Rivian Has a Recall, Tesla Style. The Stock Is Down.

Rivian R1S and R1T electric vehicles are shown at a dealership and service center in South San Francisco, Calif., in June. (David Paul Morris/Bloomberg)

Key Points

About This Summary

• Rivian is recalling around 24,000 R1T trucks and R1S SUVs due to faulty hands-free driver assistance software.
• The recall is being addressed via an over-the-air software update, a method utilized by Tesla and others.
• Rivian shares slid following the recall announcement.

Rivian is recalling some of its cars to correct an issue with its driver-assistance technologies. It’s a very modern recall.

The National Highway Traffic Safety Administration recently posted a recall notice on its website affecting about 24,000 Rivian R1T pickup trucks and R1S SUVs. Rivian’s hands-free driver assistance software “may fail to correctly identify a lead vehicle,” the notice said. The company has released an over-the-air software update to correct the issue.

Rivian stock didn’t appear to be affected by the recall early on, but shares slid shortly after the open. The shares traded as high as $14.04, then dropped to $13.46, down 3.7% on the day, while the S&P 500 was flat and the Dow Jones Industrial Average lost 0.6%.

Recalls don’t typically move auto stock prices and are a normal part of the car business. Millions of vehicles are recalled by dozens of vehicle makers in the U.S. each year.

Rivian said it wasn’t aware of any injuries related to the issue, pointing out that the recall was prompted by one incident of vehicle misclassification at a low speed, and added that 99% of the vehicles involved have received the software update.

In the past, most recalls involved a trip to the dealership, typically when regular service was planned anyway, to repair or replace suspect parts. More recently, recalls by Rivian, Tesla, and others have involved software.

That has made recall numbers look alarming. Tesla recalled 1.8 million cars all at once in July 2024. Sensors might have failed to detect an unlatched hood.

The cost of repairs, however, is low. The Tesla hood recall was fixed with an over-the-air software update. No cars needed to come into the dealership or be removed from roads.

Recalls can impact stock prices if the cost to fix an issue is higher than the company and investors expected. Ford has struggled with recall costs lately. A July fuel injector recall cost the company almost $600 million.

Still, coming into Friday trading, Ford stock was up about 13% since the charge was announced. Other things, such as car sales, interest rates, and tariff policy matter more than recalls.

For Rivian, EV sales matter more than recalls. It has been harder to sell EVs amid rising competition. It’s going to get even harder when the $7,500 federal purchase tax credit for qualifying EVs goes away at the end of September.

Coming into Friday trading, Rivian stock was up about 5% year to date. Shares were down more than 90% from a record closing high of $172.01 reached on Nov. 16, 2021, when investors and analysts were more bullish about the outlook for EVs.

Back then, Wall Street projected 2025 deliveries of roughly 200,000 cars. Rivian will deliver closer to 40,000 vehicles this year.

Write to Al Root at allen.root@dowjones.com