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Rivian has emerged as Wall Street’s most popular electric vehicle stock as Tesla and the industry as a whole face weak demand and companies are forced to cut prices. Ahead of Thursday’s launch of the R2 mid-size SUV, Jefferies began reporting on Rivian with a buy rating and a price target of $16. The price target suggests a 45% upside from Wednesday’s closing price of $11.03. “From the beginning, Rivian has been given more time and capital than many other startups to ‘do things right,'” analyst Philippe Houchois said in a research note Thursday. told. Rivian is currently the only major independent U.S. electric vehicle maker with a consensus buy rating from Wall Street, with 55% of analysts backing the stock with an average price target of $17.22. Tesla, Fisker, and Lucid all currently receive an affirmative rating from a majority of analysts. “In our view, the management team has certainly created a distinct lifestyle brand with strong sustainability and environmental credentials, and pioneered the EV last-mile delivery van platform,” said Houchois. wrote. Although Rivian has an “unparalleled capital base” that could help it fix gaps in its business model, the company faces two significant challenges this year, Fouchois wrote. Rivian needs to demonstrate that it can reduce production costs by $35,000 to $40,000 per vehicle and make the R2 at significantly lower cost than previous models, analysts said. “These are the conditions under which Rivian will raise the estimated $2.5 billion in funding needed to launch R2, and whether the business can remain independent or whether its intellectual property assets are more valuable to a larger organization. ,” Houchois told clients. Jefferies expects Rivian to burn through $9 billion in cash this year before generating positive free cash flow in 2027. As Wall Street turns bullish on Rivian, Tesla faces skepticism from analysts, at least in the short term. He was once an industry darling – as recently as March 2023, more than half of analysts rated Tesla a “buy.” Almost half of analysts currently rate Tesla a Hold, with an average price target of $210.65, implying a 19% upside from Wednesday’s closing price. $176.54. Morgan Stanley analyst Adam Jonas, a Tesla bull, said this week that Tesla could be in the red this year as it struggles with an aging product lineup amid increasing competition from hybrid cars. As a result, the company’s target price was lowered. Jonas said he still believes in Tesla long-term due to its investments in artificial intelligence and robotics, but said the company needs to strengthen its core automotive business. Tesla and Rivian stock prices have fallen 28% and 52%, respectively, since the beginning of the year. Rivian is the EV maker closest to Tesla in spirit, with “a unique software stack, strong brand identity, global potential and similar growing pains,” Houchois told customers. . —CNBC’s Michael Bloom contributed to this report.
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