Rivian's Deal With Volkswagen Will Help EV Giant 'Navigate The Ship In Stormy Waters,' Says Top Analyst: Maintains Outperform Rating With $20 Target

Analysts led by Dan Ives at Wedbush have highlighted the significance of Volkswagen’s VWAGY increased investment in Rivian Automotive Inc. RIVN to $5.8 billion and kickstarted their joint venture, according to a note shared on Wednesday. This move is seen as a crucial step for Rivian’s growth and stability.

What Happened: The analysts emphasized that this partnership is a “breath of fresh air” for Rivian, focusing on production and execution. The investment is expected to bolster Rivian’s capital roadmap, aiding in future growth and vertical integration of its software and electrical systems. This will also help achieve cost savings and improve vehicle offerings.

Additionally, the partnership is anticipated to provide the necessary capital for the R2 ramp and the Georgia plant’s R2/R3 midsize platform. This is considered a significant advancement for Rivian, although the Street’s attention will remain on R1 execution, production optimization, and profitability over the next year.

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“After seeing lots of choppiness and pain points in the supply chain in the past year, we believe this is the right partner announcement coming in at the right time as RIVN looks to navigate the ship in stormy waters with sufficient capital to fund its EV roadmap over the coming years,” the note read.

The analysts maintain an Outperform rating with a $20 price target for Rivian.

Why It Matters: Rivian has faced significant financial challenges, including a steep loss of approximately $40,000 per EV in the third quarter. The company delivered 10,018 vehicles during this period, marking the lowest quarterly deliveries since early 2023.

Rivian’s shares surged by 13% in pre-market trading on Wednesday following Volkswagen’s announcement to increase its planned investment to $5.8 billion. This investment marks a 16% increase from the initial $5 billion planned when the joint venture was announced in June. The joint venture, named Rivian and VW Group Technology, LLC, officially commenced on Wednesday and is expected to significantly bolster Rivian’s financial position.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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