The US Department of Energy has agreed to lend $6.6 billion to Rivian Automotive Inc (NASDAQ: RIVN) to set up a new production facility in Georgia.
Dubbed the “Project Horizon”, the 9 million square foot plant would produce an estimated 400,000 electric vehicles annually. In a statement last week, Rivian chief executive RJ Scaringe said:
This loan will help us accelerate the launch of our Georgia plant for R2 and R3, providing thousands of jobs in the state.
But the DOE agreement doesn’t necessarily make Rivian stock any more attractive to own for 2025, according to analysts at Truist.
Rivian stock lacks a meaningful upside
Truist analyst continue to rate Rivian shares at “hold” and see them as fairly valued at about $14 that’s roughly in line with the price at which the EV stock is trading at writing.
Simply put, the investment firm does not see any meaningful upside in Rivian stock from current levels.
In their recent note to clients, its analysts cited the possibility of Donald Trump choosing to repeal parts of the Inflation Reduction Act that currently offers subsidies on purchase of electric vehicles for their neutral stance.
They agreed that EV tax credits under the IRA benefit RIVN’s vehicles only modestly – but said the possibility that the new government could rescind the initiative still creates uncertainty for EV stocks in 2025.
RIVN continues to burn cash at a fast pace
Rivian’s loan deal with the Department of Energy arrived a couple weeks after the EV maker reported 14,183 deliveries for the final quarter of 2024.
Analysts, in comparison, expected around 13,472 vehicle deliveries.
The California based company is scheduled to report its full Q4 earnings on February 20th. Consensus is for it to lose 82 cents a share versus $1.58 per share a year ago.
The fact that RIVN is a capital-intensive business and the company continues to lose money at a significant pace is why Morgan Stanley analysts also have “equal weight” rating only on Rivian stock.
In fact, AutoForecast president recently dubbed Rivian a programme or two away from bankruptcy.
Should you invest in Rivian stock today?
In 2024, Irvine-headquartered Rivian Automotive Inc faced a few other setbacks as well, including a fire that damaged some vehicles at its Illinois plant.
Plus, the automaker had to halt production of its EDVs due to parts shortage as well.
Analysts are at Truist Financial and Morgan Stanley are not particularly bullish on Rivian stock also because it now faces intense competition, especially from the likes of BYD, NIO, and other Chinese manufacturers.
Put together with cash burn and high operational costs, they are wary of owning RIVN shares at current levels.
It is also noteworthy that the electric vehicles maker does not currently pay dividend either to incentivize risk-taking among investors either.
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