California-based EV startup Rivian Automotive RIVN reported fourth-quarter 2024 results yesterday, with revenues beating expectations and rising year over year. The company's revenues reached a record high, driven by higher sales of regulatory credits, growth in software and services and a boost in R1 average prices with the Tri-Motor option now available. Loss per share also came in narrower than estimates and the year-ago figure.

The biggest highlight was Rivian achieving a gross profit for the first time in the fourth quarter of 2024. The company managed to cut $31,000 in cost per vehicle compared to the same quarter last year. Gross profit came in at $170 million, in stark contrast to the $660 million gross loss in the fourth quarter of 2023. That’s a key milestone for Rivian and the company credited this improvement to cost-cutting measures, efficiency in variable and fixed costs, and higher revenue per vehicle. Looking ahead, the company expects to maintain a modest gross profit in 2025.

Despite its progress, Rivian acknowledged that external challenges could weigh on 2025 sales. Potential changes in government policies, including shifts in EV incentives and tariffs under Trump administration, could impact demand. As such, the company provided a lower delivery forecast of 46,000 to 51,000 vehicles for 2025, down from 51,579 units delivered in 2024.

Amid an evolving EV landscape, Rivian’s focus on operational efficiency and its cautious sales outlook have left investors wondering about the stock’s potential. Let’s break down the key fundamentals and recent developments to see if Rivian is a smart buy right now.

RIVN’s Deal With Volkswagen and its Future Vehicle Lineup

To strengthen its position, Rivian finalized its joint venture deal with Volkswagen VWAGY in the fourth quarter of 2024. This partnership, worth up to $5.8 billion, is expected to bring $3.5 billion in funding over the next few years. The collaboration aims to advance Rivian’s next-generation electrical architecture and software technology, starting with the R2 model.

Rivian has ambitious plans to expand its lineup. The upcoming R2, R3, and R3X models are designed for more budget-conscious buyers. R2, a midsize SUV, is set to debut in the first half of 2026 at a significantly lower price than the R1 lineup. CEO RJ Scaringe sees R2 as a major driver of future growth, citing substantial cost reductions in materials and production.

Operational Efficiency to Drive Rivian

Rivian has been actively working on reducing costs and improving efficiency. In the last reported quarter, the company reported an adjusted loss before interest taxes, depreciation and amortization of $277 million, a significant improvement from the $1 billion loss in the fourth quarter of 2023. For the full year, EBITDA losses narrowed by 29% to $2.7 billion. For 2025, Rivian expects further improvements, projecting an EBITDA loss of $1.7-$1.9 billion.

The second-generation R1 models are expected to lower material costs by approximately 20%.Rivian’s CEO sees the R2 models as a key growth driver, noting that its material costs are about half of R1’s, while other production costs have been cut by more than half, improving efficiency and profitability.

RIVN’s Progress in Autonomous Driving

Rivian is making strides in autonomous technology by developing its Autonomy Platform in-house. This allows the company to control its software without relying on suppliers. The second-generation R1 features an advanced sensor suite with 55-megapixel imaging and five high-tech radars. These systems, powered by strong onboard computing, process real-world data to improve driver assistance features. Updates will be rolled out every four weeks, and Rivian’s paid Autonomy Platform+ will offer hands-free driving with Enhanced Highway Assist. A free trial will be available for all second-generation R1 owners, with expanded capabilities planned for late 2025.

Challenges in Rivian’s Path

Political uncertainty remains a key concern. With Donald Trump in the White House, his unfriendly stance on EVs could lead to policy changes that may impact Rivian’s business. Rivian is aware of these risks. Additionally, competition in the EV sector is intensifying, with both legacy automakers and new entrants vying for market share. Rivian’s ability to stand out and maintain growth in this crowded space is critical.

Federal loan uncertainty related to the Georgia plant adds to concerns. In late 2024, the U.S. Department of Energy approved a $6.6 billion loan to support Rivian’s new Georgia plant. The Georgia factory, supported by state incentives, would be Rivian’s second manufacturing site and would help produce the R2 and R3 models. The plant is expected to create 7,500 jobs and an additional 2,000 construction jobs by the end of the decade. However, under Trump administration, the future of this funding remains uncertain.

Cash burn also plays a spoilsport, with reserves falling from $7.9 billion at the end of 2023 to $5.3 billion at 2024 end.

Rivian’s valuation is also stretched. It is currently trading at a forward sales multiple of 2.49, higher than its peer group as well as its own average over the last two years. The stock has a Value Score of F.

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To Buy or Not to Buy RIVN?

While Rivian has made notable progress in cost reduction, production efficiency and strategic partnerships, challenges remain. Cash burn is still a concern. The soft delivery guidance for 2025 also sends mixed signals. Given the political uncertainty and financial risks in play, new investors may want to wait before buying. However, existing investors might consider holding their shares and watching Rivian’s progress closely.

RIVN currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Rivian Automotive currently has an average brokerage recommendation (ABR) of 2.35 on a scale of 1 to 5 (Buy to Strong Sell). Of the 26 brokers covering RIVN, 13 rate it a “Hold,” 11 call it a “Strong Buy/Buy,” and two a “Sell.” The average price target of $14.96 suggests a 10% upside from current levels.

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