Should You Buy Rivian Stock While It Is Still Below $15?

Few companies have survived the boom and bust of the electric vehicle sector in the last five years. Rivian Automotive (NASDAQ: RIVN) is one that is still kicking. Along with Tesla, it is one of the only pure-play electric vehicle (EV) companies left producing cars for customers as competition intensifies and industry growth subsides.

The company is still in the very early stages, but has big plans for its product pipeline and investments in the coming years. As of this writing, the stock trades below $15, which is down over 90% from all-time highs set back at its initial public offering. At such a discounted price, is now the time to invest in EV disrupter Rivian Automotive? Let's dig into its Q1 earnings and investigate further.

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Lowered deliveries guidance

With demand for EVs slowing to a crawl in 2025, Rivian's deliveries to customers have hit a wall. Its R1 truck costs $70,000-$100,000 for individuals to purchase, making it too expensive for most shoppers in the United States. Deliveries were just 8,640 last quarter, which is a fraction of the deliveries for industry leaders such as Tesla. This figure is moving in the wrong direction, with deliveries of over 13,000 in the first quarter a year ago.

However, Rivian is making progress to improve its unit economics and free-cash burn. Its gross margin hit a positive 17% in Q1, a record for the company. This came because of increasing revenue from software and services to $318 million compared to $88 million a year ago, along with payments from its joint venture with Volkswagen. Free cash flow over the last 12 months was negative $1.8 billion, an improvement from a few years ago.

With $7 billion in cash on the balance sheet and billions of dollars in promised funding from partners like Volkswagen along with the United States government, Rivian Automotive has plenty of years left to try to get to positive free cash flow. In order to do so, it will need to start growing its deliveries again to get to scale. How does it plan to do that? With a cheaper EV model.

A person charging an electric vehicle. Image source: Getty Images.

Upcoming R2 vehicle

The R2 is an SUV that Rivian is planning to release in 2026, with factory production getting built right now. It will cost around $45,000-$50,000, significantly decreasing the price point compared to the R1. This should open up the market for more people in the United States to try a Rivian vehicle.

Even though Rivian is a niche player in the space, it already has the best-selling premium SUV costing over $70,000 in California, one of the largest markets for EVs. The brand is strong and customers are happy with its product quality. If it can get to scale, reduce prices, and still keep this premium brand for customers, Rivian could see an acceleration in demand for its vehicles in 2026 and beyond. It will need to do so in order to reach positive cash flow.

RIVN Free Cash Flow data by YCharts

Should you buy Rivian stock?

Rivian is generating exactly $5 billion in annual revenue right now. If it can scale up production with the cheaper R2 and get deliveries moving in the right direction, there is plenty of opportunity to grow this revenue figure to $10 billion, $20 billion, and possibly even higher throughout the rest of the decade. There are over a million EVs sold in the United States every year, a number that should grow over the long term.

Having $20 billion in revenue with increasing gross margins could help Rivian turn around its financials. At a market capitalization of $16 billion right now, even just $1 billion in positive free-cash-flow generation at some point in the near future could help turn the corner for Rivian stock.

The problem is, the company has a lot of work ahead to make this happen. It has not shown yet that it can get deliveries moving in the right direction and is making a huge bet on the R2 product. Competition is coming from legacy automotive players that keep gaining share in the United States. It will need to grow deliveries by a significant amount in order to reach large enough scale to flip to positive free cash flow. Gross margins in the automotive business are slim, and you need to get enough unit volumes in order to cover your overhead costs.

When taking all of this into consideration, it is hard to argue why someone should own Rivian stock right now. There is a lot of potential with this brand, but it has not proven it can generate positive free cash flow or has a clear path to growing deliveries. For now, stay away from Rivian stock even at its cheap-looking price today.

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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.