To The Moon

$Rivian Automotive, Inc.(RIVN)$ is roaring back into the spotlight after a turbulent year. Volkswagen's recent announcement of a $1 billion (with the potential for an additional $4 billion) investment has sent their stock price soaring 30%. While this is great news for Rivian in the short term, as someone who follows the EV market closely, I remain cautiously optimistic about their long-term prospects.

There's no denying that Volkswagen's investment is a significant vote of confidence in Rivian. This new partnership could provide much-needed capital to fuel their growth and potentially lead to technological collaborations that benefit both companies. The additional funds could also help them weather the current storm of slower-than-expected EV adoption and rising production costs.

Volkswagen Group CEO Oliver Blume and Founder & CEO of Rivian RJ Scaringe

Rivian hasn't shied away from making tough decisions to improve their cash flow situation. They've implemented cost-cutting measures like staff reductions, factory streamlining, and even pausing construction of a new plant. These moves are necessary in the short term, but they also highlight the inherent challenges of being a new entrant in the capital-intensive car manufacturing industry.

As someone who understands the car industry, I'm well aware of the brutal realities it presents. It's a mature, slow-growth sector with razor-thin margins and fierce competition. Even established automakers struggle to consistently turn a profit. For Rivian, this translates to an uphill battle, especially considering their current financial losses.

RIVN losing $1.5B/quarter

While I admire Rivian's innovative vehicles and their potential to create jobs, I'm hesitant to invest in them at this point. The car manufacturing industry is riddled with risk, and Rivian, as a newcomer, faces even greater challenges. Their financial health is a major concern, and even with the Volkswagen deal, the path to profitability seems long and uncertain.

RIVN rises sharply post market

Volkswagen's investment is undoubtedly a positive development for Rivian. However, the harsh realities of the car manufacturing industry shouldn't be ignored. While the short-term outlook appears brighter, Rivian's long-term success hinges on their ability to navigate the cutthroat world of automakers and achieve sustainable profitability. Only time will tell if they can defy the odds and become a major player in the EV space. For now, I'll be watching from the sidelines with cautious optimism.

Disclaimer: This is not financial advice. Do your own research before making any investment decisions.