These haven’t been the best of times for EV makers. While it is widely accepted that electric vehicles represent the future of the auto industry, the segment has faced some challenges recently. Against a difficult economic backdrop, the story has been one of waning demand and a crowded space with many finding it hard to meet prior targets.
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At the same time, some promising operators have emerged, and one such standout is Rivian (NASDAQ:RIVN). Faced with recent negative EV sentiment, the EV startup’s fundamentals have actually improved, making it well-positioned to benefit once sentiment shifts again.
This perspective is shared by Vijay Rakesh, a 5-star analyst at Mizuho who ranks among the top 1% of experts on Wall Street. He asserts, “Despite some near-term challenges with a more challenging macro backdrop, a softer consumer and rising interest rates impacting vehicle affordability, we believe RIVN remains an attractive option as a pure-play EV disruptor with its strong R1S/R1T/EDV products, improving production capabilities and a roadmap to further production ramps at its Georgia facility in 2026E as it ramps towards its more affordable R2.”
The company had a difficult time ramping up production initially but appears to have put those issues to rest as can be attested by the improving production numbers; Rivian produced 57,000 vehicles last year, outpacing its target for 54,000 units.
2024 should be a “key year,” says Rakesh. The company has scheduled production line adjustments that will take place in the middle of 2024 with the aim of boosting R1 production capacity to 85,000 units annually by the year’s end. Simultaneously, Rivian intends to update its R1 builds by incorporating a 60% reduction in ECUs and a 25% decrease in wire harness length. Also planned is a transition to in-house Enduro Motors and LFP batteries, all contributing to overall cost reductions.
“We believe with improving production ramps and reduction in costs, RIVN is tracking towards positive gross margins exiting 2024E with sufficient cash to get to its 2026E Georgia facility ramps for its upcoming R2 model,” Rakesh went on to say.
Last November also saw Rivian’s exclusivity agreement with Amazon for its EDV (electric delivery van) sales come to an end. That should open the door for new commercial clients and the company has already disclosed AT&T as its first pilot program partner.
Bottom-line, Rakesh rates RIVN shares a Buy, while his $30 price target implies investors will be sitting on returns of ~55% in a year’s time. (To watch Rakesh’s track record, click here)
Elsewhere on Wall Street, the stock claims an additional 12 Buys and 8 Holds, all for a Moderate Buy consensus rating. The average price target stands at $25.37, suggesting gains of 31% are in the cards over the coming months. (See Rivian stock forecast)
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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.
