Rivian's Bearish Outlook: A Key Factor to Consider

Wall Street analysts are bearish on Rivian Automotive, with an average price target of $14.72 and a 5% potential upside. The main reason is the impending elimination of federal subsidies for electric vehicle (EV) manufacturers, including the EV buyer tax credit and federal automotive regulatory credits. This will cause direct pain for Rivian, as well as competitors like Tesla and Lucid Group.

Wall Street analysts are expressing a bearish sentiment towards Rivian Automotive (NASDAQ: RIVN), with an average price target of $14.72 and a mere 5% potential upside over the next 12 months. This cautious outlook is primarily driven by the impending elimination of federal subsidies for electric vehicle (EV) manufacturers. The U.S. government is set to phase out several key incentives, including the EV buyer tax credit and federal automotive regulatory credits [1].

The EV buyer tax credit, which can reduce the cost of purchasing an EV by up to $7,500, is scheduled to expire in September. Additionally, federal automotive regulatory credits, which have contributed significantly to the industry's profitability, will no longer be of value in 2025 as penalties for non-compliance will be eliminated [2]. Rivian, along with competitors such as Tesla and Lucid Group, is expected to face direct and immediate financial pain due to these changes.

Rivian's new mass market vehicles—the R2, R3, and R3X—were anticipated to qualify for federal tax credits. The company earned approximately $300 million in the last quarter of 2024 alone from selling automotive regulatory credits. While state subsidies will likely continue, the loss of federal support will significantly impact Rivian's revenue streams [1]. Analysts at Guggenheim downgraded Rivian stock in July, citing reduced confidence in demand and the impact of weaker EV incentives [1].

Despite these challenges, Rivian's long-term prospects remain promising. However, the path to renewed growth has become more arduous. The company's new models, expected to debut under $50,000, are likely to face a weaker sales launch than previously anticipated [1].

Investors should closely monitor these developments. The Motley Fool Stock Advisor team, for instance, has not included Rivian Automotive in their top 10 stock picks, highlighting the cautious view among financial experts [2].

References:
[1] https://finance.yahoo.com/news/why-wall-street-bearish-rivian-111500499.html
[2] https://www.fool.com/investing/2025/07/27/why-is-wall-street-so-bearish-on-rivian/