Rivian Automotive Inc (RIVN, Financial) shares dropped 7% on Monday morning following a downgrade by BofA Securities, intensifying caution among market participants. The report from BofA, led by analyst John Murphy, flagged multiple risks for the electric vehicle manufacturer, highlighting a softer-than-expected 2025 outlook, mounting competition, and near-term sector uncertainties. The firm revised its rating from "Neutral" to "Underperform" while maintaining a $10.00 price target.
Meanwhile, Murphy also noted Rivian's evolving partnership with Volkswagen complicates forecasts of earnings over the next four years. Also, the report said that the new SUV and CUV models that Rivian is planning to launch in 2026 and 2027 might make its position in the market even more difficult. As U.S. EV incentives shift to a federal level, the demand for electric vehicles will slow in the short term. This comes as the broader macroeconomic landscape shapes up to be headed by policy adjustments that might affect the financial support that Rivian had previously secured, such as Rivian's $6.6 billion Department of Energy loan that closed on January 16, 2025.
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