Rivian Is Ruined

Big car companies almost always survive recalls with little effect. They sell millions of cars a year. A recall of thousands of vehicles puts small pressure on the bottom line and modestly tarnishes a brand. It is another matter when a manufacturer recalls most of the vehicles it has made throughout its history. Enter Rivian’s problem. (Catastrophe may be a better word.) It was front-page news that most of its EVs could lose steering control, which is more than a mundane problem.

Rivian said the trouble was related to a fastener critical to the steering mechanism. One would think that making sure steering works is an essential part of the manufacturing process. That means the assembly of this part of vehicles should be checked and then checked again.

The Wall Street Journal offered a damning analysis. Rivian recalled “nearly all of its vehicles.” The 13,000 involved were made in 2021 and 2022. Rivian sent a note to customers: “It’s important not to minimize the potential risks involved and why we are volunteering to conduct this recall.”

Rivian already faces hard challenges. It says it will make 25,000 vehicles this year. It has missed its targets before. This recall debacle means that even if the company makes them, buyers may be a scarcity.

Rivian’s stock has been trashed by Wall Street this year, and the recall problem will worsen it if investors have any sense. The stock is still wildly overvalued. Rivian’s market cap is $30 billion. Ford’s is $49 billion. Rivian’s stock, at $33, should move toward its $19 low.

In an industry where Tesla dominates and every major manufacturer in the world has begun to put billions of dollars into an EV future, Rivian made a mistake it cannot afford.

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