Rivian’s AI and autonomy are spectacular, however not sufficient to offset EV considerations

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 The company 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.

Although Wall Street analysts expressed some optimism following Rivian’s first “Autonomy and AI Day,” the company’s stock fell 6.1% to close at $16.43 per share on Thursday. But in intraday trading on Friday, shares rebounded, rising more than 12%.

While the event didn’t cause many analysts to change their ratings or price targets, Needham increased his price target on Rivian by 64% to $23 per share. The company did this due to the technical announcements and the potential for future licensing agreements, as well as higher-than-consensus expectations for deliveries of the company’s new R2 midsize SUV next year.

“RIVN signaled a change from one [automaker] “The adoption of autonomy toward a system that leverages AI to build end-to-end autonomy,” Needham analyst Chris Pierce said in an investor note Friday.

The company’s shares had risen in the run-up to AI Day, but many analysts believed the event’s announcements were already “priced in.” Shares also fell as OpenAI made its own AI announcement on Thursday, unveiling its most advanced model yet.

“We attended Rivian’s Autonomy & AI Day in Palo Alto yesterday and were largely impressed with management’s strategic direction,” Deutsche Bank analyst Edison Yu said in an investor note on Friday. “However, the stock’s weakness appears to be justified considering its results have increased since then and it has not announced any major AI partnership/deal.”

Rivian’s announcements included a proprietary chip, RAP1, designed for “physical AI,” namely autonomous driving; an evolved software architecture or “brain” of the vehicle; a new AI assistant; and a road map for the route to the “personal L4”, i.e. to fully self-driving private vehicles.

The latter will begin an update to its hands-free driving system later this month, followed by plans to further expand capabilities until the vehicles reach full autonomy in the coming years. Rivian did not disclose a time frame for full autonomy or potential autonomous vehicles for its robotaxi fleet.

Ahead of the event, Rivian shares rose more than 30% to $17.50. Despite these gains, shares remain well below the company’s IPO level of $78 per share in 2021.

Barclays analyst Dan Levy and others said that while Rivian’s technology announcements, including the surprise proprietary chip, were impressive, the company remained a “show me” story despite tougher market conditions.

“As RIVN faces a more difficult path to break even on core vehicle sales alone, we believe RIVN will further pave the path to additional software/services revenue with enhanced AV/AI capabilities, which would be margin accretive,” Levy said in an investor note on Friday. “To be clear, there is certainly a ‘showing off’ element to RIVN regarding his capabilities.”

Challenges include a collapse in demand for electric vehicles after tax credits of up to $7,500 ended in September, a lack of other support under the Trump administration and internal struggles within the company over products and capital.

Several analysts noted that adoption of advanced driver assistance systems remains low across the industry, even among the U.S. electric vehicle market leader Teslaand Rivian continues to try to catch up with other companies that have been offering such systems for years.

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“Pure EV” stocks play Tesla, Rivian and Lucid in 2025.

Rivian founder and CEO RJ Scaringe and other executives argued that the vertical integration of the company’s internal capabilities, including software, AI, 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 pace that is completely different from what we have 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 value 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 the company recently downgraded to underweight, includes $7 on software and services and $5 on its core automotive business. Several analysts added that Rivian may be able to license or sell its latest technologies, including chips.

“RIVN is developing a range of hardware and software offerings to remain competitive in an Auto 2.0 world. However, several risks to demand remain that may limit the data collection needed to achieve higher levels of autonomy,” Morgan Stanley’s Andrew Percoco said in a note Friday.

Explaining the rating affirmation, Morgan Stanley cited concerns about autonomous vehicle adoption rates, weak demand for electric vehicles ahead of Rivian’s new “R2” vehicle next year and a longer path to profitability.

Rivian R2 will be unveiled at the company’s first Autonomy and AI Day on December 11, 2025 in Palo Alto, California, showcasing developments in self-driving technology.

Carlos Barria | Reuters

Tom Narayan, analyst at RBC Capital Markets, agreed: “The advances improve Rivian’s product offering, but do not resolve ongoing liquidity and R2/R3 profitability concerns.”

Rivian continues to lose billions of dollars annually despite significant cost cuts and increases 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, which Scaringe said positions the company “really well” for the R2 launch.

The R2 midsize SUV is crucial for Rivian – especially since it’s an important market in the US. With a starting price of $45,000, it is expected to expand Rivian’s customer base and is a testament to the company’s efforts toward profitability and cost savings.

Rivian’s current R1 pickup trucks and SUV consumer models start at more than $70,000. The company also builds electric delivery trucks, primarily for its largest shareholder, Amazonwhich start at around $80,000.

“Profitability pressure will likely increase as Rivian introduces its roughly $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 twice as expensive as the R2 increase.”

Rivian’s stock, which has a market cap of $22.5 billion, is rated “Hold” with a price target of $15.43 per share, according to average ratings and estimates compiled by FactSet.

—CNBC’s Michael Bloom contributed to this report.