Rivian: We See Growth From Lower-Price Vehicles and Autonomous Driving Software

Key Morningstar Metrics for Rivian Automotive

• Fair Value Estimate: $15.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

Rivian Automotive RIVN is a battery electric vehicle automaker that sells vehicles in the United States and Canada. The company also develops autonomous driving software and produces electronic control units for autos in a joint venture with Volkswagen.

The bottom line: We initiate coverage of Rivian with a $15 per share fair value estimate and no-moat rating. We also give the stock Very High Uncertainty and Standard Capital Allocation ratings. At current prices, we view shares as fairly valued.

• In 2026, Rivian plans to launch its midsize sport utility vehicle under the R2 platform. This will be priced starting at $45,000, allowing it to compete with Tesla’s Model Y. We forecast the company will be successful in ramping up production of the R2.
• Rivian also plans to launch its Level 2 autonomous driving software next year, enabling drivers to take their hands off the wheel. Management aims to eventually sell a level 4 product, where the vehicle would take full control. We think this software will be a differentiator for Rivian.

Key stats: Rivian has not yet generated a profit or positive free cash flow. We point to reduced unit production costs from scale as the R2 ramps up production and autonomous driving software as two of the key drivers of profitability.

• The other driver is the company’s joint venture with Volkswagen, which will produce electronic control units for the latter firm’s electric vehicles. These greatly simplify a vehicle’s architecture, allowing Volkswagen to compete with lower-priced EVs from China.

Bulls say: Rivian’s autonomous driving software will drive sales, making the company profitable and free cash flow positive in the coming years.

Bears say: Rivian will face increased lower-price competition in the midsize SUV market, leading to lower volumes. The firm will remain unprofitable and continue to generate negative free cash flow.