Last week was certainly a busy one for Rivian (RIVN) investors. First there was the announcement of a JV (joint venture) with Volkswagen along with a big investment from the auto giant. That was followed by the EV maker’s Investor Day, where the company laid out its cost-cutting strategy.
Assessing the event, Needham analyst Chris Pierce came away impressed with how the company intended to tackle the issue. “RIVN has been consistently messaging potential areas of cost savings and checked all 3 boxes at the event, while offering a greater level of detail as well,” the analyst said. “RIVN cited cost downs from internal engineering efficiencies as they move from their Gen 1 manufacturing platform to Gen 2, flagged specific cost savings from suppliers while highlighting further opportunities, and spoke to plant efficiencies achieved after the R1 line shutdown and re-ramp on Gen 2 platform as well as R2 specific savings.”
RIVN stands to rake in as much as $5 billion in capital from the Volkswagen JV, some distance above Pierce’s previous estimate of a $3 billion capital infusion across FY25/26. The company specifically said the capital will support the production of its more affordable, “TAM-expanding” R2 vehicle and the launch of its Georgia manufacturing plant. However, the specifics of the JV, including the investment timeline, milestone metrics, and eventual revenue and cost structure, remain uncertain.
Nevertheless, given liquidity concerns are now “off the table,” Pierce thinks the RIVN bears have less to feast on, although they will remain focused on the general slowing growth of EV adoption and “RIVN-specific demand cooling,” resulting in a period with few catalysts until the launch of the R2 vehicle in the first half of 2026.
Pierce thinks both points are “well understood” but as the company introduces “lower-priced, used-vehicle purchase options” later this year, along with anticipated relief in interest rates for car buyers, sees the potential for “unit upside.”
“We see the bridge to the R2 vehicle as much sturdier post the Volkswagen JV, and the potential capital infusion taking more extreme downside scenarios off the table and allowing for a higher level of investor patience,” he summed up.
Conveying his confidence, Pierce reiterated a Buy rating on the shares, and raised his price target from $13 to $20, now making room for one-year returns of 49% from current levels. (To watch Pierce’s track record, click here)
Looking at the ratings breakdown, based on a mix of 12 Buys, 9 Holds and 2 Sells, the analyst consensus views the stock as a Moderate Buy. The forecast calls for one-year returns of 18%, considering the average target clocks in at $15.81. (See Rivian stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
