Rivian Automotive cut at Barclays as technology not enough to avoid EV winter

Barclays downgraded shares of electric vehicle company Rivian Automotive (NASDAQ:) to Equal-Weight from Overweight in a note Monday, lowering the stock price target to $16 from $25 per share.

Analysts told investors that their downgrade is based on three factors, with the first being that the company has a great product, but its technology is not enough to avoid increased signs of demand pressure amid a broader EV slowdown.

Secondly, the bank believes demand softness implies risk from pricing and slower volume growth. As a result, there is a “longer path to breakeven.”

“Signs of demand weakness in EDV and R1T emerged last year, but we hoped that demand would remain resilient for R1S, underpinned by a solid
backlog,” explained the analysts. “But that is no longer the case – recent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version (likely margin dilutive) seemingly indicate softened demand.”

Barclays also sees an ongoing need for capital raises at Rivian. They said the consequences of weak demand are significant.

Not only does it mean the volume outlook is challenged, but it also presents a potential pricing risk, with both points reinforcing RIVN is likely to miss its 2024 target of reaching gross margin profitability.

“Moreover, with ongoing capital needs given preparation for the high volume R2 in 2026, we see future pressure,” the bank concluded.