Rivian's Delivery Decline Confirms Profitability Concerns, Reinforcing Sell Thesis

What happened

Rivian delivered fewer vehicles in 2025 than in 2023 or 2024, underscoring its struggle to scale production and maintain demand amid a challenging EV market. This aligns with the DeepValue report's findings of an 18% annual delivery drop and a 31% Q4 plunge, highlighting persistent execution issues. While free cash flow has turned positive recently, this improvement stems from non-recurring items like VW JV revenue and working capital shifts, not sustainable automotive margin gains. The market prices in a smooth R2 launch in 2026, but the delivery decline raises red flags about Rivian's ability to execute this critical ramp. Thus, the stock's rebound to ~$19.53 appears precarious given ongoing negative earnings and high reliance on external capital.

Implication

The delivery drop signals weak demand or operational missteps that could derail Rivian's growth narrative and heighten financing pressures. Financial improvements are superficial, relying on one-off VW JV payments rather than core manufacturing efficiency, with automotive margins still deeply negative. The R2 launch's success is now even more critical; any delays or poor reception could trigger the bear case scenario, potentially driving equity value toward $10. Given the elevated valuation amid fundamental challenges, trimming or exiting positions near current prices is prudent until evidence of profitable scale emerges. Key near-term monitors include Q1 2026 deliveries and R2 start-of-production timing to assess execution risks and validate the base case.

Thesis delta

The new article corroborates the DeepValue report's bearish stance by confirming the delivery declines that were already a key risk factor. It does not shift the core thesis but intensifies the focus on R2 execution, as failure to meet 2026 targets could accelerate downside toward the $10 bear case. Therefore, the recommendation remains a potential sell, with heightened scrutiny on upcoming milestones for any signs of deterioration.