Shares of Rivian Automotive (NASDAQ: RIVN) have been on an upward trajectory, up 23.5% in the past five days, ever since the automotive company gave a positive production update. Rivian’s electric vehicle (EV) models include the R1T pickup truck, the R1S Sports Utility Vehicle (SUV), and the Electric Delivery Vehicle (EDV).
The company currently produces vehicles at its factory in Normal, Illinois. This factory has the capacity to produce 150,000 vehicles annually. It plans to build another factory in Georgia to produce its second generation of vehicles or the R2 models.
The automobile industry has been hit by production woes as supply chain logjams and chip shortages have impacted production. However, Rivian’s latest production update gave an indication that its growth story could be finally on track.
Rivian’s Production Update
The company produced 4,401 vehicles in Q2, which is almost double its Q1 production figure of 2,553 vehicles. The EV company’s vehicle deliveries stood at 4,467 vehicles in Q2, a sharp rise from the 1,227 units it delivered in the previous quarter.
Rivian reiterated its target of producing 25,000 vehicles in 2022.
This production update was above Street estimates, according to Wedbush analyst Daniel Ives. The top-rated analyst was upbeat about this update and stated that this gave a “much needed confidence boost for the story after the malaise seen over the past 9 months.”
Demand on an Uptick for Rivian
Rivian had highlighted the strong demand for its vehicles in its June 6 letter to shareholders, with preorders of over 90,000 R1 vehicles and the initial order of 100,000 EDVs from its key shareholder, Amazon (AMZN).
With $17 billion of cash on its balance sheet as of the end of Q1, Rivian is optimistic that it can support the 2025 launch and ramp-up of its R2 vehicle platform.
Analyst Ives believes that Rivian’s Q1 performance coupled with this production update shows “that Rivian (and the management team) is finally starting to get their act together and live up to some of the massive hype for the company coming out of the gates.”
According to the analyst, Rivian is poised to be a “major EV stalwart” over the next ten years due to its commercial relationship with Amazon and a “massive influx of current and future EV demand.”
Ives considered this production update important with 2023 “slated to be major inflection year for the EV pickup market with the F-150 Lightning, GM’s Silverado, and the Cybertruck on the near-term map battling for consumers.”
The analyst is of the view that RIVN has the potential to grab a major share of the EV market over the next few years. As a result, Ives remained bullish on the stock with a Buy rating and bumped up the price target to $40 from $30, “reflecting increased confidence in the Rivian story.”
Ives’ price target implies an upside potential of 25% from current levels.
Besides Ives, other analysts on the Street are cautiously optimistic about the stock with a Moderate Buy consensus rating based on eight Buys, five Holds, and one Sell. The average Rivian price target of $49.71 implies an upside potential of 55.4% at current levels.
Bottom Line
Judging by RIVN’s most recent production update, it seems that the company’s production woes are finally easing up and it seems to be on track to reach its production target of 25,000 vehicles this year.
Investors’ faith in the Rivian growth story also seems to be restored, as indicated by the TipRanks Crowd Wisdom tool. This tool indicates that TipRanks investors are very positive about the stock, with 12% of the top investors on TipRanks increasing their holding of Rivian in the last 30 days.
