Rivian Seen as ‘the One’ to Challenge Tesla, Says Morgan Stanley

According to Yahoo Finance, a recent report from investment firm Morgan Stanley Research names Rivian as “the one” to beat Tesla.

Rivian, an electric vehicle (EV) startup backed by eCommerce giant Amazon and veteran automaker Ford, went public on November 10 and raised a whopping $11.9 billion USD in funding at an initial offering price of $78 per share.

Nearly a month since Rivian’s IPO and three months since its first production EV rolled off the line, the company’s shares are trading at $122.12 at the time of writing and have achieved an all-time high of over $165. Morgan Stanley’s report gives Rivian an “overweight” rating and sets a price target of $147 per share.

The financial experts at Morgan Stanley also stressed Rivian’s potential to be a formidable challenger to Tesla.

“Rivian’s compelling product, strong management, and deterministic access to capital are underpinned by a strategic relationship with [Amazon] (AMZN) to decarbonize the final mile,” the report reads. “We see it as ‘the one’ that can challenge Tesla.”

Morgan Stanley noted that while Rivian’s all-electric R1T pickup and R1S SUV are marketed as the stars of the show, the automaker’s electric delivery vans are a unique offering that is usually undersold and sets Rivian apart from the rest of Tesla’s competition.

“The electric delivery van (EDV) has the potential to dominate the fast growing final mile EV fleet which has been largely unaddressed by the EV market until now,” reads the firm’s report.

That’s not to say that Rivian will have easy pickings of the market, however. “Comparing your valuation multiple to Tesla is easy. Competing against Tesla is hard,” says Morgan Stanley.

And there are plenty of other areas of risk for Rivian beyond competition from Tesla (and others). Rivian’s first hurdle will be scaling production in the face of supply chain disruptions and the ongoing global shortage of chips and other automotive parts going into next year.

Furthermore, the bulk of the EV market is in China, and entering that region is no small feat for a manufacturer that’s all the way over in the U.S.

“We forecast close to ~$2tn of combined EV/battery expenditure globally through 2030. At the same time, we believe this new generation of EV makers like RIVN may struggle to gain access to key international EV markets like China,” reads the report.

Morgan Stanley says Rivian will also have to be careful with capital. According to the research firm, the company will need to raise an additional $14 billion USD at the very least to fund its expansion. Morgan Stanley forecasts that Rivian will remain EBITDA and cash flow negative through the 2026 fiscal year.