Charged: Analysts downgrade Rivian as risks ‘pile up’ amid lower deliveries

Institutional investors and professional traders rely on The Fly to keep up-to-the-second on breaking news in the electric vehicle and clean energy space, as well as which stocks in these sectors that the best analysts on Wall Street are saying to buy and sell.

From the hotly-debated high-flier Tesla (TSLA), Wall Street’s newest darling Rivian (RIVN), traditional-stalwarts turned EV-upstarts GM (GM) and Ford (F) to the numerous SPAC-deal makers that have come public in this red-hot space, The Fly has you covered with “Charged,” a weekly recap of the top stories and expert calls in the sector.

FSD FEATURES IN CHINA: Tesla is readying a software update for customers in China to offer driver-assistance capabilities similar to those marketed as Full Self-Driving in the U.S., Bloomberg’s Haze Fan reports. The update planned for the coming days will allow Tesla owners to use driver-assist features on city streets, according to a person familiar with the matter.

PLANS TO INVEST IN NISSAN: A high-level Japanese group has drawn up plans for Elon Musk’s Tesla to invest in Nissan (NSANY), following the collapse of merger discussions with Honda (HMC), Kana Inagaki, Leo Lewis, Harry Dempsey and David Keohane of The Financial Times reports. The new proposal is led by former Tesla board member Hiro Mizuno and is being supported by ex-premier Yoshihide Suga and his former aide Hiroto Izumi, three people with knowledge of the move told the Times.

Click here to check out Tesla’s recent Media Buzz Sentiment as measured by TipRanks.

RECALLS: Tesla is recalling nearly 380,000 vehicles in the U.S. due to a power steering assist failure that could increase steering effort, particularly at low speeds, raising the risk of a crash. Tesla said some 2023 Model 3 sedans and Model Y crossovers which run on older software may experience an overvoltage breakdown, potentially overstressing motor drive components on the printed circuit board. An over-the-air software update has been released to fix the issue.

Rivian Automotive is recalling 17,260 vehicles in the U.S. due to a headlight issue that can reduce visibility and increase the risk of a crash, the NHTSA says. The recall affects certain 2025 R1S SUV and R1T pickup truck vehicles, with the NHTSA saying the headlight low beam may fail to illuminate when starting the vehicle in cold weather.

RESULTS: Rivian Automotive reported Q4 losses per share of (70c), with consensus at (77c), and Q4 revenue of $1.73B, with consensus of $1.43B. In Q4, Rivian produced 12,727 vehicles at its manufacturing facility in Normal, Illinois and delivered 14,183 vehicles. For the full-year 2024, Rivian produced 49,476 vehicles and delivered 51,579. The company said, “Rivian reported a gross profit of $170 million in the fourth quarter of 2024, primarily driven by improvements in variable costs, revenue per delivered unit, and fixed costs. Rivian expects these improvements to benefit it over the long-term and position the company well to achieve modest gross profit for 2025. Rivian achieved record revenues in the fourth quarter of 2024 driven by the sale of regulatory credits and software and services revenue growth as well as increasing R1 average selling prices with the increased availability of its Tri-Motor offering.”

Rivian Automotive sees 2025 adjusted EBITDA between ($1.7B)-($1.9B) and 2025 vehicles deliveries between 46,000-51,000. The company said, “External factors could impact Rivian’s 2025 expectations, including changes to government policies and regulations and a challenging demand environment. Rivian’s guidance represents management’s current view on potential adjustments to incentives, regulations, and tariff structures.” CEO RJ Scaringe added, “Our focus on cost efficiency across the business is critical for the launch of our mass market product, R2. The R2 bill of materials is approximately 95% sourced and is expected to be approximately half that of the improved R1 bill of materials. I couldn’t be more excited about R2, and I believe the combination of capabilities and cost efficiencies along with the amazing level of excitement from customers will make R2 a truly transformational product for Rivian.

RISKS PILING UP: BofA downgraded Rivian Automotive to Underperform from Neutral with a price target of $10, down from $13. Rivian “remains one of the most viable” among the startup electric vehicle original equipment manufacturers and is making progress towards sustainably positive gross margins, but the 2025 outlook was softer than expected and the Volkswagen (VWAGY) partnership is complicating earnings forecasts for at least the next four years, all while competition is increasing and demand for EVs is slowing, the firm tells investors. The company is making progress, but risks are “piling up,” BofA added.

MOVING TO THE SIDELINES: Cantor Fitzgerald downgraded Rivian Automotive to Neutral from Overweight with a price target of $15, up from $13, following the Q4 report. The company guided fiscal 2025 vehicle deliveries to 46,000 – 51,000, below Cantor’s estimate of 59,402 and the consensus expectation of 55,190, the firm tells investors in a research note. Cantor cites lower vehicle deliveries, fewer electric delivery van deliveries, and worsening macro conditions, including the implementation of incremental tariffs and the likely removal of the $7,500 electric vehicle tax credit, for the downgrade. The firm is “discouraged” by Rivian’s delivery guidance

SELL LUCID: Redburn Atlantic downgraded Lucid Group (LCID) to Sell from Neutral with a price target of $1.13, down from $3.50. The firm’s work suggests it may be challenging for Lucid’s peers to replicate the efficiency of its vehicles before 2030. However, the company’s resultant cost advantage requires volumes to build sharply once the mid-sized platform is launched in the second half of 2026, Redburn tells investors in a research note. The firm believes Lucid’s cash outflows will be “larger, for longer, than the market expects.” The cumulative free cash flow gap between Redburn and consensus through fiscal 2023 is $11B. “If we are correct, it suggests significant additional capital will eventually be required,” Redburn contends.

AI POTENTIAL: UBS upgraded XPeng (XPEV) to Neutral from Sell with a price target of $18, up from $8.80. After DeepSeek “shocked” equity markets, investors are now willing to assign some value for XPeng’s artificial intelligence potential, even remote applications, the firm tells investors in a research note. UBS says AI should “continue to dominate the debate” and that XPeng, with a focus on AI, is a company that warrants such attention in the auto sector. With the potential change in risk appetite, the firm upgrades the shares to Neutral.

REDUCED LIQUIDITY CONCERNS: Morgan Stanley upgraded SolarEdge (SEDG) to Equal Weight from Underweight with a price target of $18, up from $11. The company’s stronger free cash flow generation and clearer strategic direction reduces liquidity concerns, the firm tells investors in a research note. Morgan Stanley upgraded the shares as a result, but still emphasizes caution to investors given SolarEdge’s “unstable” end-market demand. The company’s Q1 guidance was better than expected, likely due in part to safe harboring benefits, contends the firm.

BMO Capital also downgraded SolarEdge to Underperform from Market Perform with a price target of $15, up from $13. The company’s Q4 update suggests it can retire the $347.5M September convert maturity with existing liquidity, which drove a 16% rally in the shares, the firm tells investors in a research note. However, BMO looks past the binary of “will they or won’t they issue” and says the Q4 update, when normalized for estimated pull forward of revenue and cash flow, implies SolarEdge’s underlying business is materially underperforming what’s embedded in fiscal 2025 and beyond estimates. As such, it views the share rally as overdone.

Meanwhile, Northland downgraded SolarEdge to Underperform from Market Perform with a $15 price target post-earnings as the firm argues that SolarEdge is “behind in new products, customer service, and reliability,” which will take “a while to repair.” Northland also cites a lack of transparency, “indicating that little has changed.”

MISLEADING EV PERFORMANCE: Italy’s competition authority is investigating BYD (BYDDF), Stellantis (STLA), Tesla, and Volkswagen for allegedly misleading consumers on the performance of their electric vehicles, Reuters reports. The investigations are based “on EV driving range, battery capacity degradation and limitations on standard battery warranties, potentially in breach of the Consumer Code,” the watchdog said, according to Reuters. Fines can range from EUR 5,000 to EUR 10M.