Why Rivian Stock Is Crashing Again Today

What happened

When the markets opened this morning, it appeared Rivian Automotive (RIVN -2.58%) stock was headed for a bumper day. The electric vehicle (EV) stock, after all, jumped as much as 9.2% early Tuesday. As of noon ET, though, shares in Rivian were trading down 2.3%.

So what’s behind this roller-coaster ride today? A lot, you could say.

So what

Rivian stock plunged yesterday after the EV maker called off a potential deal with German luxury automaker Mercedes-Benz to make large commercial vans in Europe barely three months after signing a non-binding agreement. Rivian intends to prioritize deliveries of its existing orders on both the consumer (R1T pickup truck and R1S SUV) and commercial (electric delivery vans) sides.

It sounds like a savvy move, and analysts have been weighing it since yesterday. Morgan Stanley analyst Adam Jonas, for instance, reiterated an overweight rating on the EV stock today with a price target of $55 a share. That’s a more than 100% upside from Rivian’s stock price as of the time of this writing.

Jonas believes Rivian’s move to pause its deal with Mercedes-Benz demonstrates capital discipline and could not only help Rivian conserve cash for existing projects but also help it avoid raising funds amid the current uncertain macroeconomic environment.

That makes sense, and as investors tried to see the bigger picture as well, they cheered Rivian’s move and bid the stock higher today alongside the broader market. Major stock market indexes surged Tuesday morning after the latest inflation data for November came in below expectations.

The stock markets, however, quickly gave up most of their gains, and Rivian stock reversed course as well. But there’s another big reason beyond just the stock market volatility that Rivian stock slipped so quickly into the negative territory today. Its archrival, Ford Motor Company.

Now what

Ford’s all-electric F-150 Lightning pickup truck was crowned the MotorTrend 2023 truck of the year today. Among other things, the magazine applauded Ford’s idea to give the F-150 Lightning a look similar to its traditional gasoline counterpart, making its long-term brand-loyal customers more receptive to making a switch to an electric truck.

In another important update today, CNBC reported Ford added a third production shift at its Michigan plant to increase production of the F-150 Lightning.

None of this bodes well for Rivian, which is struggling with supply chain and production hiccups and will barely produce 25,000 EVs this year at a time when Ford is aggressively, and smartly, upping its EV game.