Rivian (NASDAQ:RIVN) shares might need been underneath strain all yr, however wanting additional forward, there may very well be an enormous alternative at play for the EV maker.
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At least that’s the opinion of Benchmark analyst Michael Legg, who believes Rivian is “nicely positioned to achieve vital share of a large market alternative within the coming decade.”
So, how massive is that market alternative? Well, in accordance with EEI, the variety of EVs on U.S. roads is projected to develop from 4.5 million in 2023 to 78.5 million by 2035, reflecting a CAGR (compound annual progress fee) of 26.9%. By 2050, it’s estimated that 89% of all autos within the U.S. will likely be BEV or plug-in hybrid, in comparison with simply 12% this yr.
That’s about what’s to return. This yr, as a number of main automakers decreased or postponed their launches, EV progress stalled. In the primary half of 2024, U.S. EV gross sales elevated by solely 7.3%, a major slowdown in comparison with the 47% progress seen within the first half of 2023.
But following this yr’s downturn, home EV manufacturing is predicted to select up in 2025 and speed up additional in 2026-27 as ASPs (common promoting costs) fall to extra aggressive ranges vs. ICE autos and charging infrastructure expands.
Among the rising EV contenders, Legg sees Rivian as a standout, with a number of elements working in its favor.
“We imagine Rivian’s functionality to fabricate EVs domestically with in-house designed software program has been validated by its partnerships with Amazon and Volkswagen,” the analyst defined.
Regarding these relationships, since 2019, the corporate has been in a partnership with Amazon, with an settlement to produce 100,000 EDVs (electrical supply vans) by 2030, with Legg reckoning round 15,000 have already been delivered. The firm ended its exclusivity take care of Amazon in November 2023 and entered right into a partnership with AT&T in December 2023. This business facet of the enterprise affords a “income base for Rivian to construct upon because it scales the buyer aspect.”
Meanwhile, the corporate has shaped a JV with Volkswagen, with the deal price as much as $5.8 billion. The JV will leverage Rivian’s software program and electrical structure, together with its in-house developed digital management items (ECUs), with Legg believing the funding will likely be sufficient to help the enterprise and its progress initiatives. At the identical time, VW’s trade connections and expertise will help the corporate in its negotiations with suppliers and create “engineering synergies.”
“We imagine it is a main step for the corporate because it cements its place as a long-term participant with strategic relationships,” Legg additional famous.
So, what does this all imply for buyers? Based on all of the above and with its “extremely rated autos, anticipated constructive gross revenue within the present quarter and enough monetary liquidity,” Legg initiated protection of RIVN with a Buy ranking, backed by an $18 worth goal. Should the determine be met, buyers will likely be pocketing returns of ~25% a yr from now. (To watch Legg’s monitor report, click on right here)
The remainder of Wall Street’s outlook for RIVN displays a mixture of optimism and warning. The inventory carries a Moderate Buy consensus ranking, based mostly on 9 Buy, 10 Hold, and 1 Sell suggestions. The common worth goal of $15 suggests a modest upside of ~4% from present ranges. (See Rivian inventory forecast)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is essential to do your personal evaluation earlier than making any funding.
