Rivian Automotive (RIVN 0.87%) exited 2023 with as much or more momentum than its electric vehicle (EV) start-up peers, but that has slowly eroded through today. Now throw in potential tariffs because Rivian imports key parts for the vehicles it produces in the U.S., and the bears are becoming louder.

That includes Bernstein analyst Daniel Roeska and his team, which had quite a bit to say this week.

The bear case

The firm maintained its underperform rating and $6.10 price target, which implies a near 50% drop from Wednesday's closing price of $11.49 per share, citing growing tariff effects and financial headwinds.

Investors might be wondering how Rivian is affected by tariffs since it produces all of its vehicles in the U.S., but the key is that the automaker imports crucial components such as batteries from South Korea and China. As things currently stand, the Trump administration is set to implement a 25% tariff on imports of key auto parts in May.

The analyst team also cut its 2025 delivery forecast to 37,000 units, which is down 20% from the middle of Rivian's current guidance. This point is probably the least surprising, and looking at the graph below, you can see the recent softness in deliveries.

Unfortunately for Rivian investors, there isn't a known catalyst in 2025, and the lower-priced R2 can't come soon enough in 2026 to provide a spark in deliveries and revenue.

Information source: Rivian; chart by author.

When it came to the bear case, the Bernstein analysts didn't hold back: "We expect Rivian to discontinue its Lithium Iron Phosphate (LFP) variants, downgrade volume and [guidance for earnings before interest and taxes], and be forced to consider raising fresh equity."

The team now expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach negative $2.2 billion, which is 17% worse than the company's current forecast.

But wait, there's more

The bear case extended beyond financial metrics with the team noting concerns about the company's two significant victories: the joint venture with Volkswagen, valued up to $5.8 billion, and the Department of Energy (DOE) commitment for a $6.6 billion loan to help fund its upcoming Georgia plant.

More specifically, the team has doubts about Rivian achieving two nonconsecutive quarters of $50 million in gross profit, or two consecutive quarters of gross profit. Management said that was unlikely to happen during the first half of 2025, and is not guaranteed anytime in 2025 although its fourth quarter satisfied half of the $50 million in gross profit milestone.

The milestone is tied to a $1 billion chunk of Volkswagen's potential $5.8 billion investment, so it's a big deal (a deeper dive on this can be found here).

When it comes to the DOE loan, there is a potential for issues as the company's financials deteriorate. If the numbers suggest an unreasonable prospect of repayment, it could delay much-needed funding for its Georgia plant, which will produce next-generation vehicles.

Don't panic

It's true, the bearish note and near 50% lower price target sound pretty bad for Rivian investors, but it's important not to panic. As things sit currently, the company is on track to reach the full potential of Volkswagen's joint venture, and the DOE loan is still on its way.

Furthermore, unless its financials deteriorate faster than expected, the company should have funding to reach production of its R2, which the EV maker needs to be a hit with consumers. This just serves as a reminder that it's important to look at the other side of the coin when analyzing your investments, even if it's negative.