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At its peak in late 2021, which came shortly after its mega IPO, Rivian (RIVN) commanded a market cap above $150 billion - which, for context, was even higher than Ford (F) and General Motors (GM). It has since slumped – and so have all the other electric vehicle (EV) stocks. Rivian’s market cap now is just around 10% of its all-time high, and the drawdown has been even steeper for many other EV stocks.
As the EV slump deepens, markets are now focused on which names out of the current lot of companies will survive beyond the next few years. With this in mind, here’s the 2025 stock price prediction for Rivian, and what makes it a standout among other startup EV companies.
The EV Slump Has Deepened
Until about early 2022, not many in the investing community - and least of all, automotive companies - would have envisioned that a year down the line we would be talking about a slump in the EV industry where most players would be forced to reset their EV production targets amid slowing growth.
However, over the last few days, Fisker (FSR), Lucid Motors (LCID), and Polestar (PSNY) have all lowered their production forecasts, while Ford and General Motors have scaled back their EV investment plans. Even Tesla’s (TSLA) Q3 earnings call portrayed a depressing picture of the EV industry in the short term, with CEO Elon Musk blaming the macro slowdown and rising interest rates for industry woes as he said that the company would proceed slowly on its upcoming factory in Mexico.
Rivian's Q3 Earnings
The Q3 earnings calls of legacy automakers, as well as pure-play EV companies, left EV bulls disappointed. However, even as Rivian shares closed in the red following their Q3 report earlier this month, I believe the reaction was not justified. Consider the following:
1) Rivian raised its 2023 production guidance by 2,000 to 54,000 – its second guidance hike of the year, which comes amid tough operating conditions. It also said that it will launch its leasing program in select regions later in the quarter, which should also help support its sales.
2) The company lowered its projected loss and capex guidance for the year.
3) Rivian announced that it has ended its exclusivity agreement with Amazon (AMZN) – its biggest stockholder – and will now start selling its electric delivery vehicles (EDVs) to third parties.
Also, Rivian sounded optimistic about launching its low-cost R2 platform in 2026, as planned – unlike many other companies that are reconsidering their investments. Rivian’s CEO, RJ Scaringe, began the earnings call by talking about the EV industry, and said, “I want to emphatically state just how deeply convicted we are that the entire automotive industry will be transitioning to electric over the next 1 to 2 decades.”
To me, while a lot of other companies tried to sugarcoat the current EV slump by referring to the “long-term growth,” Rivian’s commentary sounded the most reassuring about the EV transition.
Rivian Stock Price Prediction 2025
Rivian should be able to survive the EV slump much better than many of its peers – some of which might not be around by 2025. Here’s why Rivian’s 2025 forecast looks positive.
- Rivian has an impressive product lineup, and its R1T pickup won MotorTrend's prestigious Truck of the Year 2022 award. While many other EV companies have had to lower car prices, Rivian hasn’t participated in the price war - which reiterates the product’s superiority.
- Rivian’s margin profile should also improve in the coming quarters, as it gets past the orders that were placed before the 2022 price hikes. Also, the company will benefit from lower material costs and more efficient fixed-cost absorption amid the rise in volumes. Rivian's deliveries should also receive a boost as it starts selling EDVs to third parties.
- While some EV companies might go bankrupt by 2025, Rivian has $9 billion cash on its balance sheet, which will fund its cash burn until 2025. It is additionally looking to raise up to $16 billion in debt funding to further strengthen its balance sheet. The backing from Amazon is another reason why Rivian looks much more financially viable than many of its peers.
- Another underappreciated aspect of Rivian is the strong management, which - unlike many other EV business leaders - has kept a rather low profile, while focusing on execution. The company has under-promised and over-delivered this year, which is the reverse of many other industry peers who are failing to meet the huge expectations that they set.
Rivian Stock Forecast
Wall Street analysts are also relatively bullish on Rivian as compared to many other U.S.-based startup EV companies. The stock has a consensus rating of Moderate Buy from analysts, and 12 of 21 analysts covering the stock rate it as a Strong Buy.
The group has a mean target price of $26.48 for RIVN, which is almost 63% higher than the current price levels.
After Rivian’s Q3 earnings, Morgan Stanley and Bank of America reiterated their bullish forecast for the stock. Barclays analyst Dan Levy believes that Rivian shares fell after the Q3 report due to the “broader EV malaise,” but emphasized that the current price level “provides an attractive entry point.”
Overall, while the turmoil in the EV industry might continue for the next few quarters at a minimum, I believe Rivian is among the names that should emerge much stronger over the next couple of years, and is a worthy contender to be the “next Tesla.”
On the date of publication, Mohit Oberoi had a position in: F , GM , RIVN , AMZN . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
