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Deutsche Bank lifts Rivian stock price target to $15, maintains Hold

 

On Thursday, Deutsche Bank adjusted its outlook on Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ:RIVN), increasing the electric vehicle manufacturer’s stock price target to $15 from the previous $12, while sustaining a Hold rating on the stock.

The revision followed the company’s event on Wednesday, where Rivian announced the acceleration of its R2 model timeline and revealed three new models, including the R2, R3, and R3X. The event, held in Laguna Beach, CA, showcased the vehicles’ features, such as multiple trims and ranges exceeding 300 miles, along with an attractive starting price point.

Rivian’s management has decided to initiate production of the new R2 model in the first half of 2026 at its existing factory in Normal, Illinois, rather than the originally planned Georgia plant. This strategic move is expected to save Rivian approximately $2.25 billion through the first half of 2026.

The Normal facility is set to have a total capacity of 215,000 units, with a flexible maximum capacity of 155,000 units for the R2 model, which will alleviate some of the production pressure from the R1 and EDV vehicles.

The company’s decision to use the Normal plant for R2 production is anticipated to provide enough cash on hand through the start of production of the R2 in 2026, mitigating the immediate need to raise additional capital. This shift is seen as a significant improvement to Rivian’s short-term risk profile, according to Deutsche Bank’s analysis.

Still, with the new products not expected to launch until 2026, investor attention may soon return to Rivian’s cost management and path to profitability. The firm anticipates challenges for Rivian in achieving positive gross margins, especially with the R1 model, due to potential soft demand and the risk of price cuts. The analyst expressed concerns over Rivian’s ability to maintain a positive outlook for gross margin by the end of 2024 and projected deeper EBITDA losses.

Furthermore, with the R2’s starting price set at $45,000, directly competing with Tesla (NASDAQ:TSLA)’s Model Y, which starts at $44,000 for the lowest trim, Deutsche Bank questioned how Rivian will achieve positive margins with more content and limited scale compared to Tesla, which benefits from world-class sourcing conditions.

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