3 things you need to know before buying Rivian stock in 2024

In a crowded field with electric vehicle (EV) companies, rivian cars (RIVN -1.65%) I’m making a name for myself. Our lineup of trucks and SUVs offers a variety of options for outdoor enthusiasts looking to make the switch from gasoline to electric.

By 2030, two out of three cars sold globally are expected to be electric. Naturally, Rivian could be a great way for investors to ride the wave of EV adoption. But there are three things you need to know before buying Rivian stock.

Image source: Getty Images.

1. Profits are avoided, but production is increasing

In Rivian’s short history, 2023 was arguably its best year. More than 57,000 vehicles have been produced and more than 50,000 have been delivered. These figures are a significant increase compared to 2022, increasing by 135% and 147%, respectively. Considering the company only manufactured 1,000 cars in the fourth quarter of 2021, Rivian has come a long way.

But despite this progress, Rivian continues to suffer losses. According to its most recent third quarter 2023 earnings report, it reported a total loss of $1.3 billion. That means you lose an average of more than $30,000 every time you sell a car.

Financial data for the fourth quarter has not yet been released, but investors should not expect much change due to the earnings shortfall reported in the third quarter. At best, margins may shrink, but with costs at an all-time high of $2.75 billion and continuing to grow, it’s highly unlikely that the company will ever achieve profitability.

RIVN Net Income (Quarterly) data from YCharts

2. Planned construction of new factory

Currently, Rivian operates from only one plant in Normal, Illinois. But that is expected to change in the coming years. Rivian, scheduled to begin construction this year, will break ground on a $5 billion state-of-the-art facility 40 miles outside Atlanta, Georgia.

Construction will take place in two phases. The first phase is scheduled to be completed around 2026, and total production is expected to increase to up to 200,000 units. By 2030, when all construction is complete and the plant is operating at full capacity, management expects to increase production to more than 400,000 units per year.

Operating at a loss and undertaking a project of this scale poses some unique risks. Construction projects of this scale, notorious for unexpected costs and delays, can quickly take a toll on Rivian’s finances if things don’t go smoothly. There is hope that the incentive-laden strategic funding agreement signed with the state of Georgia will offset this possibility, but only time will tell.

3. New commercial van agreement with AT&T

Although not as widely known as SUVs and trucks, Rivian also produces commercial vans. And this is arguably the only area where Rivian is seeing significant success.

In 2019, Rivian announced exclusive deals with: Amazon We decided to produce 100,000 vehicles by 2030. Due to the fact that it owns a stake in Rivian, the deal meant that Amazon was the only company purchasing the electric vans. But things have changed recently, with Rivian starting a new business as the exclusivity agreement expired.

AT&T It recently announced an agreement with Rivian to launch a pilot program and retrofit commercial vehicles to electric, making it the second company to partner with Rivian. Details of the deal have not yet been revealed, but this is undoubtedly a win for Rivian and could open the door to new business in the future.