Rivian Automotive (NASDAQ:RIVN), like other electric vehicle stocks, has moved lower recently after rallying from mid-January to early February. Sure, the stock market’s overall direction has much to do with this RIVN stock pullback.

However, it’s possible that a shift in sentiment has also played a role. That is, investors are likely catching on that this electric vehicle maker faces numerous challenges. Instead of being in a better situation than other early-stage EV companies, such as Lucid Group (NASDAQ:LCID), Rivian by and large is in the same boat.

Facing a bevy of headwinds, things here are more likely to worsen than improve throughout the year, all while the company burns through billions from its war chest. With this, it is best to assume shares will give back recent gains, and then some. The aforementioned pullback may be just the start.

RIVN Stock: Not a Top Contender

Read up on Rivian, and you’ll see plenty of commentary that suggests that this EV upstart is in a much better place than its competitors.

In fact, while more bearish on other EV plays, analysts such as Morgan Stanley’s Adam Jonas consider RIVN stock worthy of a buy, alongside the (for now) established king of the EV industry, Tesla (NASDAQ:TSLA). However, it is erroneous to infer from this that Rivian is becoming a “Tesla killer” in the making once again.

While Tesla has its own set of concerns/risks to bear in mind, these pale in comparison to the myriad of issues Rivian is currently experiencing. Production problems continue to persist. Competition is heating up, and not just Tesla. Incumbent automakers are also slashing EV prices. Meanwhile, Rivian has yet to lower its prices, after hiking them last March.

Interestingly enough, these price increases have created another issue: disgruntled customers. Although the company is honoring its prior prices for buyers who reserved before the increase, it’s allegedly giving post-hike buyers priority when it comes to delivery. It may be larger and (for now) better capitalized than peers/rivals, but Rivian is clearly not a top contender.

What (Likely) Comes Next

As mentioned above, we may only be in the early rounds of a serious reversal for RIVN stock. What remains of optimism for Rivian could dissipate in the months ahead, as the company fails to put all of its problems in the rearview mirror.

Sure, some of these issues, such as the production hiccups, could resolve within the year. However, the competition isn’t slowing down. Ford’s (NYSE:F) F-150 Lightning was the number one electric truck in the U.S. during December. Once a major RIVN investor, Ford now stands to give Rivian a run for its money with its in-house EV truck offerings.

Customer frustration is likely to continue too, unless the company follows the lead of its rivals, and implements price cuts of its own. Of course, this could create a whole new set of problems. Lacking the positive cash flow necessary to absorb the impact of lower prices, price cuts would exacerbate Rivian’s cash burn problem.

In turn, this would increase the chance of a dilutive secondary capital raise down the road. Any way you slice it, barring the emergence of some more promising developments, there’s a lot more out there to sink this stock even lower.

The Takeaway

Besides potentially leading to shareholder dilution, Rivian’s cash burn could create another major negative: a far lower degree of future growth potential.

The company has already delayed the launch of a lower-priced truck and an SUV model, until 2026, in order to preserve cash. Even if the situation with Rivian improves over the next three years, it may struggle to find demand for its additional offerings, as by then incumbent automakers may have much of this market locked up.

As was the case in 2022, Rivian remains in a tough spot, and the market is starting to realize it. The takeaway here is pretty clear: resist any urge to go contrarian on RIVN stock. It may not happen immediately, but sentiment for this thus-far disappointing vehicle electrification play could shift back to fully negative.

RIVN stock earns a D rating in Portfolio Grader.

On the date of publication, Louis Navellier had a long position in F. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.