Prediction: Rivian Stock Could Soar in The Next 5 Years If These 2 Things Happen

Rivian (NASDAQ: RIVN) has established itself as a notable player in the U.S. electric vehicle (EV) market. However, investors who have been with the company since it went public have not gotten their money's worth. Rivian's shares have lost significant value since its IPO. That said, the company could be about to stage a rebound -- in fact, the stock has climbed by 32% over the past 12 months. And if Rivian can execute its strategy over the next half-decade, it could maintain that momentum. Read on to discover two important catalysts that could push Rivian's stock in the right direction through 2031.

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Challenging a giant

In 2025, Tesla's Model Y was the best-selling car in the world -- not just among EVs -- for the third consecutive year. Clearly, the midsize SUV market to which it belongs is a lucrative one. Thus far, Rivian has offered a luxury SUV and a pickup truck to customers. The company is set to launch a more direct competitor to Tesla's Model Y this year. Rivian said its R2 model would begin customer deliveries in the second quarter.

Competing in this niche could significantly expand Rivian's appeal, especially given its somewhat struggling vehicle sales. Total deliveries for the company declined last year, partly due to the expiration of EV tax credits in the U.S toward the end of the year.

The R2 will have a much cheaper starting price than the company's R1S and R1T. That could attract more customers and supercharge Rivian's sales growth. If it can manage to steal a decent share of this market from Tesla over the next five years, the company's revenue could grow at a good clip over this period.

Will Rivian reach level 4?

Rivian is aiming for level 4 autonomy, which would mean its EVs can drive themselves with no human involvement (within certain geographical limits). If it can get there relatively soon -- and do so before Tesla, which has yet to get there -- it will be a big deal for the company. One important reason Rivian needs to achieve level 4 soon is that it signed a deal with Uber Technologies that is contingent on its ability to do so.

Per the terms of the agreement, Uber will purchase 10,000 fully autonomous R2 models to be deployed on its platform across various cities starting in 2028, with an option to buy up to an additional 40,000 models in 2030. Uber will also invest up to $1.25 billion in Rivian, including an upfront payment of $300 million upon regulatory approval of the deal.

Rivian's shares jumped on the heels of this announcement -- the stock will give up these gains and then some if Rivian fails to achieve full autonomy by the agreed-upon deadline, especially given that it postponed EBITDA (Earnings Before Interests, Taxes, Depreciation, and Amortization) profitability specifically to reach this goal.

What does this mean for investors? The stock could indeed soar by 2031 if it can grab a decent share of the midsize SUV market and achieve level 4 autonomy. But Rivian could significantly lag equities if one -- or both -- of those things don't happen. So, Rivian is a fairly risky automotive stock. Invest accordingly.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla and Uber Technologies. The Motley Fool has a disclosure policy.