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RIVN stock (NASDAQ: RIVN) recently increased by over 23% after the company announced Q3 results that surpassed expectations, indicating a possible turning point in its fundamentals. Revenue grew 78% year-over-year to $1.56 billion, while gross profit turned positive at $24 million – ending two consecutive quarters of losses. Nevertheless, the stock is still significantly below its 2021 IPO price of around $130, currently trading near $15. This improvement follows a difficult period for the company.
Significant headwinds have included tariffs on components sourced from Canada and Mexico, reductions in EV subsidies under the Trump Administration, and increased competition within the electric vehicle industry. However, we believe there is potential for a 2x upside from current levels if Rivian can implement its growth strategy, enhance margins, and successfully introduce its forthcoming mass-market SUV. Below, we outline a potential upside scenario considering recent developments for the company and how these could foster growth, margins, and a substantial re-rating of the stock. For further details see: RIVN Valuation Ratios.
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Rivian Is Coming Of Age
Rivian’s products are receiving positive reviews, and the company has successfully understood the formula for the EV pickup – a sector where Tesla’s Cybertruck has so far created more buzz than actual impact. The long-term bullish case hinges on Rivian’s capacity to scale beyond its niche premium models and extend its reach through partnerships. Currently, Rivian offers the R1T pickup and R1S SUV, both with prices exceeding $70,000. However, the significant growth catalyst will be the R2, a midsize SUV anticipated in 2026 at approximately $45,000, aimed at introducing Rivian to the mass market.
This model is crucial for Rivian’s volume expansion in the U.S. and Europe, directly competing with the popular Tesla Model Y. To facilitate this initiative, Rivian is increasing its Illinois facility to a capacity of 215,000 units and establishing a plant in Georgia with a 400,000-unit capacity by 2028. Collectively, these strategies should enable Rivian to widen its customer base, reduce costs, and achieve the kind of volume growth necessary to evolve from a relatively niche player to a mainstream EV competitor.
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Rivian is deepening its collaboration with Volkswagen through a joint venture that will integrate Rivian’s EV architecture and software into VW models starting in 2027. Volkswagen has already committed $1 billion, with intentions to increase that to $5.8 billion, merging Rivian’s drivetrain and software competencies with VW’s global manufacturing capabilities. This collaboration aims to commercialize Rivian’s software-defined vehicle platform and could serve as a prototype for future licensing agreements with other automakers, creating a new, steady revenue source beyond vehicle sales.
How The 2x Move Happens
Rivian’s revenues skyrocketed from $55 million in 2021 to approximately $4.97 billion in 2024. Between 2022 and 2024, sales nearly tripled, translating into a compounded annual growth rate of 73% per year. The consensus anticipates slower growth of about 8% this year, reaching $5.4 billion due to tariffs on imported auto components and subsidy reductions, although the Street projects a sales surge of around 32% in 2026 to approximately $7.1 billion. If sales indeed grow by about 35% from 2026 onward, driven by Rivian’s more mass-market launches such as the R2, revenues could rise to about $13 billion by 2028.
Although Rivian continues to incur significant operating and net losses, the company is focused on cost reduction and improving margins. It reported a surprising gross margin surpass in Q3 2025, and additional enhancements may be forthcoming. For example, the company is relying on its partnership with VW, aiming to reduce the R2’s bill of materials to around $32,000 per vehicle, which could lead to a substantial improvement in gross margins. Simultaneously, the company has also been implementing job reductions in commercial and sales positions, which might help decrease fixed costs. If adjusted net margins climb to about 10% by 2028, driven by increased scale and improved fixed cost absorption, this could lead to net income of approximately $1.3 billion for FY ’28. For context, Tesla’s net margins hovered at low double-digit levels during its consolidation phase from 2021 to 2024, suggesting that this could be feasible for Rivian as well.
Tesla’s stock currently trades at around 26x estimated 2025 earnings and approximately 12x revenues. While the market views Tesla not just as another EV player but also as a representation of physical AI, due to its emphasis on self-driving software and emerging interests like humanoid robots. However, Rivian could also see a richer valuation if it excels in ramping up its EV production and potentially begins licensing its EV architecture and technology. If we assume that Rivian stock would then be valued at about 30x earnings, a significantly smaller fraction of Tesla’s multiple, that would result in a market cap of around $40 billion, or nearly 2.2x current levels. Read RIVN Dip Buyer Analyses to understand how the stock has recovered from steep declines in the past.
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