Rivian Automotive, Inc. (NASDAQ: $RIVN) is an American EV manufacturer, automotive tech, and outdoor recreation company founded in 2009 that is best known for its electric SUV and pickup truck. The company’s vehicles are built on a universal platform designed to accommodate future vehicles or for licensing to other companies.
Rivian Launches Three New Models
On Thursday, March 7, 2024, Rivian announced the launch of three new vehicles, which will be produced alongside its RT1 truck, RS1 SUV, and EDV delivery van initially built for Amazon.
The three new models, the R2, R3, and R3X, are built on a new midsized platform, which will be used for all product lines. R2 is a midsized SUV designed to offer performance, capability, and utility in a five-seat package optimized for daily use and big adventures.
The R3 is designed as a midsized crossover that promises to deliver on performance, off-roading, passenger comfort, and storage. They will also produce the R3X, which is a performance variant of the R3, with more capability for on and off-road driving.
Both the R2 and R3 will come in two battery sizes, with the larger battery size having a range of over 300 miles on one charge. Additionally, they will have 0-60 MPH acceleration in under 3 seconds.
Accessible Pricing
Rivian appears to have officially joined the pricing wars with the launch of the R2, R3, and R3X. Their top-tier midsized SUV, the R2, will have a starting price of around $45,000, just $5,000 above the pricing for the Tesla Model 3, while the R3 is expected to be priced below the R2.
The company plans to roll out the R2 by H1 2026, while the R3 and R3X will roll out after the R2. US customers can reserve an R2 for $100, with all three models being available internationally after their North American launch.
The launch of the three new models presents a new challenge for Tesla, which has enjoyed a huge monopoly in the budget EV market in the US due to trade restrictions that have kept the Chinese EV brands off US markets.
However, Rivian’s entry into the budget EV market could help it expand its market share in the US EV market, helping it turn its fortunes around.
Rivian (RIVN) Stock Performance
Rivian stock had a rough first few weeks of 2024. Soon after the release of its fourth-quarter results in February 2024, the stock sunk on a bigger-than-expected loss and a 2024 production guidance that was below expectations.
Before the recent news of its three new models, the stock was down 47.73% year-to-date. After the news, RIVN stock gained 13.42% on Thursday, March 7, 2024, closing the day at $12.51 per share. On the same day, its rival, Tesla, saw a 1.20% gain, closing trading at $178.65 per share, while year-to-date, TSLA is down 28.09%.
Analysts Project Huge Upside for RIVN
RIVN has plunged nearly 50% year-to-date following the release of its downbeat 2024 outlook. However, Philippe Houchois, an analyst at Jefferies, believes RIVN could be a buy. He has given the stock a price target of $16, representing an over 30% upside.
According to Houchois, the new R2 platform will be crucial to this success. It will allow Rivian to produce vehicles that cost significantly less than the R1 platform. Additionally, it will lower production costs and boost manufacturing efficiency.
The Jefferies team forecasts that Rivian will use plant shutdowns in 2024 as a cost-cutting measure to achieve positive gross margins at the end of the year. However, Houchois does not expect the company to achieve break-even cash flow until at least 2027. Despite the existing challenges, Houchois believes its large capital base makes RIVN’s current low price hard to pass up.
Overall, 23 Wall Street analysts give Rivian a moderate buy rating. They forecast a broad range, with a high of $36 and a low of $8. Their average price target for RIVN is $17.48, a 39.73% upside, based on its last closing price.
Is RIVN A Buy?
Rivian Automotive has faced mounting challenges since the end of the pandemic. While there was a lot of hype during the period, its financial reporting has not lived up to market expectations. Consequently, the stock has lost around 90% of its value from its pandemic highs.
However, some analysts view Rivian’s current growing pains as similar to those of Tesla, which is now one of the most valuable automakers in the world, with a market cap of over $568 billion.
If Rivian Automotive successfully navigates its current hump, it could take a larger market share of the global EV market. Its recent launch of a small, cost-effective R2 platform could help it lower production costs and allow it to access the mass market.
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