The Clock May Be Ticking on Rivian Under $16. Is Now the Time to Buy?

Electric vehicle (EV) companies are navigating a challenging landscape as key tax credits have expired and competition is heating up. However, amid this turbulence, Rivian Automotive (NASDAQ: RIVN) is one EV maker attracting investors' attention.

The company is building on its platform, not just as an EV maker but as a broader automotive technology company. With Rivian stock trading under $16, is now the perfect time to buy? Let's dive into the company and its outlook to find out.

Rivian's technology got a big thumbs up from Volkswagen

Investors may see Rivian as an EV automaker, but its internal technology stack, which includes in-house-developed software and a zonal architecture, is quietly gaining traction. Volkswagen is one example of a major automotive company that has struggled with software bugs in its ID series of electric vehicles. The German automaker has partnered with Rivian to use its software and architecture for a prototype of VW ID. EVERY1, Volkswagen's entry-level, affordable electric vehicle.

Rivian hit a key milestone during its winter testing by proving its technology stack can perform in extreme conditions inside Volkswagen's vehicles. Not only did the test validate Rivian's technology, showing it can be sold or licensed to other manufacturers, but it also triggered a $1 billion investment from Volkswagen.

The $1 billion will help it expand production of its new R2 vehicle

Rivian's R2 SUV is seen as an important part of the EV maker's future, providing it with an affordable vehicle and a mass-market competitor to the Tesla Model Y. Right now, Rivian's R1T and R1S are luxury vehicles priced between $70,000 to $100,000. The R2 provides customers with a more affordable option starting at $45,000.

Image source: Rivian.

With the growing demand for mid-sized SUVs, Rivian aims to expand its total addressable market with this more affordable vehicle. The R2 has entered production, and units are being delivered to employees this month, with broader customer deliveries slated for this summer.

Looking further down the road, Rivian has entered into a partnership with Uber to deploy a fleet of 10,000 autonomous R2 robotaxis by 2028, with longer-term plans to expand to 25 cities by 2031.

Uber has committed $1.25 billion through 2031, but the accelerated timeline will increase research and development spending and weigh on profitability in the near term. As a result, the company has walked back its target of achieving positive adjusted EBITDA by 2027.

Is Rivian right for you?

Rivian continues to face headwinds from slowing EV demand and will need to invest more capital as it increases production capacity and expands its research and development spending for its autonomous vehicles. That said, it is making solid progress with the production of its R2 vehicle and has advanced partnerships with Volkswagen and Uber, which will be key to its future success.

Conservative investors looking for steady returns and cash flows will want to avoid the stock as Rivian scales up. But if you're a patient growth investor and believe in its technology stack, mass-market EV, and the future of robotaxis, Rivian is a top EV stock to buy today.

Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.