Samsung Rejects Rivian Battery Partnership, Is RIVN Stock Doomed?

Trade Rivian Stock Your Capital Is At Risk
Ollie Martin
Updated: 9 Feb 2022

Key points:

  • Rivian might be in for a rough ride as the Li-battery struggle increases
  • Samsung SGI back out of deal and decide to partner with Stellantis instead
  • Small-production startups face marginalization due to limited bargaining power

Rivian (NASDAQ: RIVN), one of 2021’s exciting EV IPOs, seems to be facing a little trouble behind the scenes. Part of a plague hitting EV manufacturers at the moment, supply issues regarding lithium batteries are causing manufacturing cutbacks, delays, and lackluster fiscal guidance. 

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Rivian’s planned partnership with Samsung SDI to build a lithium battery factory has fallen through, on an adverse decision from Samsung to be wary of small-production startups – who may have little bargaining power when it comes to Li-battery supply; which is largely dominated by the market leaders. 

EV manufacturing is a bit of a battleground at the moment, with competition between industry powers, carmakers, and battery manufacturers at record levels as inflation continues to tear up traditional pricing expectations in raw materials. 

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So, all in all, it looks like Rivian and possibly the string of other EV startups are more exposed than ever before. If Rivian doesn’t secure a reliable supply chain, the company runs the risk of becoming marginalized amongst the wider, more profitable companies. On this thesis, Samsung rejected the partnership with Rivian and chose Stellantis instead, a larger automobile entity that offers more security moving forward.

Many sources have claimed that shortages will most likely continue for the most part of this year, so we can expect to see rising prices. It will be interesting to see how smaller EV startups like Rivian attempt to navigate an industry that, as competition increases, favors larger companies. 

The outlook for Rivian remains bearish in the short term especially regarding the wider supply struggles, however, RIVN stock rose around 3.8% today despite the negative news.

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