Should You Buy Rivian While It's Below $20?

Rivian Automotive's (NASDAQ: RIVN) shares have been on a roller-coaster ride after the company's latest technology was unveiled at its Autonomy & AI Day event. The electric vehicle (EV) maker announced forthcoming semi-autonomous features, a Rivian-designed artificial intelligence (AI) chip, and the potential for a future robotaxi service.

After an initial share price drop following the announcements, Rivian's shares rebounded the next day, pushing the company's stock price to just over $19. With Rivian's recent announcements, should investors consider buying Rivian stock now? Here are a few things to consider.

Image source: Rivian.

Pushing further into AI and autonomy is a smart move

Electric vehicle companies are currently in a tough spot. EV tax credits were prematurely canceled by the Trump administration, and tariffs have thrown the auto industry into turmoil. While some tariffs have been changed or rolled back, EV credits are still gone, and there's no indication they're coming back.

At the same time, years of high inflation and rising interest rates have pushed vehicle prices higher, leaving many consumers wary of spending money on expensive electric vehicles.

I think this difficult situation is at least part of the reason why Rivian made some of the announcements it did. Highlighting the benefits of artificial intelligence and releasing more advanced semiautonomous features are effective ways to demonstrate to potential buyers and investors that Rivian is at the cutting edge of technology. Some of the most notable details for its event were:

• Rivian will incorporate lidar sensors into its future vehicles to enhance semi-autonomous driving capabilities, with Level 4 capabilities expected in its upcoming R2 model by the end of 2026.
• Its own AI models and custom AI chip will power semi-autonomous features for a new Autonomy+ subscription, which will launch next year for a one-time fee of $2,500 or approximately $50 per month.
• It will eventually launch a robotaxi service, but no specific date has been set.
• A new AI-powered Rivian Assistant will launch early next year in the company's vehicles.

These could be smart moves by the company as it attempts to attract buyers in a challenging EV market. Having options to generate recurring revenue from buyers or upsell them on a one-time purchase could also help boost future revenue.

The autonomous vehicle market could be worth $2.2 trillion by 2030, and automakers are trying to position themselves to benefit. Tesla is already making inroads, Alphabet's Waymo has launched a successful robotaxi service, and fellow EV start-up Lucid recently stated its intention to be the first automaker to sell full self-driving vehicles to customers.

Considering the competition, it's a wise move for Rivian to make these investments in AI and autonomy.

Is now a good time to buy Rivian?

Rivian's pursuit of self-driving vehicles, new revenue opportunities, and AI-enabled features is notable, but I don't think it's a reason to buy Rivian at this point. The EV market is likely at the beginning of some difficult times, and it could be years before things turn around.

Potential Rivian investors should instead keep an eye on the company's ability to increase vehicle sales and whether the launch of its cheaper R2 vehicle -- which will start at $45,000 -- helps drive sales from more budget-conscious buyers.

Rivian's management is forecasting 2025 vehicle deliveries of 42,500 at the midpoint -- a decline of 17% from last year. AI and semi-autonomous features are unlikely to be a significant catalyst for pushing vehicle sales higher; it will come from making and selling new models at prices that many more people can afford.

If you believe in the long-term potential of EVs, Rivian has considerable potential with a cheaper R2 going on sale next year. But just know that significant share price returns will likely take years to materialize -- and they're certainly not guaranteed.

Chris Neiger has positions in Rivian Automotive. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.