Is Rivian Stock a Buy Now?

Electric vehicle (EV) maker Rivian Automotive(NASDAQ: RIVN) has big plans in 2025. It could, in fact, become a make-or-break year for the young EV company, and there are reasons to be optimistic about its prospects.

Rivian is carrying momentum into the new year from several sources. Investors have been noting its accomplishments and potential by driving its stock up by about 35% over the last three months. Whether that will continue depends on how the company executes on its expansion plans on several fronts in the coming months.

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Rivian's growing opportunities

Interest in electric vehicles continued to grow in 2024, but the rate of growth has slowed. EV sales rose by 7.3% to 1.3 million units in the U.S. last year. Rivian's R1S SUV was the No. 10 best-selling domestic EV in 2024. The company delivered about 51,500 units for the year, consisting of its R1S, R1T pickup truck, and electric commercial van.

One new growth opportunity is its commercial van. The EV maker has been delivering on an existing 100,000-vehicle order for early investor Amazon. Earlier this month, the company renamed it the Rivian Commercial Van (RCV), making it available to any fleet operator. It was previously exclusive to Amazon.

Management said inquiries are coming in from many different business operators, including plumbers and electricians, floral and food-service providers, dry cleaners, and even dog groomers.

A focus on EV tech

Rivian is also working to grow through a focus on EV technology. CEO R.J. Scaringe is the public face of this drive. Last month, he announced plans to launch advanced hands-free assist capabilities this year, with "eyes off" systems due in 2026.

It seems to be taking a page out of Tesla's playbook here. Consumers are looking for more autonomous vehicle capabilities, even if that doesn't mean a fully driverless robotaxi. Scaringe stated that technology is "something we're hyper-focused on."

The CEO will also be leading a "fireside chat" at the upcoming Nvidia GTC (GPU Technology Conference) in March along with Nvidia's vice president for automotive business. The topic will be "The New Role of AI in Electric Vehicles." That tie to the leading AI company should be an encouraging sign for Rivian investors. Its Gen 2 vehicles already feature the Rivian Autonomy Platform, and the company looks to differentiate itself by building on that technology.

Rivian EVs. Image source: Rivian Automotive.

Here's what's ahead for Rivian

The company achieved its goal of reaching a positive gross profit for the first time in the fourth quarter. The $170 million gross profit came through cost reductions engineered into its second-generation R1 vehicles as well as supply chain and commodity cost savings. That was well ahead of Wall Street predictions for $64 million. The company also expects a modest full-year gross profit for 2025.

That's an important first step as it prepares to begin production of its next-generation R2 SUV, set to be launched in early 2026. The investment thesis in Rivian is really dependent on the success of the R2. This year will be relatively flat for sales volume. Management has only guided for sales of between 46,000 and 51,000 units for the year, a slight decrease versus 2024.

Record revenue in the fourth quarter was also aided by the sale of regulatory credits. Investors shouldn't look at that as a fundamental part of the underlying business, but Rivian ended the fourth quarter with $7.7 billion in cash and equivalents along with more liquidity available from its revolving credit facility. It also reported positive free cash flow of $856 million on an adjusted basis in the fourth quarter.

The stock remains speculative, but Rivian is in a position to succeed if its upcoming R2 attracts mass-market interest. That makes now a good time to buy shares as long as investors recognize the aggressive nature of this stock position.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Howard Smith has positions in Amazon, Nvidia, Rivian Automotive, and Tesla. The Motley Fool has positions in and recommends Amazon, Nvidia, and Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.