BofA cuts rating, target on Rivian due to mounting risks

Investing.com -- Bank of America downgraded Rivian Automotive Inc (NASDAQ: RIVN) to Underperform from Neutral on increasing risks despite the electric vehicle startup's progress toward positive gross margins. BofA also lowered its price target on Rivian to $10 from $13.

Rivian is “making progress towards sustainably positive gross margins, but risks (are) piling up,” analyst at BofA said.

Rivian's 2025 outlook was softer than expected, while its recently announced partnership with Volkswagen AG (OTC: VWAGY) complicates earnings forecasts for at least the next four years.

Rising competition in the EV SUV and crossover segments, with new entrants such as Lucid (NASDAQ: LCID) Group’s Gravity SUV and Volkswagen’s Scout brand set to intensify market pressures.

Rivian now expects 2025 adjusted EBITDA losses of $1.9 billion to $1.7 billion, below previous BofA and consensus estimates. Deliveries are projected between 46,000 and 51,000 units, down from BofA’s prior forecast of 60,000, as the company plans significant downtime at its Normal, Illinois, plant in the second half of the year.

Slowing EV demand and potential policy shifts could further weigh on Rivian’s outlook, BofA said, adding that the Biden administration’s $6.6 billion Department of Energy loan to the company could face risks under a new administration.

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