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Wall Street is always looking for the next big investment. While artificial intelligence (AI) is getting a lot of attention right now, it’s electric vehicles (EVs) that have arguably the most impressive track record.
According to estimates from Beyond Market Insights, the global electric vehicle market is expected to grow at a compound annual rate of 22.5% between 2022 and 2030. % of vehicles sold worldwide. In other words, electric vehicles offer an almost impossible growth opportunity.
Rivian Stock Price Prediction 2023,2025,2030 Good To Buy?
The big question is: which companies are ready to take advantage of this? Wall Street analysts and experts think they have the answer. Based on non-time-bound price targets provided by three analyst/experts, the following three EV stocks offer gains of 176% to 705%.
The first EV stock that at least one Wall Street analyst believes will hit the proverbial gas and rise is Rivian Automotive (RIVN -4.88%). Perhaps the hottest initial public offering (IPO) of 2021, Rivian is expected to fetch $63 per share, according to Piper Sandler analyst Alexander Potter. It’s worth noting that Piper Sandler co-managed Rivian’s IPO, so that probably has something to do with the high price target.
Rivian actually put itself on the EV investor map long before it was announced in November 2021. In September 2019, it reached an agreement with e-commerce giant Amazon (AMZN -2.74%) to deliver 100,000 electric delivery vans (EDVs) by 2030. While Amazon sometimes has more operating cash flow than it knows what to do with, it won’t place an order for 100,000 EDVs without doing its homework. The choice of Rivian immediately confirms that the company is a potential long-term winner in the field of electric vehicles.
What can help Rivian stand out among John and Jane Q users? Answer: His R1T electric pickup. As Ford Motor Company and General Motors progress with EV versions of their best-selling heavy trucks, the Rivian R1T is in a league of its own. It is, in fact, a luxury pickup that is fully off-road capable. With minimal competition in the luxury category, the R1T has a chance to be a real winner.
Rivian Shares Tumble As Legacy Automakers Rev Up Ev Production
But it’s not all peach and cream for Rivian (or his colleagues). Although it ends 2022 with about $12 billion in cash, cash equivalents and cash, Rivian is burning through its capital at an incredible rate. It is spending $5 billion to build a facility in Georgia that is expected to begin operation next year. In addition, the company lost an average of more than $1 billion per quarter on an operational basis as it ramped up production.
To make matters worse, Rivian has been bitten by the recall bug. Four weeks ago, the company announced it would be recalling 12,700 R1T pickups and R1S SUVs due to faulty airbag sensors. Last October, the company recalled more than 12,000 of its vehicles to address loose fastener issues. While recalls are something all automakers face, it’s a terrible time for Rivian.
Unless the company significantly reduces its cash burn and successfully overcomes recent supply chain challenges, the $63 price target may be out of reach.
The second EV stock with incredible future prospects is China-based Nio (NIO -2.71%). Mizuho analyst Vijay Rakesh expects shares of the fast-growing Chinese automaker to hit $25. If accurate, this would lead to a gain of 176%.
Rivian, The Electric Truck Maker, Closes With A Big Gain After Its I.p.o.
One of the reasons for the excitement surrounding Nio is its location. China is the largest car market in the world, and EVs’ market share is up for grabs. With China abandoning its zero-covid mitigation strategy in December, the reopened economy bodes well for future demand for electric cars.
However, it is Nio’s various forms of innovation that speak the most. The company introduces at least one new model every year. The two sedans it brought to showrooms last year, the ET7 and ET5, were well received and accounted for more than half of all monthly deliveries.
To add to this, Nio vehicles tend to appeal to upper middle income consumers. People with higher incomes are generally less likely to change their shopping habits when China’s economy experiences a “hiccup”.
In addition, Nio’s Battery-as-a-Service (BaaS) subscription, which was introduced in August 2020, is well received. BaaS enables electric vehicle buyers to charge, exchange and upgrade their batteries, and receive a discount off the initial purchase price of their vehicle. In return, Nio receives recurring revenue from high-margin subscriptions and keeps its buyers attached to the brand for (hopefully) a long time.
Rivian Stock Skids As Legacy Automakers Rev Up Ev Targets
But reaching the $25 price target is not without its challenges. Supply chain issues across China have limited efforts to expand Nio production. While management believes it could ship as many as 250,000 EVs this year, the company appears to be on track for about (or perhaps less than) 40,000 EV deliveries in Q1, which equates to a pace of 160,000 EVs. annual performance.
It may also be difficult for Nio shares to nearly triple if earnings remain elusive. Using generally accepted accounting principles (GAAP), Nio generated a net loss of $2.09 billion last year. While China’s reopening should offset these losses, weak stock market sentiment hasn’t helped Nio.
But the EV stock with the most interesting upside is none other than North America’s largest EV maker, Tesla (TSLA -3.67%). Ark Invest CEO and CIO Cathie Wood argued that Tesla made $4,600 (note, this was before the company’s 3-for-1 split last August). On a stock-adjusted basis, Wood’s price target of $1,533.33 implies for Tesla an increase of more than 700% over the next several years.
Tesla’s two main selling points are company size and operational performance. In terms of scale, Tesla will ship 1.31 million electric vehicles and produce 1.37 million vehicles by 2022. With activity increasing at the gigafactory in Berlin, Germany and Austin, Texas, at least 1.8 million EVs are expected to be produced this year.
Ford Sells 7 Million More Rivian Shares, Reduces Stake To 9.7 Percent
Another differentiator for Tesla is profitability. Tesla has posted GAAP earnings for three consecutive years and no longer relies on selling renewable energy credits to other automakers to become profitable. While EVs are one of the fastest growing opportunities of the decade, both the new and traditional automakers’ EV divisions are almost completely at a loss. In short, Tesla has shown that its business model works so far.
For starters, Tesla’s first-mover advantage appears to be diminishing. The company has slashed prices on its flagship Model 3 sedan and Model Y SUV in the United States and China in recent months. While Tesla’s price hike will blame this price cut on the company becoming more efficient at producing vehicles, the writing on the wall says that increased competition and rising inventory levels are to blame.
Another glaring problem is that it’s just a car company. All of Tesla’s ancillary businesses, including the solar and utilities businesses, yield low margins and lose money once costs are factored in below the line. Tesla’s profits depend entirely on the sale and lease of electric vehicles. While auto stocks often trade at 6 to 8 times earnings, Tesla is priced at 49 times Wall Street’s forecast earnings per share for 2023.
However, the biggest issue that could keep Tesla from approaching Cathie Wood’s price target is CEO Elon Musk. Musk may be a visionary, but he’s also a huge responsibility to the company. He has been a magnet for securities regulators on more than one occasion and has made a long list of broken promises. Many of these promises are built into Tesla’s stock price, leaving little room for error.
Rivian Stock Price Prediction For 2023, 2025, 2030, 2040 & 2050
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, serves on the board of directors of The Motley Fool. Sean Williams has a post on Amazon.com. The Motley Fool has locations and recommends Amazon.com, Nio and Tesla. The Motley Fool recommends General Motors and recommends the following options: Long January 2025 $25 appeals to General Motors. Motley has a disclosure policy.
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Rivian (rivn) Stock: $100 Price Target And Outperform Rating
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