Rivian CEO RJ Scaringe at the company's first “Autonomy and AI Day” on December 11, 2025 in Palo Alto, California.
Lora Kolodny | CNBC
Rivian Automotive impressed Wall Street on Thursday with its plans for artificial intelligence, automation and an internally developed silicon chip, but significant demand and capital challenges remain for the electric vehicle maker.
Even though Wall Street analysts expressed some optimism following Rivian's first “Autonomy and AI Day,” the company's stock fell 6.1% to close Thursday at $16.43 per share. But shares recovered on Friday to close at $18.42, up 12.1%.
While the event did not cause many analysts to change ratings or price targets, Needham raised his price target for Rivian by 64% to $23 per share. The firm did so because of technology announcements and the potential for future licensing deals, as well as higher-than-consensus expectations for deliveries next year of the company's new R2 midsize SUV.
“RIVN marked a change of one [automaker] adopt autonomy to one that leverages AI to build end-to-end autonomy,” Needham analyst Chris Pierce said in a note to investors on Friday.
The company's stock had risen ahead of AI Day, but many analysts believed the event's announcements were already “considered.” Shares also fell when OpenAI made its own artificial intelligence announcement on Thursday, revealing its most advanced model yet.
“We attended Rivian's AI and Autonomy Day in Palo Alto yesterday and came away very impressed with the strategic direction outlined by management,” Deutsche Bank analyst Edison Yu said in a note to investors on Friday. “However, the stock's weakness appears justified given the rally since earnings and the lack of a major AI partnership or deal announcement.”
Rivian's announcements included a proprietary chip, RAP1, designed for “physical AI,” meaning autonomous driving; an evolved software architecture, or “brain” of the vehicle; a new AI assistant; and a roadmap to get to “personal L4,” or fully autonomous personally owned vehicles.
The latter begins later this month with an update to its hands-free driving system, followed by plans to continue expanding capabilities until the vehicles reach full autonomy in the coming years. Rivian did not disclose a timeline for full autonomy or potential autonomous vehicles for the robotaxi fleet.
Ahead of the event, Rivian shares rose more than 30% to $17.50. Despite those gains, shares remain well below the company's IPO levels of $78 per share in 2021.
Barclays analyst Dan Levy and others said that while Rivian's technology announcements, including the surprising proprietary chip, were impressive, the company remains a “show me” story amid more challenging market conditions.
“With RIVN facing a tougher path to breakeven on core vehicle sales alone, we believe that with enhanced AV/AI capabilities, RIVN is further paving the way for additional software/services revenue, which would increase margin,” Levy said Friday in a note to investors. “To be clear, there is certainly an element of 'show me' on RIVN's part about its capabilities.”
Challenges include falling demand for electric vehicles following the end of tax credits of up to $7,500 in September, a lack of other support under the Trump administration and infighting at the company related to products and capital.
Several analysts noted that adoption of advanced driver assistance systems remains low across the industry, even among U.S. electric vehicle leaders. teslaand Rivian continues to catch up with other companies that have offered these types of systems for years.
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Rivian founder and CEO RJ Scaringe and other executives argued that vertical integration of the company's internal capabilities, including software, artificial intelligence, vehicle platforms and other technologies, will allow the automaker to be more efficient, faster and better than others.
“AI allows us to create technology and customer experiences at a completely different pace than we've seen in the past,” Scaringe said during the event.
Such arguments, as well as the automaker's previous $5.8 billion joint venture software deal with Volkswagen, have led Wall Street to price Rivian's software business higher than its core electric vehicle production and sales, given market conditions.
A $12 price target on Rivian shares from Morgan Stanley, which recently downgraded the company to underweight, includes $7 for software and services and $5 for its core automotive business. Several analysts added that Rivian could license or sell its newest technologies, including chips.
“RIVN is developing a suite of hardware and software offerings to remain competitive in an Auto 2.0 world. However, several risks remain around demand, potentially limiting the data capture needed to achieve higher levels of autonomy,” Morgan Stanley's Andrew Percoco said in a Friday note.
Morgan Stanley raised concerns about autonomy adoption rates, lackluster demand for electric vehicles ahead of Rivian's new “R2” vehicle next year, and a prolonged path to profitability as reasoning for the rating affirmation.
Rivian R2 is on display at the company's first Autonomy and Artificial Intelligence Day, showcasing developments in autonomous driving technology, in Palo Alto, California, on December 11, 2025.
Carlos Barria | Reuters
RBC Capital Markets analyst Tom Narayan agreed: “The developments enhance Rivian's product offering, but do not address current concerns about R2/R3's liquidity and profitability.”
Rivian continues to lose billions of dollars annually, despite significant cost reductions and gains in software revenue thanks to its deal with VW.
Rivian ended the third quarter with $7.7 billion in total liquidity, including nearly $7.1 billion in cash, cash equivalents and short-term investments that Scaringe said position the company “very well” for the launch of R2.
The R2 midsize SUV is crucial for Rivian, especially since it is a major market in the U.S. With expectations of a starting price of $45,000, it is anticipated to expand Rivian's customer base and be a proving point for the company's efforts toward profitability and cost savings.
Rivian's current consumer models of R1 pickup trucks and SUVs start at more than $70,000. It also makes electric delivery vans, largely for its largest shareholder, Amazonwhich start at around $80,000.
“Profitability pressure will likely intensify as Rivian launches its ~$45,000 R2 platform in the highly competitive midsize SUV segment,” Narayan said. “While targeting a lower price could increase market reach, the R1 platform struggles with profitability despite being almost double the price of the R2 surge.”
Rivian stock, with a market cap of $22.5 billion, has a Hold rating with a price target of $15.43 per share, based on average ratings and estimates compiled by FactSet.
-CNBC Michael Bloom contributed to this report.
