Rivian (NASDAQ: RIVN) stock is down 93% from its all-time high

Electric vehicle (EV) maker Rivian(NASDAQ: RIVN) has proven to be a painful investment for most people who have owned the stock

Electric vehicle (EV) maker Rivian (NASDAQ:RIVN) has proven to be a painful investment for most people who have owned the stock. Its shares today trade 93% below the all-time high of around $172 they hit in November 2021, just days after the company went public.

To be fair, however, the stock was relatively overvalued at the time. And some investors may be looking at its now much cheaper valuation as an opportunity.

The next 12 months will present significant opportunities for Rivian as it rolls out its new R2 SUV and R3 crossover models. The arrival of those lower-priced mass-market EVs will expand its ability to capture some market share from embattled EV powerhouse Tesla. But will the company ever be able to staunch its relentless outflows of cash?

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Part of what has kept interest in Rivian relatively low in 2024 is the fact that the U.S. economy has slid into a recession, which could put a damper on consumer demand for vehicles. That factor, along with a 25% tariff President Donald Trump imposed on vehicles and auto parts imports, has battered Tesla.

The electric vehicle giant's first-quarter deliveries fell 13% year over year, largely due to the backlash against CEO Elon Musk's actions in Washington. That could create an opening for Rivian to capitalize on Tesla's damaged brand with consumers who still want to buy an EV but don't want to put money in Musk's pocket.

Rivian may also benefit from Trump's tariffs, which are part of a wider trade war with China. The EV maker boasts a highly U.S.-centric supply chain -- its motors and batteries are built domestically, and all its vehicles are assembled in Normal, Illinois. That gives the company an edge over rivals like Ford Motor (NYSE:F), which manufactures the electric Mustang Mach-E crossover in Mexico.

Of course, Rivian won't be entirely immune to tariff-related fallout. Like all automakers, it relies on a complex international supply chain for sourcing electronic components and core materials such as steel and aluminum, which now face significantly higher import taxes. That could erode gross margins across the U.S. auto industry. And as a small and still unprofitable company, Rivian will be less able to absorb those higher costs than its larger rivals.

Rivian's Q4 results were a mixed bag. The good news was that total revenue jumped 32% year over year to $1.73 billion, driven by a spike in sales. Its operating losses dropped 58% to $661 million. While that was still a massive loss for a company of Rivian's size, things are moving in the right direction, and it now has a pathway to profitability and positive cash flow if it can continue scaling up its business model while keeping costs under control.

Image source: Getty Images.

But success is far from guaranteed. Investors won't get to see Rivian's first-quarter earnings until early May, but its early production and delivery reports for the period were disappointing: It delivered a total of just 8,640 R1T and R1S vehicles in the quarter, 36% fewer than in the prior-year period.

Rivian may have reached the limits of consumer demand for its high-end EV trucks and SUVs, which face intense competition from alternatives like General Motors' (NYSE:GM) Cadillac Lyriq and Tesla's Cybertruck -- both of which also experienced softening demand in the first quarter. However, Rivian will broaden its scope beyond the weakening luxury vehicle segment when it begins delivering its new mid-sized electric SUV, the R2, in late 2025. The R2 is expected to start at just $45,000 compared to the full-sized R1S, which starts at around $78,000.

The next 12 months could be crucial for Rivian as it attempts to launch its new SUVs and maintain strong production levels amid a challenging economic climate. Investors will also be watching closely to see if the company can finally transition to profitability after years of losses.