Can Rivian Realistically Return to Growth in 2025?

When many investors turned to find the next Tesla, which is easier said than done, some turned to the young electric vehicle (EV) maker Rivian Automotive (NASDAQ: RIVN). The company had proven capable of manufacturing high-quality vehicles, impressed critics and consumers alike, and inked a massive deal for delivery vans (EDVs) with Amazon -- life was good. Exiting 2023 you could argue Rivian had more momentum than any EV maker out there, but that has since dissipated and left investors wondering if the automaker can return to growth in 2025.

The harsh truth

The harsh truth is that the automotive industry is extremely competitive, and it takes an automaker with a full lineup to be truly successful. That hampers Rivian's ability to post extreme growth as the company only offers the R1T, R1S, and EDVs. But what's worse is that Rivian's only offerings are aging, and demand for them is waning -- it's been a noticeable trend.

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Data source: Rivian. Chart by author.

So the question facing investors is: Can the automaker return to growth in 2025 before the highly anticipated R2 launch in 2026?

Driving demand

Investors in the know understand that Rivian has a small consumer base, but that it's a highly passionate base as well. There are Rivian adventure groups all across social media with consumers planning trips among other things. Rivian is attempting to tap into this passion with its first major marketing push, which the company could certainly use to help stoke demand for its vehicles.

"This campaign is about celebrating the people who define what Rivian truly is," said Vice President of Marketing Denise Cherry on Rivian's blog. "Our vehicles are made to empower exploration and adventure, but it's the stories our owners create that give them real soul. For our first 360 brand campaign, we wanted to make sure our owners were the spotlight."

Rivian has largely relied on word of mouth and organic growth to spread its brand awareness, but with demand waning over the past year, this marks the right time for the company to try to drive interest and demand for its R1 vehicles.

Rivian R1T and R1S. Image source: Rivian.

The next step

Then it'll be time for the R1 vehicles to hand the baton to the R2 in 2026, which starts at roughly $45,000, or about half the price of Rivian's R1 vehicles. With 155,000 production units annually the R2 will be able to nearly double production of the R1S and R1T. If demand is there, expect deliveries to take off and accelerate through 2026.

Investors also can't forget Rivian's big-time move to swap initial production of the R2 from its Georgia plant, which is under construction, to its Illinois plant thanks to an expansion of the factory. It's a move that not only fills production capacity at its original plant, but that saved the company roughly $2.25 billion.

What it all means

The harsh truth is that Rivian is unlikely to return to growth in 2025, unless its marketing campaign works miracles to drive immense demand. The automaker is essentially all-in on its R2, which boasts a much lower-cost bill of materials and improved tech, and will rely on the R2, R3, and R3X to take the company into its next growth stage. The near-term environment for EVs is pessimistic, especially with the current administration pulling support for the EV industry, and Rivian lacks any visible catalysts for the stock in 2025.

But investors would be wise to take the long-term approach with Rivian. The company just achieved two consecutive quarters of gross profit and if it executes the production ramp-up of the R2 in 2026, it will be a much better year for investors.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.