Rivian’s (RIVN) shares rose fractionally early Friday after the American electric vehicle maker reached a key milestone in its $5.8 billion deal with German auto giant Volkswagen (VWAGY).
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Rivian Passes Key Winter Tests in Volkswagen Deal
Wolfsburg, Germany-based Volkswagen said it has successfully completed winter testing for its first batch of vehicles to be revamped with Rivian’s software. This clears a key investment hurdle in the deal, which is structured in tranches and tied to the achievement of certain “technological milestones.”
The testing completion comes weeks after media reports suggested that the partnership may be facing delays due to challenges with software integration. However, Oliver Blume, chief executive of Volkswagen Group, in a statement noted that the automaker is “accelerating toward the future” as the joint venture with Rivian “once again demonstrates the speed and precision of its work.”
‘Foundation for the Next Development Phases’
Volkswagen said it conducted months of testing for its planned entry-level EV ID.EVERY1 and for vehicles under its luxury, high-tech Audi brand and the U.S.-based and independent brand, Scout, which is focused on off-road SUVs and pickups. Tests were carried out in Phoenix, U.S., and in Arjeplog in Sweden.
“The results demonstrate that the software-defined vehicle architecture already operates reliably under harsh winter climatic and dynamic driving conditions,” Volkswagen noted. “In addition, this milestone establishes the foundation for the next development phases within the joint venture and individual Group brands.”
Rivian is expected to get $1 billion this year as part of the deal. The milestone comes weeks after the U.S. maker, which is on the lookout for new revenue sources as it remains unprofitable, launched the more affordable R2 electric SUV and snapped a $1.25 billion robotaxi deal with Uber (UBER).
Is Rivian a Buy, Sell, or Hold?
On Wall Street, analysts’ consensus rating on Rivian’s shares remains a Hold. This breaks down to nine Buys, seven Holds, and six Sells issued by 22 analysts over the past three months.
However, the average RIVN price target of $17.50 implies about 15% upside.
