Rivian has two great partnerships with UBER and Volkswagen but needs to scale dramatically to get taken seriously as an automaker. Tesla, Waymo's and Chinese autonomy players are way ahead.
Industry/Sector/Type - EV/ Robotaxis
Biggest catalysts for the stock: Volkswagen investment, Uber tie-up
Rivian Automotive secured a major investment and strategic partnership from Uber (UBER), which includes a $300M investment and plans to deploy up to 50,000 of Rivian's R2 robotaxis by 2031. This will be scaled as soon as Rivian increases prduction.
The cash infusion from Uber and Volkswagen accelerates R&D for autonomy. It is a neccesary step for survivial given the competition in EVs and autonomy.
Rivian has sensibly reduced its dependence on the expensive R1, by accelerating the R2 launch, which targets a more affordable segment, with 2026 production guidance at about 60-64K vehicles and ambitions to reach full capital of 215K
The Volkswagen deal is totally $5.8Bn based on milestones, with $1Bn in 2025 already invested in 2025, and potentially up to $1Bn in equity given the completed milestone in March 2026. It also has an option to borrow $1Bn in October 2026.
Recently, Volkswagen's (VLKAF) software partnership with Rivian passed a major milestone, completing the testing of the first vehicles using the joint software. That's a great sign of progress.
The Volkswagen deal will likely remain a steadfast long-term deal, as Volswagen believes that Rivian has better software architecture and zonal electrical design than its rivals,. There is a plan to adopt this across all its brands, and it could be a long-term tailwind for the belagured automaker.
The accelerated R&D delays the path to adjusted EBITDA profitability at least beyond 2027, and if there are delays in execution to 2028.
Rivian's operations are still way too low to achieve any economies of scale: While the R1 cost over $100K killing large-scale demand, the R2 is still short of scale. Sure, it costs only $50,000 to $55,000, but Rivian can manage to forecast only 64K vehicles in 2026, after producing 42K vehicles in 2025.
By some analysts' projections, Rivian needs to produce at least 155K R2s to achieve economies of scale, which is still considerably lower than its full capacity of 215K vehicles.
EVs and autonomous vehicles has become and will continue to remain a crowded space with traditional auto makers jostling with EV and autonomous vehicle upstarts like Tesla, and tech giants like Waymo, and the consumer facing Uber. Not to mention the headstart Chinese auto makers already have in this space. Compared to them Rivian is struggling with just $7Bn in sales and a market cap of $18Bn.
We can’t use much of conventional valuation metrics, but it quotes just 2.6x sales, with sales forecast to grow at 50% for the next three years, but here the low multiple is not a plus , its skepticism …so I would think that it's still a “show me execution” story. The other problem is most buying in a war ravaged scenario will likely be defensives/belweathers before the Rivian’s pick up. It would be better to hold, unless investors are OK with the high risk.
Ferrari is available at an excellent price of just 33x earnings, this iconic brand with a deep moat deserves a premium multiple.
