
It also probably doesn’t help that in May 2022, Rivian recalled 500 of its EV pickup trucks due to faulty airbags, or that the company attempted to raise prices, then quickly rolled back the markups after a nasty backlash.
So where do all these developments leave Rivian? Well, the road is long, with many turns. And just over a week after issuing its recall announcement, Rivian’s stock, along with other automotive companies, had ticked back up a hair. Maybe it can come roaring back, with all its bolts tightened and its prospects renewed.
- What can Rivian do to recover its business?
- How can EV startups compete with established brands?
- Did Rivian handle the recall well?
Source: Peter Valdes-Dapena, “Rivian Recalling 12,000 Vehicles for Loose Bolt,” CNN, October 8, 2022; Tom Moloughney, “Our Rivian R1T Had Its Recall Service; What’s It All About?” InsideEVs, October 17, 2022; “Rivian Shares Skid after EV Maker Recalls Nearly All Vehicles,” Reuters, October 10, 2022; David Shepardson, “GM Startup Cruise Recalls and Revises Self-Driving Software after Crash,” US News, September 1, 2022; Patrick Lucas Austin, “Everything to Know about Rivian, the Next Electric Vehicle Darling,” Time, November 9, 2021; Noor Zainab Hussain and Ben Klayman, “Rivian Valued at over $100 bln in Debut, after World’s Biggest IPO of 2021,” Reuters, November 10, 2021; “Rivian Recalls Nearly Every Vehicle Sold,” Automotive Fleet, October 10, 2022; Rob Lenihan, “Tesla Rival Rivian Delivers Bad News,” TheStreet, June 14, 2022; Neha Chamaria, “Why Rivian Stock Plunged 75% in the First Half of 2022,” The Motley Fool, July 12, 2022; Jack Ewing and Karen Weise, “Amazon Wants 100,000 Electric Vans. Can Rivian Deliver?” The New York Times, July 21, 2022; Rich Smith, “Why Ford, Rivian, and Lucid Stocks Raced Ahead Today,” The Motley Fool, October 18, 2022