Deutsche cuts Rivian target, says new options a ‘deep price cut’

Deutsche Bank lowered the firm’s price target on Rivian Automotive to $16 from $19 and keeps a Hold rating on the shares. The company last week expanded its R1T and R1S configuration options to allow the cheapest Standard battery pack selection and introduced a new pack called “Standard+”, the analyst tells investors in a research note. The firm believes the move is a “deep price cut without much improvement in cost, which could hurt the company’s financials.” It likely signals weakening of demand for R1, which reflects a broader slowdown in electric vehicle adoption, but could have significant consequences for Rivian, contends Deutsche. The firm worries the new cheaper configurations could deepen R1 losses and push out Rivian’s path and timeline to breakeven, lead to larger free cash flow burn, prompt the need for additional capital, and potentially even raise questions around future R2 profitability. It says the new Standard “packs as a clear negative signal.”