Rivian (NYSE: RIVN) stock closed sharply lower yesterday after the company released its Q3 delivery and production report. While the company reported a sharp rise in deliveries, it lowered its 2025 guidance, which dampened sentiments.

Rivian delivered 13,201 vehicles in Q3 as compared to 10,018 vehicles in the corresponding quarter last year. However, a closer look at the numbers reveals a complexity in the ramp-up. The production figure of 10,720 vehicles was notably lower than the 13,157 vehicles produced in the corresponding quarter of 2024. This production-delivery gap, where the company delivered significantly more vehicles than it built, indicates a strategy of clearing existing inventory built up in prior quarters.

Rivian Narrows 2025 Guidance

Despite the strong delivery beat, the company’s simultaneous announcement to narrow its full-year delivery guidance injected a note of caution into the market. Rivian revised its 2025 full-year delivery forecast to a range of 41,500 to 43,500 vehicles, down from its prior guidance range of 40,000 and 46,000 vehicles. Notably, even the top end of the guidance implies a 16% year-over-year fall in deliveries. The company’s deliveries fell last year, also amid a slowdown in the US EV market, where even market leader Tesla is struggling and reported its first annual drop in deliveries last year.

US EV Tax Credit Expired in September

Meanwhile, Q3 was a strong quarter for Tesla and other EV companies. One significant factor contributing to the bump in Q3 sales was the expiration of the $7,500 U.S. federal EV tax credit for leases at the end of September 2025. This “tax credit cliff” is expected to temper demand in the final quarter of the year, as consumers who rushed to purchase or lease before the deadline are now out of the market, and the financial incentive for new buyers is diminished.

Rivian Breaks Ground at Georgia Plant

Meanwhile, amid all the slowdown noise, last month Rivian broke ground at its Georgia plant, whose construction it previously halted. The Georgia plant would have an annual nameplate capacity of 400,000 units, and the company announced plans for the facility shortly after its blockbuster IPO in late 2021, which was the largest listing since Facebook’s (now Meta Platforms) 2012 listing.

Georgia provided a generous $1.5 billion incentive package in 2022, and by October 2023, the site was reported to be 95% graded and nearly ready for construction.

However, in March 2024, Rivian announced a pause in construction at its Georgia plant. This decision was driven by a strategic move to prioritize the launch of its more affordable R2 SUV, with initial production slated for its existing plant in Normal, Illinois. The aim was to reduce capital expenditure and accelerate the R2’s market entry.

Notably, amid the perennial cash burn, Rivian’s cash reserves have decreased, and the company made a prudent decision to conserve cash.

Volkswagen Has Invested in Rivian

Prospects of Rivian restarting the Georgia plant brightened last year after German auto giant Volkswagen announced a multi-billion-dollar investment in the company, some of which is linked to its meeting pre-set milestones.

The agreement is expected to bolster Rivian’s financial position and facilitate cost reductions through joint component sourcing. This strategic partnership is crucial for Rivian as it continues its path towards profitability.

During their Q4 2024 earnings call, Rivian said that it expects to realize revenues of $2 billion from Volkswagen over the next four years as their joint ventures deliver on the pre-set milestones. This, Rivian said, would include the cash received from Volkswagen for licensing of intellectual property, coupled with equity premiums and other noncash benefits.

Rivian Will Release Its Q3 Earnings Next Month

Meanwhile, all eyes will now be on Rivian’s Q3 2025 financial results, scheduled for release on November 4, 2025. Investors will be scrutinizing the company’s gross margins, cash burn, and any further updates regarding the cost-efficient R2 vehicle program, which remains a crucial element of Rivian’s long-term strategy for profitability and market expansion. The successful launch of the more affordable R2 in 2026 is seen as the primary catalyst to re-energize growth beyond its current R1 platform.

R2 Would Help Rivian Scale Up Volumes

Rivian is set to launch its low-cost platform R2 in the first half of 2026 and previously said that the bill of materials (BOM) for the model would be half of the R1 series of vehicles that it currently sells.

The R2 is designed to be a more compact and affordable alternative to Rivian’s current R1T pickup and R1S SUV. It will start at around $45,000, significantly lower than the R1 models. This price point aims to compete more directly with popular EVs like the Tesla Model Y, which was the best-selling car across EVs as well as internal combustion engine cars last year.

The R2 is critical for Rivian’s long-term success and profitability. By offering a more affordable and mainstream EV, Rivian aims to attract a larger customer base beyond the niche premium segment. Moreover, the model would help drive higher production volumes, which is essential for achieving economies of scale and improving gross margins.

US EV Price War

Notably, Tesla also achieved scale (and profitability) with its mass market Model 3 and Model Y. The company is now working on a new low-cost model, which would be priced below its current range.

With a flurry of companies working on affordable EV models, the competition in that space is set to intensify. This might lead to an escalating price war as these models compete for market share. There is some economic rationale behind companies cutting prices. For instance, as production volumes increase, manufacturers achieve greater economies of scale. Fixed costs are spread over more units, further reducing the per-vehicle production cost.

As market leader, Tesla cut costs; other players like Rivian are forced to lower prices to stay competitive. However, while Tesla’s profitable and cash-generating operations give it the leeway to cut prices, EV startups are already saddled with losses and cash burn, and the price war is making things only complicated for them.