EV stocks: Rivian leads the charge in pulling back on ambitious plans for 2023
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Rivian Automotive (NASDAQ:RIVN) traded lower on Monday after the company said it paused its joint venture with Mercedes-Benz Vans to focus on its consumer and existing commercial business as it tries to become cash flow positive with U.S. operations. "The pausing of this partnership reflects our process of continually evaluating our major capital projects, while taking into consideration our current and anticipated economic conditions," stated Rivian CFO Claire McDonough on the plan.
Morgan Stanley said the Rivian (RIVN) news was a fairly stark reversal of the company's messaging from just three months ago, but the firm is sticking with a bullish outlook on the EV stock.
"Despite the favorable outlook we had for this partnership, we believe this announcement demonstrates Rivian's capital discipline as it reprioritizes projects to conserve cash and avoid raising additional capital heading into an uncertain macro environment next year," updated analyst Adam Jonas.
Morgan Stanley kept an Overweight rating on Rivian and price target of $55. The firm believes Rivian (RIVN) should be able to get FY23 and the tough economic backdrop behind them before they would need more capital.
As for as the implications for the broad EV sector, Jonas and team see Rivian's (RIVN) delaying of the Mercedes eVan plan consistent with a broader trend they expect to see with more non-Tesla players of lowering, pushing-out, and potentially even cancelling/writing down portions of their electrification plans they had previously launched.
Shares of Rivian Automotive (RIVN) fell 4.16% on Monday to $26.16. Some other EV stocks that swung lower included Helbiz (HLBZ) -9.22%, Electrameccanica Vehicles (SOLO) -6.56%, REE Automotive (REE) -5.20%, Arcimoto (FUV) -4.50%, Ayro (AYRO) -3.46%, and Lucid Group (LCID) -3.45%.
Meanwhile, Tesla (TSLA) is down 4.49% to trade at a three-week low. Last week, reports indicated Tesla (TSLA) is cutting back on some Model Y production from Shanghai in December.