Rivian skids as legacy automakers rev up EV targets

Jan 6 (Reuters) – Rivian Automotive’s stock(RIVN.O) briefly tumbled below its IPO price on Thursday in a sell-off along with other electric vehicle makers as the race for market share intensifies and legacy companies ramp up their own production.

Rivian fell to as low as $75.13, below its November initial public offeringprice of $78 for the first time. The stock pared losses and was last down almost 6% at $84.72.

Competing EV makers Tesla Inc (TSLA.O), Lordstown Motor (RIDE.O) and Fisker (FSR.N) each dipped around 2%, with high-flying growth stocks under pressure from expectations the U.S. Federal Reserve could raise interest sooner than previously thought.

“Rivian investors need to keep near-term expectations managed,” Morgan Stanley analyst Adam Jonas cautioned in a note to clients. “Tesla has shown us the extremely difficult path to ramping EV manufacturing. You can’t have the reward without the pain.”

Jonas rates Rivian’s stock “overweight.”

Rivian’s stock has slumped about 17% since the start of Wednesday, when Amazon , one of Rivian’s biggest investors, said it teamed up with carmaker Stellantis NV (STLA.MI).

The two companies will develop cars and trucks with Amazon software and deploy electric vans made by Stellantis on Amazon’s delivery network. read more

U.S. shares of Stellantis rose 2.3% on Thursday and are now up 11% in 2022.

Rivian signed a contract in 2019 to build 100,000 electric delivery vans for Amazon by 2025. But now the electric commercial vehicle business, a vital market for Rivian, is becoming more crowded.

The fall in Rivian’s shares suggests investors assumed Amazon would primarily rely on Rivian vans for its EV fleet, and that investors believe the latest announcement now makes that less likely, Deutsche Bank analyst Emmanuel Rosner said.

General Motors’ (GM.N) electric commercial vehicle business, BrightDrop, has signed deals with Walmart Inc (WMT.N) and FedEx Corp (FDX.N), while Ford Motor(F.N) is expected to deliver its E-Transit cargo van to customers this year.

Meanwhile, General Motors (GM.N)on Tuesday unveiled its electric Chevrolet Silverado pickup and Ford is ramping up production of F-150 Lightning. Both pickups would compete with Rivian’s R1T at a time it is struggling to stick to delivery dates due to supply chip constraints.

Ford’s stock has soared 17% year to date and is now at its highest since 2001. GM has rallied 7% in 2022.

“(Rivian) investors are probably getting a little spooked by the legacy industry making a comeback,” said Guidehouse Insights analyst Sam Abuelsamid.

Rivian, which lost $1.2 billion in the third quarter, is expected to deliver cars to customers this year. Production at its second plant in Georgia, in which it has invested $5 billion, is likely to begin only by 2024.

“It’s still sort of unproven in terms of investability of that as a stock versus some of the other names like Tesla, and arguably Ford,” said David Keller, chief market strategist at StockCharts.com.

Reporting by Nivedita Balu and Akash Sriram in Bengaluru, Additional reporting by Eva Mathews and Tiyashi Datta, and by Noel Randewich in Oakland, California; Editing by Ramakrishnan M., Arun Koyyur and Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles.