Where Will Rivian Stock Be in 3 Years?

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In late 2021, when Rivian Automotive (RIVN) made its public debut, it was riding a wave of enthusiasm for electric vehicles (EVs). With a market value surpassing $100 billion, this newcomer momentarily held the title of America’s second most valuable auto manufacturer, outranking both Ford Motor Company and General Motors, despite having virtually no recorded sales at that time.

Of course, the inflated price didn’t sustain. Now, Rivian’s shares have plummeted a staggering 93% from their peak, making them an attractive proposition for budget-minded investors with faith in the future growth of the U.S. electric vehicle sector.

Let’s explore what the next three years may have in store for the company.

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Trump’s economic policy is a mixed bag

Following numerous corporations, Rivian experienced a surge in its stock value post Donald Trump’s election win in November 2024, fueled by optimism. However, this enthusiasm proved to be hasty. As a contender, it was evident that Trump intended to scale back green energy initiatives, a promise he’s fulfilled during his tenure as president.

The newly established government has instructed the Environmental Protection Agency (EPA) to end what they call the “EV mandate” set by the previous administration. This initiative aimed to have 56% of vehicles sold in the U.S. be electric by 2032. Additionally, the One Big Beautiful Bill Act (OBBBA), recently passed on July 4, will eliminate key incentives for the industry, like the $7,500 tax break for new electric passenger vehicle purchases.

As reported by CBS News, electric vehicles (EVs) usually retail for approximately $9,000 more than their gasoline counterparts. The tax credit has been crucial in keeping EVs competitive for budget-minded consumers. A potential alteration to this tax credit could pose a threat to Rivian’s strategy of introducing lower-priced vehicle lines, such as the upcoming R2 platform, which is projected to be priced at $45,000 upon its 2026 launch.

It’s worth noting that while Trump’s policies may not be entirely detrimental to Rivian, they could potentially pose challenges for its foreign competitors. The 25% tariff on imported vehicles might disadvantage non-American automakers. However, since Rivian produces all its cars at its Illinois plant, and with plans for potential expansion of the new R2 line, it may stand to benefit from incentives offered by the OBBBA for domestic capital investment.

Reducing support for electric vehicles (EVs) might cause Rivian’s gasoline-powered competitors to persist with conventional internal combustion engines for a longer period. This could potentially decrease competition within the electric vehicle industry.

Can Rivian become profitable?

Currently, Rivian finds itself in a challenging position, as indicated by their first-quarter financial reports. Although revenue increased by a modest 3% year-on-year to reach $1.24 billion, this growth rate is rather uninspiring for an investment focused on rapid expansion. Additionally, the company reported an operating loss of approximately $655 million in this quarter.

Despite a slow increase in revenue during the last year, Rivian has significantly reduced its losses by nearly half. This suggests that the company’s aggressive cost-reduction strategies in areas like staff, supply chain, and production have been highly effective. In simpler terms, even though sales haven’t grown much, they’ve managed to save a lot of money.

Moreover, I’ve noticed that Rivian has managed to secure a significant $1 billion investment from none other than Volkswagen. This partnership is leading them towards a collaborative endeavor, focusing on developing software. The potential benefits of this joint venture are substantial, as it could lead to cost reductions through the power of economies of scale.

Currently, it seems that further expansion in revenue might be the key factor for Rivian to pave a route towards profitability and ultimately achieve success as a company. Over the coming years, introducing more affordable models such as the R2 and R3 could potentially bring about this goal.

Is Rivian a buy?

Rivian’s future largely hinges on the success of its upcoming vehicle models, set to debut next year. However, it’s premature to make judgments about its prospects as we’re yet to understand how changes in subsidies and government policies could impact consumer interest in electric vehicles (EVs). Prudent investors might choose to observe from the sidelines until more details emerge.

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2025-07-20 13:33