Why Rivian Stock Dropped Today

Key Points

• In 2019, Rivian inked a deal to sell Amazon 100,000 electric vans by 2030.

• By 2024, it had already delivered 20,000.

• Now Amazon may want to buy the rest of its vans elsewhere.

• 10 stocks we like better than Rivian Automotive ›

Shares of Rivian Automotive (NASDAQ: RIVN), the electric trucks and vans company, slid in afternoon trading after Bloomberg reported that Amazon (NASDAQ: AMZN) is evaluating electric vans from General Motors (NYSE: GM) as an alternative to Rivian's.

As of 2:40 p.m. ET, Rivian stock is down 3.1%.

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Image source: Rivian Automotive.

Amazon's grand plan

In 2019, Amazon made headlines when it asked Rivian to supply it with 100,000 electric delivery vans through 2030. Five years later, half these vans were already on the road. But as Rivian's financial problems mount, Amazon may be seeking an off ramp.

In comments to Bloomberg today, Amazon restated its 100,000-electric van objective -- with a twist: "We're committed to having 100,000 electric delivery vehicles on the road by 2030, and we regularly test various vehicle options -- including a small number of Chevrolet BrightDrops in our fleet."

Notice the change: "100,000 electric delivery vehicles" period -- not "100,000 Rivians."

Bloomberg notes Amazon only has about a dozen GM vans in its fleet at present, but these are running alongside alternative electronic models from Ford (NYSE: F), Stellantis (NYSE: STLA), and Mercedes -- in addition to Rivian.

Is it time to sell Rivian stock?

Amazon wants 100,000 electric vans on the road by 2030, and if Rivian can't build them all (or Amazon decides it doesn't want just Rivians) then other manufacturers will happily thank Amazon for its business. Granted, all's not lost. Rivian might end up delivering 100,000 e-vans to Amazon -- and Amazon might supplement those with even more e-vans from other manufacturers.

What's more important to me as an investor is the fact that even with Amazon's business, Rivian lost $4.7 billion last year. And even with Amazon's business, Rivian's expected to keep losing money all the way into 2031.

That sounds more like a sell than a buy to me.

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Rich Smith has positions in Stellantis. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.