shares rivya (RIVN 0.19%) It’s down 55% this year as the company continues to disappoint investors looking for a turnaround in its business. The latest was a reduction in full-year production to 47,000 to 49,000 new vehicles from an expected 57,000 vehicles. This continues years of disappointing production results for the electric vehicle (EV) maker.

So is it time to jump into Rivian now that its stock is down? It may be riskier than you think.

Rivian’s cash and cost problem

It’s worth starting with Rivian’s balance sheet. The company had $7.9 billion in cash and equivalents at the end of the second quarter of 2024, offset by $5.5 billion in debt.

RIVN Total Long-Term Debt (Quarterly) data Y Charts.

That seems like a lot of money until you consider the money the company burns from its $4 billion operations. This was driven by ongoing operating costs of $3.8 billion from research and development (R&D) and technology.handling, general and administrative (SG&A) expenses. Why are the costs so high? This comes down to Rivian’s decision to vertically integrate the engines, software, car, and even the sales experience. This makes the business very expensive to run and dependent on scale to be profitable.

RIVN Total Operating Expenses (TTM) data Y Charts.

To get out of this hole, Rivian needs to increase both the number of vehicles it produces and the margin it achieves per vehicle. Without both, the company is in trouble.

Margins and scaling issue

Right now Rivian is losing money on every car it sells. Management claimed that the company’s gross profit would be positive by the fourth quarter, but this was likely due to production levels being lower than previously expected. However, even a small gross profit is not enough when faced with the operating losses you see above.

RIVN Gross Margin (Quarterly) data Y Charts.

Rivian needs to expand production beyond Normal, Illinois, which only has the capacity to produce about 215,000 vehicles. The plan is to open a new facility in Georgia, but that is years away.

A recent filing with the Department of Energy said Rivian hopes to begin production in the third quarter of 2027 and reach full capacity in late 2028. Gross profit was positive on top of the approximately $2.5 billion needed to build the first phase of the Georgia facility.

Even when the Georgia plant is built, the company’s capacity will be about 400,000 and it will need to make a profit of about $10,000 per vehicle to cover its $4 billion operating costs. That’s a margin Rivian has never been able to demonstrate at a time when the market is in decline and competitors are flocking to electric vehicles.

A bleak future for Rivian

There’s not much to like about where Rivian is today. The company’s vehicles are great, but investors are buying the company, not the SUV. And considering the rapid cash burn and losses on every vehicle it sells, the company is in real trouble.

The current market capitalization of $10 billion provides the company with the opportunity to raise capital. But selling stock dilutes shareholders, and raising capital becomes more expensive if the stock falls. volkswagenSigned a $5 billion partnership agreement with the company. But the company has already invested $1 billion in Rivian, and $2 billion of this deal will be for the joint venture, not for the purchase of Rivian shares.

Add it all up: Rivian shares aren’t a buy below $11, and the company’s future is in serious doubt.