Rivian (NASDAQ:RIVN) Is Less Efficient Than Tesla; Says Analyst

With 25K vehicles produced in 2022, Rivian (NASDAQ:RIVN) has emerged as a leading EV (Electric Vehicle) player. However, the company is less efficient than Tesla (NASDAQ:TSLA), as noted by Adam Jonas of Morgan Stanley. Jonas said the RIVN’s inefficiencies are taking a toll on its margins.

The analyst said that RIVN set a production target of 50K vehicles for 2023. While production is projected to double, Jonas expects RIVN to post a negative gross margin of 68%. In contrast, the analyst pointed out that when Tesla produced over 50K units in 2015, it delivered a positive gross margin of 21.3% (ex-credits).

While Jonas sees inefficiencies at Rivian, he quickly points out that the operating environment has changed a lot, negatively impacting the company’s margins. For instance, the surge in lithium prices and significant competition augmented Rivian’s challenges vis-a-vis Tesla at the same stage.

Jonas reiterated his Buy recommendation on RIVN stock. His price target of $26 implies a stellar upside potential of 96.82% from the current levels.

While Jonas is bullish about RIVN, let’s check what other analysts recommend for the stock.

Is RIVN Stock a Buy?

RIVN is focusing on ramping production and cost reduction, which bodes well for growth. However, near-term pressure on margins and heightened competition could play spoilsport. 

Including the rating from Jonas, RIVN stock has received 13 Buy ratings. At the same time, four analysts recommend a Hold, while two are bearish. Overall, RIVN stock has a Moderate Buy consensus rating. Meanwhile, analysts’ average price target of $28.11 implies 112.79% upside potential. 

While analysts are cautiously optimistic about the company, hedge funds sold 18.2 shares of RIVN in the previous quarter. RIVN stock scores three on TipRanks’ Smart Score system, implying it is more likely to underperform the broader markets.