Rivian (RIVN) shares have been on the receiving end of a proper hammering in 2022 and are down by 63% on a year-to-date basis. However, investors liked the latest news out of the EV start-up’s HQ and will be hoping it could help change the narrative for this beaten-down EV stock.
So, what happened? Last week, Rivian and Mercedes-Benz disclosed that they had signed an MOU to manufacture electric vans together in Europe. The JV will make use of an existing Mercedes-Benz site in Central/Eastern Europe to construct an all-new electric-only plant. According to the companies, production is expected to kick off “in a few years.” The pair aim to manufacture two large vans; one based on Mercedez’s Vans Electric Architecture (VAN.EA) and another on Rivian’s second-gen electric-van, Rivian Light Van (RLV) platform.
Deutsche Bank analyst Emmanuel Rosner thinks there are a couple of reasons why Rivian stands to benefit from the collaboration.
“First,” said the analyst, “it will allow the company to enter the European market at a lower cost of investment, consistent with Rivian’s new strategy of capital efficient model for expansion. Second, the partnership with Mercedes likely gives Rivian added credibility in the marketplace and should enable it to leverage Mercedes’ established supply chain and manufacturing footprint in Europe, providing the OEM a short-cut to entering a new market with a very credible partner.”
That’s all well and good but before all that takes place, Rivian has a lot of U.S.-based work to take care of. There’s the target of producing 25,000 vehicles for the year to meet, and the “ramping up” of EDV deliveries to Amazon and of the R1T/R1S to consumers. The company also needs to increase “capacity utilization” at its Normal, Illinois plant, and construct its second US facility and new R2 model.
“Nonetheless,” Rosner summed up, “we view the JV announcement as a positive development for Rivian, as it efficiently addresses part of Rivian’s plans for international expansion on top of its U.S. production ramp efforts.”
To this end, Rosner reiterated a Buy rating on RIVN shares, along with a $46 price target, suggesting shares have room for ~19% growth in the year ahead. (To watch Rosner’s track record, click here)
Most analysts back Rosner’s stance; RIVN shares garner 7 other Buys and with the addition of 3 Holds and 1 Sell, the analyst consensus rates the stock a Moderate Buy. The average price target currently stands at $50.33, implying one-year share appreciation of ~30%. (See Rivian stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
