Why Rivian Stock Roared Higher Today

Rivian Automotive (NASDAQ: RIVN) left investors hoping for more after it reported earnings last week. While the electric vehicle (EV) maker made progress in some areas, its production guidance for 2025 fell short of expectations.

The stock dropped in response, but investors are now feeling more optimistic about the company's prospects. That's helping to drive shares higher today. After jumping as much as 7.5%, shares remained higher by 3.7% at 1:45 p.m. ET.

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Is Tesla's loss Rivian's gain?

Investors are picking up on reports about sagging sales at sector leader Tesla. Demand for Tesla's EV offerings fluctuate, but a negative trend may be emerging. Tesla sales dropped by 45% in Europe in January even as overall EV sales jumped over 37%, based on vehicle registrations. Tesla is seeing headwinds domestically, too. Last year, Tesla EV registrations in California dropped by more than 10%.

Tesla's declining sales may be coming from different sources. Growing competition in Europe from Chinese EV makers is certainly a headwind. But Tesla CEO Elon Musk has also become a more divisive political figure in many places. And that might just be giving Rivian an opening with its upcoming R2 SUV.

Image source: Rivian Automotive.

The R2 will be the closest competitor to Tesla's Model Y that Rivian has offered. It is scheduld to start production later this year and begin deliveries in early 2026. If EV consumers are shying away from Tesla's brand due to Musk's work in politics, the timing might be just right for Rivian to step in with the R2.

The timing is good for Rivian. It reported positive gross margins for the first time in the fourth quarter. That came from cutting costs, design improvements, and supply chain efficiencies. Investors might be looking ahead to 2026 when Rivian's R2 should help it meaningfully increase production levels. That will help further improve margins. And some investors are looking for Rivian to take advantage of an opening in EV demand.

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Howard Smith has positions in Rivian Automotive and Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.