Why Rivian Stock Sank Today

Some news that came out over the weekend is hitting electric vehicle (EV) stocks like Rivian Automotive (RIVN -2.67%) hard on Tuesday — a down day for the broader market. Rivian shares plunged by as much as 5.2% to open the holiday-shortened trading week. As of 2 p.m. ET, the stock was still lower by 2.3%, while the S&P 500 was off by about 0.7%.

Rivian reports on Wednesday

During a week when it will report its fourth-quarter and full-year financial results, Rivian is enduring some bad news from the government. While the Biden administration has been highly supportive of EV development and growth, reports this weekend said it plans to take a step back from one of its more ambitious goals — at least temporarily. The timing of those plans could be of crucial importance for EV start-ups like Rivian.

As the growth rate of EV adoption in the U.S. has slowed, some  major domestic automakers have throttled back their plans to increase EV production. Last year, the Environmental Protection Agency (EPA) proposed an ambitious plan for reducing vehicle emissions. For the auto industry to meet the agency’s proposed targets would require EVs to account for 60% of new car sales in the U.S. by 2030 and up to two-thirds by 2032. EPA Administrator Michael Regan called the regulations “the strongest-ever federal pollution standards for cars and trucks.”

But reports this weekend say that the Biden administration is now considering pushing back the timeline on that plan. As automakers struggle to profitably make electric vehicles, and as demand growth has waned, Biden is reportedly considering easing emissions-reduction requirements somewhat through 2030 to give the industry and the marketplace more time to adjust.

Is Rivian stock worth buying?

Rivian itself is working to grow as quickly as possible. Its production more than doubled in 2023 to more than 57,000 units, and the company is already working to build its second factory.

Whether Rivian has plans to scale back on the pace of its spending will be revealed when it announces its fourth-quarter results and its outlook after the market closes Wednesday. 

Regardless of government-related tailwinds, Rivian boasts a unique product mix and has plenty of cash on hand to put toward growing its business. And at this point, investors who are willing to speculate on the EV maker can buy into a stock that’s down more than 30% year to date.

It’s a high-risk investment, but it may be one worth considering depending on what the company says Wednesday about the state of the business.