Rivian Automotive Inc (NASDAQ:RIVN)’s expanded joint venture with Volkswagen will see a further $800 million pumped into the Tesla Inc (NASDAQ:TSLA) rival, but analysts at UBS have voiced concerns that Rivian “is helping a direct competitor” with the tie-up.
While the $5.8 billion total funding injection will provide a substantial safety net for loss-making Rivian’s finances, the electric vehicle manufacturer's technology-sharing agreements with VW will need to be prudely managed.
Via the joint venture, VW will gain access to the technology being developed by Rivian. VW has already confirmed that its Scout EV brand will start using Rivian’s technology from 2027, noted UBS.
“We believe Rivian is counting on scale/cost/purchasing savings from the JV to help their own operations,” the bank added.
Analysts at the bank have a neutral rating on Rivian stock with an $11 price target.
Wedbush analysts are more bullish on Rivian, giving the stock a $20 price target and an ‘outperform’ rating.
The joint venture is “a breath of fresh air as the Rivian story develops”, said Wedbush analysts, adding: “Rivian will leverage this opportunity by utilizing this robust capital roadmap to support future growth while vertically integrating its software platform and electrical architecture while achieving further cost savings and deliver improved vehicles down the line.”
“After seeing lots of choppiness and pain points in the supply chain in the past year, we believe this is the right partner announcement coming in at the right time as RIVN looks to navigate the ship in stormy waters with sufficient capital to fund its EV roadmap over the coming years,” they added.
Rivian shares rallied 18% to $12.46 following news of VX’s increased capital injection.