Rivian Takes 'Positive Step In The Right Direction' With R2, R3 Event, But Analysts See 'Mountain-Like Climb Ahead' For EV Maker

Electric vehicle company Rivian Automotive RIVN unveiled the highly anticipated R2 SUV during a presentation Thursday.

Along with the R2 unveiling, Rivian also gave an early look at the R3 and R3X, which are future vehicle models.

Here's a look at what analysts are saying about the event and the future of Rivian.

The Rivian Analysts:

• Wedbush analyst Daniel Ives has an Outperform rating and price target of $20.
• Truist analyst Jordan Levy has a Hold rating and price target of $11.
• Goldman Sachs analyst Mark Delaney has a Neutral rating and price target of $13.

Related Link: Rivian Q4 Earnings Highlights: Revenue Beat, EPS Miss, 2024 Guidance And More

Wedbush on Rivian: The story of Rivian is developing, but the focus remains on production, according to Ives.

The analyst said that investors and analysts learned a lot from the R1 launch in regards to manufacturing and customer feedback. The $45,000 starting price for the R2 was also a "critical piece" for the upcoming vehicle launch.

"We view these 2 vehicle debuts as a large positive step in the right direction for the Rivian story as the company focuses on a more cost-effective vehicle to target further EV adoption, and will be purely up to the execution on the project/churning out current R1 orders to regain some Street momentum and confidence," Ives said.

Ives said that R2 updates are critical "for continued EV penetration." A focus on a new battery platform, self-driving capabilities and a large number of sensors and cameras on the R2 were all items highlighted by the analyst in the new investor note.

"We were also surprised to see a sneak peek of the R3 platform which is mainly derived from the R2, shrinking the vehicle more into a crossover competitor."

Ives said Thursday's presentation was an exciting announcement from the company.

"In the eyes of the Steet, it is all about the R1 execution (and production ramp after a disappointing 2024 guidance) with the factory shutdown coming in the near future to implement new technologies."

Ives said the stock may be a "wait and see" story based on production, optimization and profitability. Rivian still has a "mountain-like climb ahead," Ives said.

Truist on Rivian: A decision to pause Georgia construction and focus on the Illinois factory was well received by Levy.

"We see the decision to utilize Normal for an initial R2 launch as the prudent decision given the current capital environment, with the shift estimates by RIVN to amount to savings of >$2.25B," Levy said.

The analyst said Rivian's comments point to having enough cash to fund operations through the start of R2 production, which will come in the first half of 2026.

Levy points out that the R2 closely mirrors the size and design of Tesla Inc‘s Model Y, while the R3’s reveal indicates a model akin to Toyota Motor Corporation‘s RAV-4 or Honda Motor Company‘s CR-V.

"Given the high growth, capital intensive nature of Rivian's business we believe a DCF-based valuation is most fitting, though we believe applying a risk-weighted discount to RIVN's intrinsic value helps to account for the still early-stage nature of the market."

Levy also said there are risks for Rivian, which include the competitive nature of the electric vehicle market and supply chain challenges.

"Further softening demand due to near-term recession worries, and slower adoption of passenger EVs than currently forecasted" are also mentioned as risks for Rivian.

Goldman Sachs on Rivian: The R2 launch event should be a positive for Rivian stock, Delaney said.

“We believe the R2 will help to materially expand Rivian's TAM (total addressable market), and the company can leverage products/technology across the R1, R2 and the R3/R3X,” Delaney said.

The analyst said the company's announcement of building the R2 in Illinois instead of Georgia will help with capital efficiency and lower investment costs.

"We believe that the company's opportunity to reach a positive gross margin in late 2024 and ability to strengthen the balance sheet will be key focus items for the market in the near to intermediate term."

Delaney said a starting price of $45,000 for the R2 will increase the addressable market for Rivian, targeting around 25% to 30% of the market, compared to 10% of the market targeted with vehicles $70,000 and up like the R1.

The analyst said that while there was no price tag provided for the R3, it would likely have a lower starting price than the R2, which could expand Rivian's TAM even further.

"We consider the event and financial update to be an incremental positive for the stock."

RIVN Price Action: Rivian shares are up 6% to $13.27 on Friday, which is on the heels of the stock gaining 13% Thursday. Shares have traded between $10.05 and $28.06 over the last 52 weeks with Rivian stock down 47% year-to-date.

Read Next: Did Tesla Crash Rivian’s R2 Launch Party With A Livestream About Model 3? Here’s Who Won The Most Eyeballs

Photo: Rivian