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Why Rivian Stock Dropped Today

What happened

Rivian Automotive (RIVN -1.18%) has garnered investor interest since its initial public offering in late 2021. Its first full year of production was somewhat disappointing, with production volume at less than half its current 50,000 unit annual capacity. But investors just began to push Rivian stock off its recent all-time low with hopes for a 2023 recovery. Shares continued to rise early today, but reversed course with a drop of as much as almost 3% before settling lower by nearly 1% as of 2 p.m. ET. 

So what

The drop on Wednesday comes after the release of a study on brand value shows just how far electric vehicle (EV) leader Tesla has risen. That’s bad news for Rivian as Tesla prepares to begin production of its Cybertruck that will be Tesla’s first direct competition for Rivian. Barron’s reported on the study of brand value today, and it shows a big jump for Tesla as the top automotive brand. If that trend continues, it could impact Rivian’s plans for the growth of its own electric pickup truck offering.

two Rivian electric trucks parked side by side.

Image source: Rivian Automotive.

Now what

With plans for a $5 billion investment in a second manufacturing facility in Georgia, Rivian has committed to growing it sales volume over the next several years. And Rivian has already cut back on other investment plans as it has struggled to ramp up production in the face of supply chain and cost headwinds. 

The 2023 brand market value study by consulting firm Brand Finance showed Tesla jumped 28 spots to become the No. 9 overall global brand and top automotive brand. That correlates to a brand value of $66 billion, according to the study. That’s more than 4 times the $15.4 billion market capitalization of Rivian.

Brand value can lead to growing recognition and sales. With Tesla’s Cybertruck due to begin production this year, that could mean stronger competition for Rivian’s R1T electric pickup trucks. If sales or Rivian’s order backlog decrease, that will likely drive investors to sell shares, too. 

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