Rivian Designs 'Beautiful Products' But Needs To Prove It Can Produce Vehicles Profitably, Analyst Says

Rivian Automotive Inc RIVN held its R2/R3 launch event last week and shares raced higher as key strategy changes were received well by investors. Here’s a look at RBC Capital’s main takeaways from the launch.

What To Know: Following the Rivian event last week, RBC Capital analyst Tom Narayan reiterated Rivian with a Sector Perform rating and price target of $15.

Rivian will offer two battery sizes with the R2 platform. The larger battery will offer more than 300 miles of range and RBC expects the smaller battery and lower-priced vehicle to have a range of about 250 miles.

The EV maker plans to shift production of the R2 to its Normal, Illinois facility — where the R1 is produced — instead of using its Georgia facility, where the R3 will be produced. The company believes it will save $2.25 billion by pausing Georgia plant construction.

Narayan believes the move will put Rivian on a much quicker path to profitability for R2 than R1, which isn’t expected to be profitable until the end of 2024 following years of losses. The RBC Capital analyst believes the R2 could reach profitability at a similar pace to Tesla Inc’s TSLA Cybertruck, which is expected to take 18 months to generate profits.

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Rivian designed the R2 platform with global markets in mind, particularly Europe, Narayan said. The company has not accepted reservations from the region, but it received 68,000 reservations for the R2 in the U.S. within 24 hours of unveiling the new vehicle.

“Most investors viewed the event favorably and in particular the capex savings from the plant delay … There is a consensus that Rivian designs beautiful products,” the RBC Capital analyst said in a note to clients.

Although Rivian stock received a favorable response to the company’s R2/R3 event last week, Narayan recommended that clients remain on the sidelines until there is clear evidence that Rivian is capable of making its vehicles profitably.

The RBC Capital analyst highlighted increasing competition from legacy automakers and waning EV demand in the U.S. as potential headwinds for Rivian stock. Narayan arrived at his $15 price target by applying a 1.7x pure play EV multiple on the company’s 2026 sales discounted back to 2024.

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RIVN Price Action: Rivian shares were down 2.17% at $12.42 at the time of writing, according to Benzinga Pro.

Photo: courtesy of Rivian.